Alliance Cheers Two Arizona Measures

By E.E. Mazier

NU Online News Service, May 20, 10:40 a.m. EST?A new Arizona measure awaiting the governor's signature is a good initial action to reduce construction defect litigation, according to an insurance trade group.

The Alliance of American Insurers in Downers Grove, Ill., said the construction defect bill would establish an alternative dispute resolution procedure for certain construction defect claims.

According to the Alliance, HB 2620 is "a good first attempt to provide relief in this area," and it urged Gov. Jane Dee Hull to sign the bill into law.

But the Alliance added that the bill does not go far enough because it only applies to multi-unit dwellings.

However, Sarah White, a policy manager in the Alliance's property-casualty department, noted that the measure does provide incremental relief for contractors and insurers plagued with construction defect litigation costs.

Ms. White said that if the bill is signed into law, it could be used "as a building block for more meaningful reform in future sessions."

HB 2620 would create a "notice and opportunity to cure" procedure before the filing of a lawsuit against a construction professional in multi-unit dwelling actions, the Alliance said.

Senate amendments to the bill shortened the time frames for many of the notice and cure steps. For example, the notice must be provided 90 days before filing suit, not 120 days. The inspection must take place within 10 days, rather than 20, and the seller has 60 days, not 90, to respond, the Alliance noted.

Additionally, the amended Senate version allows the purchaser to amend the original notice during the 90-day notice period.

The bill also awards attorneys fees, costs and reasonable expert witness fees to the successful party.

Under the bill, a purchaser is the successful party if the final judgment exceeds the seller's best or final offer, while the seller is the successful party if the award is less than that, the Alliance said.

Further, the buyer of the dwelling maintains the right to file a written complaint against the homebuilder with the Arizona Registrar of Contractors. Any written contract for the sale of a newly-constructed dwelling must contain notice of the buyer's right to file the complaint, the Alliance noted.

The Alliance also said it was looking forward to the governor putting her signature on a structured settlement bill, HB 2192.

If HB 2192 is signed into law --as is expected --Arizona would be the fourth state this year to enact a law setting requirements governing the sale of structured settlements, the Alliance said.

The structured settlement bill would require factoring companies--which offer to purchase such settlements--to disclose all fees, charges and other amounts that would be deducted from the proceeds of the sale. The bill also conditions the transfer of such funds on approval by a court or other administrative authority, the Alliance said.

Under a structured settlement, an injured person receives funds disbursed over time, usually in the form of an annuity, instead of in a lump sum. According to the Alliance, compensation is made with the aim of ensuring long-term financial security. But this security is undermined by the unregulated sale of these settlements, the Alliance contends.

"HB 2192 protects consumers' long-term financial security from unscrupulous factoring companies," said John Lobert, senior vice president of state government affairs for the Alliance.

He said that by ensuring full disclosure before any transfer of a structured settlement, HB 2192 would protect Arizona citizens from factoring companies that promise "cash now" while delivering only pennies on the dollar without fully informing consumers of the cost and consequences of the transaction.

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Alliance Cheers Two Arizona Measures

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