Washington Supreme Court Chimes in on Prelitigation Notice Requirements Under Right to Cure Statute (RCW 64.50)

The Washington Supreme Court recently made an important decision regarding RCW 64.50, Washington's "Right to Cure" statute, enacted in June 2002. This law gives construction professionals the right to notice of a construction-defect claim, and an opportunity to cure or settle before a lawsuit is filed, while at the same time preserving adequate rights and remedies for property owners. The law applies to both new construction and substantial remodel of residences.[1] RCW 64.50.010(1). In Lakemont Ridge Homeowners Ass'n v. Lakemont Ridge Ltd. P'ship, 156 Wn.2d 696, 131 P.3d 905 (2006), the Washington Supreme Court interpreted this law with respect to when the construction professional is entitled to prelitigation notice.

In summary, the statute requires homeowners (or a condominium association) to give notice to "construction professionals" at least 45 days before filing a lawsuit against the professional for construction defects. RCW 64.50.020(1). "Construction professionals" includes architects, builders, builder vendors, contractors, subcontractors, engineers, and inspectors. RCW 64.50.010(4). The notice of the claim must "state that the claimant asserts a construction defect claim against the construction professional" and "describe the claim in reasonable detail sufficient to determine the general nature of the defect." RCW 64.50.020(1). The construction professional then has 21 days to respond by: (a) proposing an inspection, (b) offering to pay money or buy back the residence, or (c) disputing the claim. RCW 64.50.020(2). The homeowner can refuse to allow an inspection and can file a lawsuit if the construction professional disputes the claim. RCW 64.50.020(3).

In order to "trigger" the Right to Cure statute and be entitled to prelitigation notice from the homeowner or condominium association, the construction professional must have first provided the homeowner or association with its own "notice" of the Right to Cure statute "upon entering into a contract for sale, construction or substantial remodel of a residence." RCW 64.50.050(1) (emphasis added). Under RCW 64.50.050(2), the "notice" required to be given by the construction professional at the time of contracting is to be in substantially the following form:

CHAPTER 64.50 RCW CONTAINS IMPORTANT REQUIREMENTS YOU MUST FOLLOW BEFORE YOU MAY FILE A LAWSUIT FOR DEFECTIVE CONSTRUCTION AGAINST THE SELLER OR BUILDER OF YOUR HOME. FORTY-FIVE DAYS BEFORE YOU FILE YOUR LAWSUIT, YOU MUST DELIVER TO THE SELLER OR BUILDER A WRITTEN NOTICE OF ANY CONSTRUCTION CONDITIONS YOU ALLEGE ARE DEFECTIVE AND PROVIDE YOUR SELLER OR BUILDER THE OPPORTUNITY TO MAKE AN OFFER TO REPAIR OR PAY FOR THE DEFECTS. YOU ARE NOT OBLIGATED TO ACCEPT ANY OFFER MADE BY THE BUILDER OR SELLER. THERE ARE STRICT DEADLINES AND PROCEDURES UNDER STATE LAW, AND FAILURE TO FOLLOW THEM MAY AFFECT YOUR ABILITY TO FILE A LAWSUIT.

Lakemont Ridge Homeowners Ass'n involved the construction of condominiums before Washington's Right to Cure statute went into effect. The lawsuit in that case was initiated after the statute went into effect, but no prelitigation notice was given to the construction professional. The Washington Court of Appeals ruled that even though construction occurred before the statute went into effect, the association was nevertheless required to provide prelitigation notice to the construction professional (even though the association was never provided with any notice from the construction professional of any such obligation).

On review, however, the Washington Supreme Court reversed the lower court of appeals' decision. The supreme court held that the statute established two distinct notice requirements that operate together to achieve the legislature's dual goal of reducing potentially burdensome and expensive construction-defect litigation, and preserving (and not restricting) the homeowner's rights and remedies. One way of protecting the homeowner or association was the legislature's inclusion of RCW 64.50.050(3). That subsection provides that if notice is not given to the homeowner or association as required by the statute (meaning at the time of entering into the contract), then a lawsuit is not precluded or barred. If the construction professional provides notice of the prelitigation notice requirement, however, the homeowner or association must give prelitigation notice of the alleged defects and follow the statutory procedures designed to avoid litigation.

The moral of this story is simple: if "notice" is not first provided by the construction professional to the homeowner or association at the time of entering into the contract, then the homeowner or association is not required to provide prelitigation notice to the construction professional, and may immediately file a lawsuit against the construction professional. This includes construction before or after June 13, 2002 (the effective date of the statute). Arguably, even "notice" given to the homeowner or association at some later date—for example, a few weeks or even years after the contract was entered into—would not be sufficient. Notice must be given "upon entering into a contract." If it is not, then the construction professional is not entitled to notice and rights to cure under RCW 64.50. Therefore, the safe bet would be to include the above-referenced "notice" language directly in the contract, as opposed to providing it in a separate document or, worse, at a later date.

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