HB 85 - Certain residential property; arbitration of disputes
Georgia House of Representatives - 1995/1996 Sessions
HB 85 - Certain residential property; arbitration of disputes
Page Numbers - 1/ 2/ 3/ 4/ 5/ 6/ 7/ 8/ 9
1. Jones 71st 2. Watson 139th 3. Skipper 137th
House Comm: Ind / Senate Comm: /
House Vote: Yeas Nays Senate Vote: Yeas Nays
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House Action Senate
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1/9/95 Read 1st Time
1/10/95 Read 2nd Time
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Rules Suspended to Introduce
Code Sections amended: 8-2-40, 8-2-41, 8-2-42, 8-2-43, 8-2-44, 8-2-45, 9-9-2
HB 85 LC 21 3011
A BILL TO BE ENTITLED
AN ACT
1- 1 To amend Part 2 of Article 1 of Chapter 2 of Title 8 of the
1- 2 Official Code of Georgia Annotated, relating to state
1- 3 building, plumbing, electrical, and other codes, so as to
1- 4 provide for the arbitration of disputes between builders and
1- 5 purchasers of certain residential property; to provide that
1- 6 contracts for the purchase of certain residential property
1- 7 shall have a "Binding Arbitration and Warranty Disclosure
1- 8 Statement"; to define certain terms; to provide for the
1- 9 type, contents, distribution, and maintenance of a "Binding
1-10 Arbitration and Warranty Disclosure Statement"; to provide
1-11 that noncompliance by a builder shall constitute an unfair
1-12 and deceptive act; to provide that the disclosure of
1-13 warranties shall not limit the application of other laws; to
1-14 provide the manner in which a consumer may notify a builder
1-15 of any items of construction which the consumer believes
1-16 will cause probable material damage to the house and which
1-17 are in violation of any standard codes; to authorize the
1-18 consumer to demand that the builder submit to binding
1-19 arbitration if the builder fails within 60 days to bring the
1-20 residential property into conformity with any standard
1-21 codes; to provide for arbitration procedures; to provide for
1-22 rules to govern all aspects of arbitration proceedings under
1-23 this Act; to provide for administration by the office of the
1-24 administrator created under the "Fair Business Practices Act
1-25 of 1975"; to provide for pleadings, documents, records, and
1-26 awards; to require a builder to make corrections in order to
1-27 bring a residential property into conformity with any
1-28 standard codes upon the direction of an arbitrator or
1-29 arbitrators; to authorize certain actions by a consumer
1-30 under certain circumstances; to provide for a court to
1-31 confirm certain decisions of arbitrators or courts; to
1-32 provide for judgments and enforcement; to provide for
1-33 specific performance and for the recovery of actual,
1-34 consequential, and punitive damages under certain
1-35 circumstances; to provide for the liability of a builder and
1-36 for the attachment or recovery of the assets of a builder
1-37 for the protection of the consumer pending the outcome of
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2- 1 the court action; to provide for appeals of arbitration
2- 2 awards; to provide that the arbitration decision may be set
2- 3 aside only under certain conditions; to provide a limitation
2- 4 on actions; to provide for remedies in law or equity; to
2- 5 require compliance with standard codes; to provide that a
2- 6 prevailing consumer may be awarded reasonable attorney's
2- 7 fees, court costs, and costs of litigation and to authorize
2- 8 the award of such fees and costs to a prevailing builder
2- 9 under certain conditions; to provide for a limitation on
2-10 actions following an arbitration decision; to provide for
2-11 rules and regulations; to amend Code Section 9-9-2 of the
2-12 Official Code of Georgia Annotated, relating to the
2-13 applicability of the "Georgia Arbitration Code," so as to
2-14 provide that such code shall not be applicable in cases
2-15 involving new home construction where the consumer notifies
2-16 the builder of any item of construction which the consumer
2-17 believes is in violation of any standard codes; to provide
2-18 for related matters; to provide effective dates; to repeal
2-19 conflicting laws; and for other purposes.
