New legislation in Saint Paul would protect homeowners from bad builders.
The problem has to do with warranties on new homes and newly remodeled homes. Those warranties are supposed to last for 10 years, but if a builder goes out of business, those warranties become useless.
"We're trying to fix that," Sen. Ellen Anderson, DFL-Saint Paul, said at a press conference Friday.
Anderson and Rep. Barb Goodwin, DFL-Columbia Heights, are introducing bills that would protect homeowners if their homes sustain water damage.
Nancy, a homeowner in Woodbury, who didn't want her last name used, is one the people who have been stung by the current law on home warranties.
She found excessive water damage trapped in the walls of her 9-year-old home, which was built by a company that quietly went out of business. Nancy was left her holding a 10-year warranty that, legally, is no longer valid.
"You should not be able to stick a pencil right through a piece of wood in your home," she said, pointing to a picture of a wall ruined by leaky windows. "You have absolutely no recourse."
Current state law works like this:
Builders can dissolve their companies without informing the people who own homes the companies built.
Then, two years after the company dissolves, the warranties the builder issued become legally void. So homeowners have no recourse, because homeowners insurance won't cover water damage, and the builder's insurance won't cover a builder that no longer exists.
The bills introduced by Anderson and Goodwin included language that would help homeowners recover legal fees associated with their warranty claims.
At their press conference in Saint Paul, another homeowner said the total cost of his repair and legal bills came to about $216,000.
But the Builders Association of Minnesota said the proposed legislation doesn't go after the right people, and should target insurance companies, not builders.
"I appreciate that homeowners are having a problem," said Pam Perri Weaver, the executive vice president of the builders association. "This is really an insurance issue."
Either way, Nancy is one of potentially thousands of homeowners who have the problem. To fix her home, engineers have told her all of the walls would have to be ripped apart.
"It could cost a couple hundred thousand dollars," she said.
Last year, the Minnesota Supreme Court affirmed the current state law, and said builders who go out of business; do not have to honor warranties that are more than two years old.
The court said it would take new legislation to change the law.
By Scott Goldberg
, KARE 11 News
(Copyright 2006 by KARE. All Rights Reserved.)