1.1 	A bill for an act
1.2 	relating to civil actions; providing relief and
1.3 	protections for construction and home improvement
1.4 	defects; amending Minnesota Statutes 2004, sections
1.5 	327A.01, subdivision 2; 327A.03; 327A.04; 327A.08;
1.6 	514.011, subdivision 2; proposing coding for new law
1.7 	in Minnesota Statutes, chapter 337.
1.8 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.9 	Section 1. Minnesota Statutes 2004, section 327A.01,
1.10 	subdivision 2, is amended to read:
1.11 		Subd. 2.Building standards.  "Building standards" means:
1.12 	(1) at a minimum,the materials and installation standards
1.13 	of the State Building Code, adopted by the commissioner of
1.14 	administration pursuant to sections 16B.59 to 16B.75, in effect
1.15 	at the time of the construction or remodeling; and 
1.16 	(2) generally accepted standards of workmanship prevailing
1.17 	in the geographic area in which the dwelling is located.

1.18 	Sec. 2. Minnesota Statutes 2004, section 327A.03, is
1.19 	amended to read:
1.20 	327A.03 EXCLUSIONS.
1.21 	The liability of the vendor or the home improvement
1.22 	contractor under sections 327A.01 to 327A.07 is limited to the
1.23 	specific items set forth in sections 327A.01 to 327A.07 and does
1.24 	not extend to the following:
1.25 	(a) loss or damage not reported by the vendee or the owner
1.26 	to the vendor or the home improvement contractor in writing 
2.1 	within six months one year after the vendee or the owner
2.2 	discovers or should have discovered the loss or damage;
2.3 	(b) loss or damage caused by defects in design,
2.4 	installation, or materials which the vendee or the owner
2.5 	supplied, installed, or directed to be installed;
2.6 	(c) secondary loss or damage such as personal injury or
2.7 	property damage;
2.8 	(d) loss or damage from normal wear and tear for the
2.9 	geographic area in which the dwelling is located;
2.10 	(e) loss or damage from normal shrinkage caused by drying
2.11 	of the dwelling or the home improvement within tolerances of
2.12 	building standards if the wood moisture equivalent is less than
2.13 	or equal to 15 percent in the building materials at the time of
2.14 	construction;
2.15 	(f) loss or damage from dampness and condensation due to
2.16 	insufficient ventilation after occupancy, except to the extent
2.17 	the loss or damage was from improper or defective construction;
2.18 	(g) loss or damage from negligence, improper maintenance or
2.19 	alteration of the dwelling or the home improvement by parties
2.20 	other than the vendor or ,the home improvement contractor, or a
2.21 	subcontractor;
2.22 	(h) loss or damage from changes in grading of the ground
2.23 	around the dwelling or the home improvement by parties other
2.24 	than the vendor or the home improvement contractor unless the
2.25 	grade changes are the result of inadequate subgrade preparation;
2.26 	(i) landscaping or insect loss or damage unless insect
2.27 	access to the dwelling is due to a construction defect or the
2.28 	result of unsealed penetration;
2.29 	(j) landscaping loss or damage not resulting from improper
2.30 	grading or soil conditions;
2.31 	(j) (k) loss or damage from failure to maintain the
2.32 	dwelling or the home improvement in good repair;
2.33 	(k) (l) loss or damage which the vendee or the owner,
2.34 	whenever feasible, has not taken timely action to minimize;
2.35 	(l) (m) loss or damage which occurs after the dwelling or
2.36 	the home improvement is no longer used primarily as a residence;
3.1 	(m) (n) accidental loss or damage usually described as acts
3.2 	of God, including, but not limited to:  fire, explosion, smoke,
3.3 	water escape, windstorm, hail or lightning, falling trees,
3.4 	aircraft and vehicles, flood, and earthquake, except when the
3.5 	loss or damage is caused by failure to comply with building
3.6 	standards;
3.7 	(n) (o) loss or damage from soil movement which is
3.8 	compensated by legislation or covered by insurance;
3.9 	(o) (p) loss or damage due to soil conditions where
3.10 	construction is done upon lands owned by the vendee or the owner
3.11 	and obtained by the vendee or owner from a source independent of
3.12 	the vendor or the home improvement contractor, but only if the
3.13 	contractor or subcontractor has warned the homeowner, in
3.14 	writing, of the soil conditions;
3.15 	(p) (q) in the case of home improvement work, loss or
3.16 	damage due to defects in the existing structure and systems not
3.17 	caused by the home improvement.