2-20 BE IT ENACTED BY THE GENERAL ASSEMBLY OF GEORGIA:
SECTION 1.
2-21 Part 2 of Article 1 of Chapter 2 of Title 8 of the Official
2-22 Code of Georgia Annotated, relating to state building,
2-23 plumbing, electrical, and other codes, is amended by
2-24 designating Code Sections 8-2-20 through 8-2-31 as Subpart
2-25 1, by striking wherever the same shall appear in Code
2-26 Sections 8-2-20 through 8-2-31 the term "part" and inserting
2-27 in lieu thereof in each such instance the term "subpart",
2-28 and by adding following Code Section 8-2-31 a new Subpart 2
2-29 to read as follows:
"Subpart 2
2-30 8-2-40. (Index)
2-31 As used in this subpart, the term:
2-32 (1) 'Administrator' means the administrator appointed
2-33 pursuant to Code Section 10-1-395.
2-34 (2) 'Builder' means any person contracting or
2-35 undertaking as prime contractor the construction of any
2-36 new single-family residence.
2-37 (3) 'Consumer' means any person who purchases a new
2-38 single-family residence.
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3- 1 (4) 'Person' means any individual, company, corporation,
3- 2 association, partnership, or other legal entity.
3- 3 (5) 'Standard codes' means, with respect to any county
3- 4 or municipality, the state minimum standard codes
3- 5 enumerated in subdivisions (9)(B)(i)(I) through
3- 6 (9)(B)(i)(VIII) of Code Section 8-2-20, as amended or as
3- 7 interpreted from time to time in any properly adopted
3- 8 rules or regulations, and any state minimum standard
3- 9 codes enumerated in subdivisions (9)(B)(i)(IX) through
3-10 (9)(B)(i)(XIV) of Code Section 8-2-20 which have been
3-11 adopted by the county or municipality, as amended or as
3-12 interpreted from time to time in any properly adopted
3-13 rules or regulations as authorized in this part.
3-14 8-2-41. (Index)
3-15 (a) Any type of contract or agreement for the purchase of
3-16 new residential property by a person who has indicated an
3-17 intent to purchase a house as a dwelling and who has not
3-18 indicated an intent for the house to serve as rental
3-19 property shall be in writing and shall contain a
3-20 conspicuous 'Binding Arbitration and Warranty Disclosure
3-21 Statement' in the following form:
3-22 BINDING ARBITRATION AND
3-23 WARRANTY DISCLOSURE STATEMENT
3-24 1. Arbitration
3-25 The builder, _______________, hereby agrees to submit to
3-26 binding arbitration pursuant to Subpart 2 of Part 2 of
3-27 Article 1 of Chapter 2 of Title 8 of the Official Code
3-28 of Georgia Annotated any dispute with the purchaser
3-29 involving an item of construction that the purchaser or
3-30 consumer alleges to be a violation of standard codes
3-31 applicable to the residential property.
3-32 2. Warranty Disclosure
3-33 'Check one of the following:
3-34 _____ NO WARRANTY is offered with this home; however,
3-35 the law may provide for some type of warranty
3-36 coverage in particular situations.
3-37 _____ AN UNINSURED WARRANTY is offered with this home.
3-38 Seller agrees to deliver to purchaser, at closing
3-39 or within a reasonable time thereafter, a
3-40 ______________ warranty which IS NOT insured by a
3-41 third party authorized to insure warranties under
3-42 a state or federal insurance or risk retention act
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4- 1 or statute.
4- 2 _____ AN INSURED WARRANTY is offered with this home.
4- 3 Seller agrees to deliver to purchaser, at closing
4- 4 or within a reasonable time thereafter, a
4- 5 ______________ warranty which IS insured by a
4- 6 third party authorized to insure warranties under
4- 7 a state or federal insurance or risk retention act
4- 8 or statute.'
