Purchaser Dwelling Actions

After the recent real estate market boom, which saw an influx in “new build” construction in Arizona, many home buyers are now dealing with the discovery of construction defects. With the difficulties facing builders in this tough real estate market, home buyers are having an increasingly difficult time resolving these disputes. But, before, pursuing litigation against these builders, home buyers or “purchasers” need to ensure that the requirements of Arizona’s “Purchaser Dwelling Action” statutes are complied with if applicable to the purchase of the dwelling.

What Is A “Dwelling Action”?

Arizona law requires a purchaser to provide a seller with notice of defects before bringing a “Dwelling Action”. A dwelling action is any action “related to the design, construction, condition or sale of the dwelling” that is brought against a person or entity “that is engaged in the business of designing, constructing or selling dwellings.” See A.R.S. § 12-1361. Dwelling actions may even encompass claims brought by homeowner associations related to multi-unit dwellings and/or certain “common areas”. See id. Homeowner associations must also comply with A.R.S. § 33-2001, et seq. in order to bring a “Homeowners’ association dwelling action” related to the design, construction, condition or sale of a newly constructed single or multifamily residential property and/or improvements owned by the association or the homeowners jointly.

What Notice Must Given?

Except in cases where the defect poses an immediate threat to the life or safety, a purchaser must provide a seller with at least 90 days notice before filing a dwelling action. See A.R.S. § 12-1363(A); § 12-1362(A). That notice must provide “reasonable detail” regarding the alleged defects, which should include an itemized list of defects and the location of each defect. See A.R.S. § 12-1363(A). After receiving the notice, the seller is permitted to inspect the property and the purchaser must make the property available for inspection. See A.R.S. § 12-1363(B).

The seller is required to respond, in good faith, within 60 days of receiving the notice with its position on the alleged defects. See A.R.S. § 12-1363(C). This response can include an offer to correct the defects, monetary relief, or otherwise. See id. If no response is provided within the 60 days, the purchaser can immediately proceed with a dwelling action. See A.R.S. § 12-1363(D). If a response is provided, the purchaser must respond within 20 days of receipt, either accepting or rejecting any offer. See A.R.S. § 12-1363(E). If rejected, the seller may respond by providing a counteroffer and the specific factual basis for the rejections, assuming that the seller provided the factual basis for its response. The seller can provide a “best and final offer” in response within 10 days of receipt of purchaser’s response. See id. These communications are not generally admissible in any subsequent dwelling action and may be amended. See A.R.S. § 12-1363(F), (G).

What If No Notice Is Given?

If the notice requirements are not met, the Court can dismiss an action. See e.g., McMurray v. Dream Catcher USA, Inc., 220 Ariz. 71, 202 P.3d 536. A.R.S. § 12-1362 did previously contain language permitting the Court to stay a dwelling action pending compliance with the requirements. But, that section was amended and the language permitting the stay omitted in 2004. The written notice does, however, toll the statute of limitations.

There are, of course, exceptions to the Purchaser Dwelling Action statutes, including if the contract contains “commercially reasonable alternative dispute resolution procedures”, if the claim is related to personal injury or death, damage to property other than the dwelling, or if it is an action to recover for repair costs incurred by the purchaser, among others. See A.R.S. § 12-1366.

Can I Recover My Attorneys’ Fees?

Pursuant to A.R.S. § 12-1364, reasonable attorneys’ fees, reasonable expert witness fees and taxable costs should be awarded by the Court to the successful party. The seller, even if it loses, can be the successful party if it makes an offer and the purchaser does not obtain a more favorable judgment.