New Hampshire has enacted a dispute resolution statute for residential construction defect claims made by homeowners that, among other things, provides contractors notice and opportunity to resolve alleged construction defects prior to a disgruntled owner instituting litigation against them. Despite its obvious benefits to residential contractors, many contractors fail to preserve the right to rely on the statute in contracts with homeowners.
The residential construction dispute resolution law’s stated purpose is “to encourage the out-of-court resolution of disputes between homeowners and contractors relative to residential construction defects.” NH RSA 359-G encourages the resolution of residential construction defect claims by mandating a procedure that homeowners must follow prior to instituting litigation against a contractor, provided that the contractor preserves its right to rely on the statute in its written contract with the owner.
Assuming the right to rely on RSA 359-G has been preserved, the homeowner must provide notice of any claim of an alleged defect to the contractor no later than sixty days prior to filing an action against the contractor in court. The homeowner’s notice to the contractor must contain a description of the alleged defect(s) “in detail sufficient to explain the nature of the alleged construction defect and the result of the defect … [and] provide to the contractor any evidence in possession of the homeowner that depicts the nature and cause of the construction defect.” In other words, the homeowner’s notice must contain more than a simple notification to the contractor that there is a problem. In so doing, the statute requires homeowners to provide contractors with adequate notice of the actual issue(s) for which the homeowner claims a defect and not simply a notice that there are alleged defects in the work.
Provided that the contractor receives adequate notice from the homeowner, the contractor must, within 30 days, respond in writing to the homeowner disclosing any information the contractor has regarding the specific alleged defects and:
- Offer to settle the claim made by making repairs, paying money to the homeowner or both, without performing any inspection of the claim;
- Offer to inspect the claim; or
- Reject the claim.
Generally speaking, if a contractor offers to inspect the claim, the contractor will have 15 days to do so and then another 15 days to provide written notice to the homeowner of the contractor’s findings from the inspection. In the written notice the contractor must:
- Make a written offer to fully or partially remedy the construction defect at no cost to the homeowner, and provide the anticipated schedule to complete repairs;
- Make a written offer to settle the claim by payment;
- Make a written offer to resolve the issue by payment and repair; or
- Issue a written statement that the contractor will not remedy the defect.
After the homeowner elects to accept or reject the offer made by the contractor, the matter may proceed with payment, repairs or to the courts if the contractor rejects the claim and the homeowner disagrees.
Importantly, if the homeowner accepts the contractor’s offer to remedy the alleged defects and the contractor does so, the homeowner is barred from later bringing suit against the contractor for issues related to the defect. Similarly, provided that the contractor has preserved its right to assert 359-G, this dispute resolution mechanism provides the exclusive remedy for homeowners to utilize in the first instance. Actions filed in court prior to exhausting the remedies in 359-G shall be stayed until such time as the homeowner has complied with the statute.
RSA 359-G provides contractors and homeowners with a great tool to resolve disputes before they ripen into time-consuming and costly litigation. The statute provides a common sense framework for the parties to a residential construction contract to address perceived deficiencies in the work in a prompt and orderly fashion without initial resort to a legal process that is ill-equipped to deal with residential construction defect issues efficiently. Savvy contractors and homeowners do well by insisting that RSA 359-G be incorporated into their contracts.
It is important to note that RSA 359-G contains many other meaningful timing, notice and additional requirements that are beyond the basic operation of the statute addressed here.