Solving home warranty disputes

Saving homeowners from a legal and financial nightmare is the goal of a new law dealing with home warranty disputes.

Sponsored by Rep. Marsha Swails (DFL-Woodbury) and Sen. Kathy Saltzman (DFL-Woodbury), the new law is designed to help homeowners avoid costly court battles with builders and home improvement contractors. It takes effect Jan. 1, 2011.

Under Minnesota law, homeowners have the right to make builders or contractors repair major damage that occurs in their homes as a result of faulty workmanship performed within the last 10 years. When a builder or contractor denies fault, homeowners often sue, and the resulting lawsuits can drag out for years and cost both sides tens of thousands of dollars in legal fees.

To help avoid such predicaments, the new law will establish a dispute resolution process through the Department of Labor and Industry. Under the provisions, the department will maintain a list of qualified “neutrals” who can evaluate home warranty claims. Homeowners and builders will have the opportunity to have their cases evaluated by the neutral party before a lawsuit could be filed.

The neutral party would issue a nonbinding decision that could not be used as evidence in a court case. The goal is simply to give both parties a better idea of the real cost of the damages involved and the likely outcome of a lawsuit. Supporters say the measure will have the effect of eliminating cases where one side is obviously being unreasonable.

The law also states that another, alternative dispute resolution process can be used to process claims, if both sides agree to it. In addition, it clarifies a builder or contractor’s rights and obligations to inspect building defects and offer to make the necessary repairs.

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