Saturday, March 01, 2008

Contact Your Legislator re: SB 220

For the past several weeks, I've been trying to protect Utah Community Associations and their owners (past, present and future), from SB 220, a bill pushed by the Utah Home Builders Association, and designed to protect builders from construction defect lawsuits. Here, for your review, is a copy of the letter that I sent to Utah representatives, who will be voting on this legislation on Monday.

If you have not done so yet, I encourage you to email or call your legislator.

Here's a handy page that will help you to find your representative, by address:

Contact Your Representative

Dear Representative:

I am an attorney, practicing primarily community association law. I was the founder of the Utah Chapter of the Community Associations Institute and am a member of CAI’s College of Community Association Lawyers. (The opinions in this letter are my own.)

I have become aware of SB 220, and am very concerned regarding the adverse consequences that it would have, if it passes, upon community associations and those who buy and live in them. I have no doubt that the legislation, if it passes, would deprive most Utah homeowners from having any recourse in the event of defective construction.

I have received a copy of correspondence sent from a local realtor to a representative in support of the bill; I would respectfully request that you consider my responses to the arguments in the letter that you may have received:

"It codifies more than a decade of Utah case law currently in place";

This is not true. The Utah Supreme Court stated several years ago, regarding to the American Towers decision, which this purports to “codify” : “we do not find American Towers Owners Ass'n and SME Industries persuasive authority regarding the current state of the economic loss rule in Wyoming or Utah." (Grynberg v. Questar, 2003 UT 8,¶56, 70 P.3d 1). Several other cases have questioned and limited American Towers. I am certain that it is that clear trend, from Utah’s Supreme Court and Court of Appeals, that is spurring this legislation.

"It reinforces homeowners' rights to bring claims under contract law, allowing current and subsequent homeowners to sue builders for defective construction under the terms of their contract or warranty";

There is no need to “reinforce” a right to sue under contract. This right is clearly established under Utah law, and has been since statehood. This bill does absolutely nothing to create or reinforce any homeowners’ rights.

"It clarifies that homeowners and third parties may bring tort claims when a construction defect causes personal injury or damage to other property";

Again, this right is clear under existing case law. This bill, however, would allow these claims to be pursued only when there is an injury. If a tub falls through the floor and kills or injures someone, there could be a lawsuit. If a tub falls through and lands on the concrete garage in a condo, there will probably be no suit, because there will be no “damage to other property” and no contract between the contractor and the homeowner.

"It strikes a balance between allowing a homeowner to sue for faulty work, while guarding against frivolous lawsuits."

Many, if not most homeowners will not be able to sue because of the absence of a contract. Even where contracts exist, they are almost always drafted by the developer's or contractor's lawyer, and unit owners very seldom seek or obtain legal advice when purchasing their homes.
Furthermore, I have seen no evidence of “frivolous lawsuits”. On the rare occasions that frivolous lawsuits may be filed, the courts can and will respond by awarding attorneys’ fees to the defendants under Utah Code Ann. 78-27-56.

Why is the Utah Association of Realtors supporting SB 220???

"It protects the free market system and the home buyer's right to choice";

This does not, in any way, add any “right to choice”. What does it allow one to choose that they cannot currently choose?

"It helps insure that buyers have choices regarding the design, construction and warranty of their home";

How does this bill even effect, much less help that “choice”? How does an owner’s inability to sue in negligence increase their choices in design?"

It prevents third parties from suing on behalf of homeowners who may not want to be part of a lawsuit";

No one can sue on behalf of another without the other’s consent. A community association can, under current law, (which has been in place for thirty years) bring a suit on behalf of the association, but when that happens, the decision to sue is made by an elected board. No one is being forced, by anyone else, into lawsuits.

"It protects housing affordability by limiting frivolous lawsuits that artificially inflate home construction costs";

I keep hearing this, and I keep asking for any evidence of “frivolous lawsuits”, but I am not seeing any evidence of any frivolous construction defect lawsuits. Furthermore, “housing affordability” necessarily includes the cost of repairs and maintenance. If builders are shielded from liability (by this or any similar bill), the cost of resultant repairs and maintenance will be borne by innocent homeowners.

"And, it gives buyers the option, in line with building code standards, to choose more affordable products for their homes, e.g., a 20-year shingle for a roof, rather than a 50-year on".

Again, home buyers have that option right now. This adds nothing. In fact, under this law, they may get that 20 year roof without being told about it, because there will be no obligation on the builder to meet any standard of care.