4- 9 (b) The 'Binding Arbitration and Warranty Disclosure
4-10 Statement' shall be part of such contract, shall be
4-11 presented prior to the closing, shall contain no other
4-12 written or pictorial matter, shall be in a size no less
4-13 than 13 point type in Helvetica font, and shall be
4-14 separately initialed by the purchaser. The builder shall
4-15 maintain a signed copy of the building contract containing
4-16 the 'Binding Arbitration and Warranty Disclosure
4-17 Statement' on file for a period of three years. Failure
4-18 to maintain such a copy for the required period shall
4-19 create a rebuttable presumption that the contract did not
4-20 contain the 'Binding Arbitration and Warranty Disclosure
4-21 Statement.' Failure to comply with this Code section
4-22 shall constitute an unfair and deceptive act or practice
4-23 under Code Section 10-1-393. A builder shall not exclude
4-24 any implied warranties which arise under operation of law.
4-25 Nothing contained in this Code section shall be construed
4-26 to limit the application of any other law designed for the
4-27 protection of consumers and legitimate businesses.
4-28 8-2-42. (Index)
4-29 (a) Within one year of the closing on new residential
4-30 property by a consumer, the consumer may notify the
4-31 builder of any item of construction that the consumer
4-32 believes will cause probable material damage to the house
4-33 and which is in violation of any standard codes applicable
4-34 in the county or municipality wherein the residential
4-35 property is located. The notification to the builder
4-36 shall be in writing and sent by certified mail, return
4-37 receipt requested. If the builder fails within 60 days of
4-38 receipt of the notice to make corrections necessary to
4-39 bring the residence into conformity with any standard
4-40 codes, the consumer may serve the builder with a written
4-41 demand, sent by certified mail, return receipt requested,
4-42 to submit to binding arbitration. A copy of the demand
4-43 shall be mailed in the same manner to the administrator
4-44 who may reject it in accordance with the rules adopted
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5- 1 pursuant to this subpart. Such rules shall provide for
5- 2 the administrator or his or her designee to reject any
5- 3 demands within ten days where the administrator finds that
5- 4 there does not appear to be a violation of any standard
5- 5 codes which will cause probable material damage to the
5- 6 house. If the administrator rejects a demand, the builder
5- 7 shall not be required to be subject to the binding
5- 8 arbitration.
5- 9 (b) Unless the administrator rejects a demand for
5-10 arbitration, the builder shall be subject to the binding
5-11 arbitration and shall be bound by the arbitration
5-12 decision, except as otherwise provided in this subpart,
5-13 regardless of whether the builder has attended the
5-14 arbitration proceedings; provided, however, that neither
5-15 party shall be compelled to attend any arbitration
5-16 proceedings, either in person or through a representative.
5-17 Either party may designate a representative or
5-18 representatives to participate in the arbitration
5-19 proceedings. Either party may be represented by legal
5-20 counsel. The arbitration proceedings, including the
5-21 production of evidence and the assessment of costs against
5-22 the parties, shall be carried out pursuant to the rules
5-23 and regulations promulgated by the administrator. Any
5-24 consumer demanding binding arbitration shall pay to the
5-25 administrator a $100.00 application fee, and the
5-26 administrator shall apply this application fee to the
5-27 costs of the binding arbitration. Among the other rules
5-28 for which the administrator may provide under this
5-29 subpart, the administrator shall provide by rule for the
5-30 arbitrator or arbitrators to award a refund of the $100.00
5-31 application fee to the consumer and provide for the
5-32 payment of such fee by the builder in the event the
5-33 arbitrator finds a standard code violation or violations
5-34 which have not been appropriately addressed by the
5-35 builder.
5-36 (c) The parties are entitled to be heard; to present
5-37 pleadings, documents, testimony, and other matters; and to
5-38 cross-examine witnesses. The arbitrator or arbitrators
5-39 shall hear and determine the controversy upon the
5-40 pleadings, documents, testimony, and other matters
5-41 produced notwithstanding the failure of a party duly
5-42 notified to appear. The results of any inspection by
5-43 state, county, or municipal building inspectors may be
5-44 included as evidence with the same weight as any other
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6- 1 evidence for consideration by the arbitrator or
6- 2 arbitrators.