3.18 	Sec. 3. Minnesota Statutes 2004, section 327A.04, is
3.19 	amended to read:
3.20 	327A.04 WAIVER AND MODIFICATION LIMITED.
3.21 	Subdivision 1.  Except as provided in subdivisions 
3.22 	subdivision 2 and 3, the provisions of sections 327A.01 to
3.23 	327A.07 cannot be waived or modified by contract or otherwise.
3.24 	Any agreement which purports to waive or modify the provisions
3.25 	of sections 327A.01 to 327A.07, except as provided
3.26 	in subdivisions subdivision 2 and 3 of this section, shall be
3.27 	void.
3.28 	Subd. 2. At any time after a contract for the sale of a
3.29 	dwelling is entered into by and between a vendor and a vendee or
3.30 	a contract for home improvement work is entered into by and
3.31 	between a home improvement contractor and an owner, any of the
3.32 	statutory warranties provided for in section 327A.02 may be
3.33 	excluded or modified only by a written instrument, printed in
3.34 	boldface type of a minimum size of ten points, which is signed
3.35 	by the vendee or the owner and which sets forth in detail the
3.36 	warranty involved, the consent of the vendee or the owner, and
4.1 	the terms of the new agreement contained in the writing.  No
4.2 	exclusion or modification shall be effective unless the vendor
4.3 	or the home improvement contractor provides substitute express
4.4 	warranties offering substantially the same protections to the
4.5 	vendee or the owner as the statutory warranties set forth in
4.6 	section 327A.02.  Any modification or exclusion agreed to by
4.7 	vendee and vendor or the owner and home improvement contractor
4.8 	pursuant to this subdivision shall not require the approval of
4.9 	the commissioner of administration pursuant to section 327A.07.
4.10 	Subd. 3.If a major construction defect is discovered
4.11 	prior to the sale of a dwelling, the statutory warranty set
4.12 	forth in section 327A.02, subdivision 1, clause (c) may be
4.13 	waived for the defect identified in the waiver instrument, after
4.14 	full oral disclosure of the specific defect, by an instrument
4.15 	which sets forth in detail:  the specific defect; the difference
4.16 	between the value of the dwelling without the defect and the
4.17 	value of the dwelling with the defect, as determined and
4.18 	attested to by an independent appraiser, contractor, insurance
4.19 	adjuster, engineer or any other similarly knowledgeable person
4.20 	selected by the vendee; the price reduction; the date the
4.21 	construction was completed; the legal description of the
4.22 	dwelling; the consent of the vendee to the waiver; and the
4.23 	signatures of the vendee, the vendor, and two witnesses.
4.24 	A single waiver agreed to pursuant to this subdivision may
4.25 	not apply to more than one major construction defect in a
4.26 	dwelling.
4.27 	The waiver shall not be effective unless filed for
4.28 	recording with the county recorder or registrar of titles who
4.29 	shall file the waiver for record.

