A bill that imposes limitations on lawsuits for defective housing construction is on its way to the governor's office.
By a vote of 27-1, an amended version of SB220 passed the Senate on Tuesday, a day after passage in the House on Monday by a 64-9 vote.
Home builders and Realtors had pushed for the bill, saying it would reduce the number of unwarranted lawsuits. But critics maintained the measure would limit homeowners' ability sue a contractor for defective construction.
Salt Lake attorney Lincoln Hobbs, who represents homeowners associations, accused the Utah Home Builders Association of attempting to protect contractors from negligence claims while other professionals such as lawyers, doctors, Realtors and accountants are held accountable when they fail to meet their legally required duties.
The bill prevents a person from filing suit unless a builder did not follow their contract, or the defective construction caused personal or property damage. In addition, a person could sue if there were a "willful breach of legal duty."
The bill was sponsored by Sen. Curt Bramble, R-Provo, and Rep. Steve Urquhart, R-St. George. Urquhart said during debate Monday that the measure will only "codify the status quo," and that people who have complained that the bill will take away their rights were misinformed.
Urquhart said the bill will create a new state law regarding construction lawsuits, rather than allowing courts to rely on precedents set in previous court cases.
Utah Association of Realtors president David Mansell said that by keeping third-party "frivolous" lawsuits at bay, the state housing market can maintain its affordability.
California, Nevada and Oregon are the only states that allow third-party lawsuits on behalf of nonconsenting homeowners who are part of a homeowners association, said Mansell. He said such lawsuits have helped drive up home prices in those states by forcing home builders to include extra costs to account for potential lawsuits and higher than required building standards needed to reduce potential liability.
According to his association, the bill approved Tuesday stems from a 1996 Utah Supreme Court case involving the American Towers condominium development in Salt Lake City. A small group of condo owners had sued, claiming the builder was responsible for construction and design problems. In that case, the state high court ruled that negligence claims were no longer allowable, Mansell said.
Hobbs disagreed and noted that in 2003, the Utah Supreme Court said in another case, Grynberg v. Questar, that its original decision in the American Towers case was no longer appropriate. "That was the case where the Supreme Court said, 'We don't consider it to be good law anymore,'" he said.
Hobbs said he believes the state Supreme Court has been poised to overturn its previous decision as it applies to builders, and the Legislature is trying to do a "preemptive strike" before that reversal takes place.
He said some lawmakers with a vested interest in the building industry are trying to salvage the precedent that currently stands, which limits builders' exposure to potential litigation.
A Deseret Morning News analysis of campaign disclosure forms in January found that about 98 percent of the $848,000 in campaign money donated to 104 Utah legislators during 2007 came from special interests such as corporations, lobbyists and political action committees.
Among the biggest contributors were the Utah Association of Realtors at $37,360, and the Utah Home Builders Association's political action committee at $24,200, with a total of $76,700 in donations coming from the real estate/construction industry.Bramble's records indicate he received $6,000 from the home builders' political action committee in 2007, 11 percent of his total contributions raised last year. Phone calls and e-mails from the Deseret Morning News to Bramble seeking comment Tuesday were not returned.
Contributing: Nicole Warburton
E-mail: [email protected]