6- 3 (d) The arbitrator or arbitrators shall maintain a record
6- 4 of all pleadings, documents, testimony, and other matters
6- 5 introduced at the hearing. Any party to the proceeding may
6- 6 have the proceedings transcribed by a court reporter.
6- 7 (e) The award shall be made within 45 days following the
6- 8 close of the hearing. The award shall be in writing and
6- 9 signed by the arbitrator or arbitrators joining in the
6-10 award. The arbitrator or arbitrators shall deliver a copy
6-11 of the award to each party personally or by registered or
6-12 certified mail, return receipt requested.
6-13 (f) If the arbitrator or arbitrators find that there is a
6-14 standard codes violation or violations, the arbitrator or
6-15 arbitrators shall direct the builder to make the necessary
6-16 corrections to bring the house into conformity with any
6-17 standard codes.
6-18 (g) All pleadings, documents, records, and awards under
6-19 this Code section shall be public information after the
6-20 award is delivered, and a copy of such pleadings,
6-21 documents, records, and awards shall be mailed or
6-22 delivered to the administrator at the time a copy of the
6-23 award is delivered to the parties. The award shall
6-24 conspicuously state that a petition to set aside the award
6-25 must be filed within 30 days and that if the builder fails
6-26 to file such a petition within 30 days and fails to comply
6-27 with the award within 60 days, the consumer may file suit
6-28 to enforce compliance with the award.
6-29 8-2-43. (Index)
6-30 A petition to have the arbitration decision set aside
6-31 shall be made to a court of competent jurisdiction within
6-32 30 days after delivery of a copy of the award to the
6-33 parties. The builder or the consumer may seek to have the
6-34 arbitration decision set aside. The arbitration decision
6-35 shall be set aside only if it is found to be arbitrary,
6-36 capricious, or totally without any basis in fact, given
6-37 the facts that were presented to the arbitrator or
6-38 arbitrators.
6-39 8-2-44. (Index)
6-40 (a) The consumer may file an action in any court of
6-41 competent jurisdiction against the builder in either of
6-42 the following instances:
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7- 1 (1) In any case where the arbitrator finds that there is
7- 2 a standard codes violation or violations under Code
7- 3 Section 8-2-42 and the builder, without filing a
7- 4 petition under Code Section 8-2-43, fails to comply with
7- 5 such decision within 60 days of the arbitrator's or
7- 6 arbitrators' decision; or
7- 7 (2) In any case where either party files a petition
7- 8 under Code Section 8-2-43 and the builder fails to
7- 9 comply with the court's decision within 60 days of the
7-10 court's decision.
7-11 (b) Upon determination of either of the instances
7-12 enumerated in subsection (a) of this Code section, the
7-13 court shall either confirm the award by the arbitrator or
7-14 arbitrators under Code Section 8-2-42 or confirm the
7-15 decision of the court under Code Section 8-2-43, whichever
7-16 is applicable. Upon confirmation of the award or the
7-17 decision by the court, judgment shall be entered in the
7-18 same manner as provided in Chapter 11 of Title 9. Any
7-19 action under this Code section may be brought to recover
7-20 actual, consequential, and punitive damages, to seek
7-21 specific performance, or for any combination of the
7-22 foregoing purposes.
7-23 (c) In any action brought under this subpart, if the court
7-24 finds that it is reasonable to believe that the defendant
7-25 may move or transfer assets in order to avoid liability or
7-26 to prevent recovery by the consumer under this Code
7-27 section, the court may issue any order necessary in law or
7-28 in equity to prevent such transfers. The court may
7-29 appoint a receiver to recover any assets if the court
7-30 finds that the builder has already transferred assets to
7-31 avoid actions under this subpart. If the court finds that
7-32 such transfers have already taken place, the court may
7-33 appoint a receiver to recover any assets moved in
7-34 contemplation of the action. The receiver shall be paid
7-35 out of any amounts so recovered.