4.30 	Sec. 4. Minnesota Statutes 2004, section 327A.08, is
4.31 	amended to read:
4.32 	327A.08 LIMITATIONS.
4.33 	Notwithstanding any other provision of sections 327A.01 to
4.34 	327A.07:
4.35 	(a) the terms of the home improvement warranties required
4.36 	by sections 327A.01 to 327A.07 commence upon completion of the
5.1 	home improvement and the term shall , may not be waived by either
5.2 	party, and must not be required to be renewed or extended if the
5.3 	home improvement contractor performs additional improvements
5.4 	required by warranty;
5.5 	(b) the home improvement warranties required by sections
5.6 	327A.01 to 327A.07 shall not include products or materials
5.7 	installed that are already covered by implied or written
5.8 	warranty; and
5.9 	(c) the home improvement warranties required by sections
5.10 	327A.01 to 327A.07 are intended to be implied warranties
5.11 	imposing impose an affirmative obligation upon home improvement
5.12 	contractors, and sections 327A.01 to 327A.07 do not require that 
5.13 	to create and convey written warranty instruments be created and
5.14 	conveyed to the owner.

5.15 	Sec. 5. [337.11] RESIDENTIAL BUILDING AND CONSTRUCTION
5.16 	CONTRACTS; ARBITRATION PROVISIONS.
5.17 	No residential building and construction contract
5.18 	containing any clause or provision requiring the parties to
5.19 	submit any controversy to arbitration shall preclude any party
5.20 	or beneficiary under the contract from instituting suit or legal
5.21 	action on the contract at any time.  Compliance with such a
5.22 	clause or provision must not be a condition precedent to the
5.23 	right to bring or recover in the action.  A party is bound by an
5.24 	arbitration provision only when the party elects to arbitrate
5.25 	and a lawful and binding arbitration follows.
5.26 	For purposes of this section, "residential building and
5.27 	construction contract" means a contract for the design,
5.28 	construction, alteration, improvement, or maintenance of a new
5.29 	or existing building constructed for habitation by one to four
5.30 	families, including attached garages.

5.31 	Sec. 6. Minnesota Statutes 2004, section 514.011,
5.32 	subdivision 2, is amended to read:
5.33 		Subd. 2.Subcontractor to give notice.  (a) Every person
5.34 	who contributes to the improvement of real property so as to be
5.35 	entitled to a lien pursuant to section 514.01, except a party
5.36 	under direct contract with the owner must, as a necessary
6.1 	prerequisite to the validity of any claim or lien, cause to be
6.2 	given to the owner or the owner's authorized agent, either by
6.3 	personal delivery or by certified mail, not later than 45 days
6.4 	after before the lien claimant has first furnished labor, skill
6.5 	or materials for the improvement, a written notice in at least
6.6 	10-point bold type, if printed, or in capital letters, if
6.7 	typewritten, which shall state:
6.8 	"This notice is to advise you of your rights under
6.9 	Minnesota law in connection with the improvement to your
6.10 	property.
6.11 	Any person or company supplying labor or materials for this
6.12 	improvement may file a lien against your property if that person
6.13 	or company is not paid for the contributions.
6.14 	We ......................................................
6.15 	     (name and ,address, and license number of subcontractor)
6.16 	have been hired by your contractor ......................
6.17 	                                (name of your contractor)
6.18 	to provide ...................... or ............... for
6.19 	             (type of service)         (material)
6.20 	this improvement.
6.21 	To the best of our knowledge, we estimate our charges
6.22 	will be .............................. .
6.23 	        (value of service or material)
6.24 	If we are not paid by your contractor, we can file a claim
6.25 	against your property for the price of our services.
6.26 	You have the right to pay us directly and deduct this
6.27 	amount from the contract price, or withhold the amount due us
6.28 	from your contractor until 120 days after completion of the
6.29 	improvement unless your contractor gives you a lien waiver
6.30 	signed by me (us).
6.31 	We may not file are prohibited by law from filing a lien if
6.32 	you paid your contractor in full before receiving this notice.
6.33 	The Minnesota Department of Commerce is the state agency
6.34 	with responsibility for licensing and regulating residential
6.35 	contractors."
6.36 	(b) A person entitled to a lien does not lose the right to
7.1 	the lien for failure to strictly comply with this subdivision if
7.2 	a good faith effort is made to comply, unless the owner or
7.3 	another lien claimant proves damage as a direct result of the
7.4 	failure to comply.