Business & Insurance Litigation Newsletter for Indiana

New Law Requires Homeowners to Allow Contractors

Opportunity to Cure Defects Before Filing Suit

The Indiana State Legislature recently enacted a statute, which requires homeowners to allow builders an opportunity to cure any construction defects before the homeowner initiates litigation. See I.C. §32-27-3. This new law applies to defects in the construction of a residence or in the substantial remodeling of a residence. Under the Act, a "residence" is defined as a single-family house, a duplex, a triplex, a quadraplex, or a condominium unit. "Substantial remodeling" means remodeling where the total cost exceeds fifty percent (50%) of the assessed value of the residence at the time the contract was made. The Act requires contractors to notify homeowners of the Act's requirements when they enter into a contract for the sale, construction, or substantial remodeling of a residence. The notice must be conspicuous and be part of the contract with the homeowner.

Under the new law, homeowners are required to provide written notice to their general contractor of any alleged defects sixty days prior to filing a lawsuit. The homeowner must describe the alleged defect with sufficient detail to clearly identify the defect for the contractor. After receipt of the notice, the contractor has twenty-one days to respond in writing by making an offer to inspect with the intent to repair, an offer to settle by payment, or a refusal to repair or pay. An offer to inspect must include a timeline for the inspections to occur. The homeowner must provide reasonable access for the inspections to occur. Once the inspection is completed, the contractor must notify the homeowner within fourteen days of the contractor's intent to either repair the defect, offer monetary compensation, or refuse to proceed. If the contractor either refuses to make repairs or fails to respond within twenty-one days after receipt of the homeowner's written notice, then the homeowner may file suit.

On the other hand, if the contractor does offer to make payment or offers to inspect the property, then the offer by the contractor must be accepted or rejected by the homeowner within sixty days after the homeowner received the offer. If the homeowner refuses the offer, the homeowner may then file suit after the initial sixty-day period has expired.