7-36 (d) No case shall be brought under this Code section more
7-37 than one year after the arbitration decision required by
7-38 this subpart was rendered or more than one year after a
7-39 decision is rendered by a court under Code Section 8-2-43,
7-40 whichever occurs later.
7-41 (e) In any case which is brought under Code Section 8-2-43
7-42 or under this Code section in a court of competent
7-43 jurisdiction, the court may fashion any remedies in law or
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8- 1 in equity which it deems appropriate; but, where the court
8- 2 finds that the builder failed to correct existing
8- 3 violations, the builder shall be ordered, along with any
8- 4 other awards granted by the court, to correct any standard
8- 5 codes violation or to pay that amount determined by the
8- 6 court to be necessary to correct any such standard codes
8- 7 violation. In any such cases, a prevailing consumer, in
8- 8 addition to any other remedies awarded, may be awarded
8- 9 reasonable attorney's fees, court costs, and costs of
8-10 litigation. In any such cases, if the court finds that
8-11 the consumer acted in bad faith or for purposes of
8-12 harassment, it may award reasonable attorney's fees, court
8-13 costs, and costs of litigation to the builder.
8-14 8-2-45. (Index)
8-15 The administrator shall adopt rules under Chapter 13 of
8-16 Title 50, the 'Georgia Administrative Procedure Act,' to
8-17 govern all aspects of arbitration proceedings under this
8-18 subpart. Without otherwise limiting the rule-making
8-19 authority under this subpart, the rules shall include
8-20 provisions regarding maximum costs, how costs will be
8-21 assessed against the parties for arbitration proceedings
8-22 under varying circumstances, suitable qualifications for
8-23 arbitrators, and procedures for rejection by the
8-24 administrator prior to arbitration of those cases which do
8-25 not allege specific violations of standard building codes.
8-26 The arbitrators shall make the decision regarding how the
8-27 costs of arbitration proceedings are to be paid in
8-28 accordance with the rules adopted under this Code
8-29 section."
SECTION 2.
8-30 Code Section 9-9-2 of the Official Code of Georgia
8-31 Annotated, relating to the applicability of the "Georgia
8-32 Arbitration Code," is amended by striking in its entirety
8-33 paragraph (8) of subsection (c) and inserting in lieu
8-34 thereof a new paragraph (8) to read as follows:
8-35 "(8) Any sales agreement or loan agreement for the
8-36 purchase or financing of residential real estate unless
8-37 the clause agreeing to arbitrate is initialed by all
8-38 signatories at the time of the execution of the
8-39 agreement; provided, however, that this part shall not
8-40 apply in cases of new home construction where the
8-41 consumer notifies the builder of any item of
8-42 construction which the consumer believes is in violation
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9- 1 of any standard codes as defined in paragraph (5) of
9- 2 Code Section 8-2-40; and any arbitration with respect to
9- 3 such cases of new home construction and alleged
9- 4 violations of any standard codes shall be conducted
9- 5 pursuant to the provisions of Subpart 2 of Part 2 of
9- 6 Chapter 2 of Title 8. This exception shall not restrict
9- 7 agreements between or among real estate brokers or
9- 8 agents;".
SECTION 3.
9- 9 Notwithstanding any provision of this Act to the contrary,
9-10 the failure to obtain a warranty of completion at closing
9-11 shall in no way affect the liability of the closing attorney
9-12 or agent or the lien of any lending institution perfected at
9-13 closing.
SECTION 4.
9-14 This Act shall become effective July 1, 1995; provided,
9-15 however, that for the purpose of having the necessary rules
9-16 promulgated in order for the Act to be carried out, Code
9-17 Section 8-2-45 in Section 1 of this Act shall become
9-18 effective upon the approval of this Act by the Governor or
9-19 upon its becoming law without such approval.
SECTION 5.
9-20 All laws and parts of laws in conflict with this Act are
9-21 repealed.
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