Anyone who has ever built a house or building intimately understands Murphy’s Law: if something can go wrong, it will. That was probably the logic behind a bill signed Tuesday by Gov. Linda Lingle that protects a contractor’s right to
Anyone who has ever built a house or building intimately understands Murphy’s Law: if something can go wrong, it will.
That was probably the logic behind a bill signed Tuesday by Gov. Linda Lingle that protects a contractor’s right to fix a problem before getting sued.
“That doesn’t take away the customer’s right to sue,” says Sen. Gary Hooser, D-Kaua‘i, Ni‘ihau, the bill’s co-sponsor. “It just gives the contractor a chance to fix it first.”
Act 119 requires a homeowner to notify a contractor before calling their attorney. The new law allows contractors to offer payment, make a repair or both within 30 days of being notified of a defect.
According to long-time Kaua‘i insurance agent Mike Cockett, the law stems from a situation that blossomed in California a few years ago.
“Lawyers there discovered that they could sue contractors of large tract homes for things like mold and other minor defects,” Cockett said.
Lawsuits boomed and suddenly, insurance companies began avoiding contractors who were caught in legal snafus by unscrupulous lawyers.
“Anything that affects the mainland trickles down to us,” said Bob Bentley, general manager of Kaua‘i-based Us Guys Builders, LLC.
“We’re seeing an impact in significant increases in general liability insurance rates as a whole,” he said.
The new law could lessen insurers’ fear, resulting in lowered rates for builders and possibly savings to the consumer, Hooser said.
But small contractor Robert Mendes of Kapa‘a said that he’ll believe it when he sees it.
“The costs of insurance, meaning general liability, unemployment, workers’ compensation, is about 35 percent of all my costs,” he said.
For example, his three-person operation last year cost him $2,500 in premiums — more than twice what he paid the year before.
“There’s not flat percent fee, so it’s always changing,” he said. “We end up passing that on to the consumer.”
Bentley said premiums for his 10-person business have jumped from $15,000 to $25,000 in a year, so any legislation that hints at lower rates is welcome.
There’s no denying that the new law is particularly good for small contractors, who could be wiped out by a frivolous suit. Should small contractors find themselves in a scuffle with an overly litigious client, they’ve got some kind of protection.
“It would save the contractor the cost of getting a lawyer and going to court,” Mendes said.
Some avoid the problem all together, like Craig Kawakami, a Kaua‘i-based contractor who only works on family projects.
Mendes said that contractors typically offer a year warranty on their work, and that etiquette usually means that contractors and their customers find solutions to problems rather than fight it out in court. Now, the law guarantees that the contractor stands a fighting chance. The bill was introduced by Sen. Norman Sakamoto, D-Salt Lake City, who, perhaps not coincidentally, is a contractor himself.
The Building Industry Association of Hawaii, National Association of Home Builders and Hidano Construction strongly lobbied for the bill, which garnered unanimous, bipartisan approval.
Phil Hayworth, Business Editor, can be reached at 245-3681 (ext. 251) and phayworth@pulitzer.net