"It protects homeowner and home builder insurance availability and affordability".

There is no evidence that this will help availability or affordability of home builder or homeowner insurance. If it has any effect on homeowner insurance, it would almost certainly be negative, as homeowner insurers would lose their right to subrogate against builders.

"It reinforces homeowners' rights to bring claims under contract law, allowing current and subsequent homeowners to sue builders for defective construction under the terms of their contract or warranty";

A repeat of the same arguments above. Those rights exist, and this does not add to them.

"It clarifies that homeowners and third parties may bring tort claims when a construction defect causes personal injury or damage to other property";

See above.

"It strikes a balance between allowing a homeowner to sue for faulty work while guarding against frivolous lawsuits".

There is no balance for the majority of Utahns who don’t have contracts with their contractors, and thus would have no right to sue.

I sincerely thank you for your time and consideration of this important legislation. I respectfully suggest that there is no need for any legislation on the subject, but if there is to be legislation on an issue of this importance, it should be carefully considered and debated. That has not happened with this bill.

Lincoln W. Hobbs


  1. It is sad that a good bill is being bashed by attorneys. Any good attorney will realize this is a good bill. If an owner hires a designer or a contractor to design or build there house, why should a 3rd party, down the road, who wasn't part of the original contract to sue, just because he doesn't like the decisions the original group made.

  2. Dear Anonymous:

    Thanks for the comment. I guess that I can infer that you think that I am not a "good attorney", because I think this is not only a bad bill, but a terrible bill.

    However, I think that all of the assumptions in your comment are incorrect.

    First of all, this bill does not have anything to do with decisions. This bill deals with whether or not builders should be held accountable for their failure to abide by "the standard of care" in the building industry. It involves whether or not they abide by the building codes, which are established by state law and municipal ordinance, and whether or not builders do what other "average" builders in the industry do. So, if you are an average or above builder (that was a "c average" back when I went to school), negligence should not be a concern to you.

    Why should the Utah State Legislature be protecting builders who deserve "Ds" and "Fs"? (Or stated otherwise, builders who are below average, which is equivalent to the standard of care?)

    If this bill passes, even as it was amended today, it will establish builders as the only licensed professionals in the state (of which I am aware, at least) that need not worry about negligence.

    Lawyers (even "bad" lawyers like myself) can be sued for negligence. So can architects, realtors, doctors, appraisers, surveyors, and engineers. I am sure that I have forgotten a few licensed professions, but why and how are builders special, and deserving of this protection?

    Your next premise in your comment is that the buyer's contract is adequate.

    Oh, how I wish it were so.

    Unfortunately, the contracts are prepared by the builders (or more often, their good lawyers). Those few home buyers who read their contracts probably realize that they have little choice but to sign them.

    I think I have said enough to a poster whom will not identify him or herself. Please identify yourself (I certainly have, and I chose to publish your comment), and then address the issues rather than simply accusing me of being a bad lawyer. I'll gladly continue this discussion in whatever public forum you may choose, including this blog.

    And, by the way, thanks for reading and responding.

  3. Nice comments at the television story comment site. I hope I didn't "out" who you are. I didn't call you a "bad" attorney on your own site. I did think, perhaps wrongly, that you were fooled by others. After reading some of you other posts, I just think you are wrong, not stupid. Sorry if I offended you.

  4. Anonymous seems to entirely dismiss the circumstances that condominium HOAs face, which SB220 does not deal with adequately. As the boomer population ages, more and more will want to choose condo life, but may be dissuaded if the legislature continues down this misguided path. It will be interesting to see how sales tracts for the new condos in the City Creek Project will read if they have to warn prospective buyers that they have no recourse for any construction defects that may be discovered in the common facilities/systems.

  5. Brian,
    The problem isn't new. If you have a developer that is cheap, you are going to have some problems, condos or not. The reason I wanted this bill, is HOA are really a class action law suits waiting for an attorney. You can ask any of the professional insurance carriers. Many would not even insure their clients if they were to work on a condo project. There are quite a number of law firms that specialize is ripping everyone off knowing that. It is about time there was some legal balance. Perhaps LH is an ethical attorney, and just gets assumed a questionable attorney because he works in this field. Condo attorneys have one of the worst reputations of almost any attorney practicing. It is certainly and area that needs to clean house. Perhaps bills like this will help.