Howard Fischer / Capitol Media Services

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Az voter initiative would require 10-year new-home warranty

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PHOENIX — Buyers would be entitled to a 10-year warranty when they purchase new homes under the terms of an initiative apparently headed for the statewide ballot.

Backers of the measure filed petitions Monday with more than 262,000 signatures to put the issue before voters Nov. 4. While the petitions have to be reviewed, the total submitted is far more than the 153,365 necessary to qualify for ballot status.

The initiative, financed almost exclusively by the Sheet Metal Workers International Association, also would:

● Allow homeowners to help choose the contractors hired by the builders to make the repairs;

● Give buyers the right to cancel within 100 days and get back most of their deposit;

● Let homeowners sue without fear of having to pay a builder's legal fees if they lose.

It also would require that model homes be outfitted exactly the way they would look for the purchase price advertised or have a price tag on each of the non-standard items.

The measure would leave in place some of the procedures enacted six years ago by the Legislature at the behest of home builders. That includes a requirement for the builder and the buyer to try to work out problems before a lawsuit can be filed.

But Richard McCracken, attorney for the union, said the rest of the law tilts too far in favor of the builders, often leaving buyers with few, if any, remedies — other than going to court.

A warranty, he said, is a better option.

"We think the result is not more lawsuits," McCracken said. "We think the result is better construction, because if somebody's standing behind their house for 10 years and they know they're going to have to repair any defects, they're going to build it differently in the first place."

Spencer Kamps, lobbyist for the Home Builders Association of Central Arizona, said the reverse is true: There will be more litigation.

He pointed out that the 2002 law includes a provision that whichever side loses pays the other side's legal and other fees. This initiative says only that the home buyer is entitled to legal fees if that person wins.

The result, said Kamps, is there will be no incentive for home buyers to settle.

"The only people that are going to win out of this process is a bunch of attorneys," he said. "All's it's going to do is cause housing cost to go up and lawyers' pockets to get bigger."

McCracken acknowledged that if the measure becomes law, it likely would increase construction costs. But he said that won't increase what consumers have to pay.

"Right now the market's determining the price, not how much some home builder wishes it could sell a home for," he said.

Kamps also said there's less to that 10-year warranty the initiative would provide than it might seem. He pointed out state law already gives home buyers eight years to file a complaint.

But McCracken said that law is just that: a statute of limitations to file a lawsuit. He said homeowners still would have to show any defects actually occurred during the warranty period — which could be just one year — though they would have eight years to file suit.

And the initiative also would spell out that the home buyer — and not the builder — gets to decide whether to accept cash or demand repair or replacement.

One thing in the initiative that McCracken said will help home buyers is how model homes are shown.

He said buyers review those models, sign a contract, and only when they go to the design center are they informed that the price they were quoted does not include actually getting a home like the one they saw.

McCracken said that doesn't mean model homes can be outfitted only with Formica countertops, cheap carpeting and basic fixtures, the items that home buyers would get for the base price. But he said if the model includes upgrades, then there need to be labels displayed on each one telling the buyer, upfront, how much they would add to the price.

To buttress their arguments, initiative organizers brought out Terry and Mary Landa, who listed a series of major and minor problems with the home they had built for themselves in Goodyear. Terry Landa said efforts to get repairs for the defects, which include improperly installed electrical wiring, have been ignored by the builder, which has since sought protection from creditors in U.S. Bankruptcy Court.

McCracken said the initiative has nothing directly to do with the ongoing fight between the Sheet Metal Workers and various home builders about using union contracts. But he said the measure has some potential benefits for union members.

"All the better contractors, both union and non-union, are going to have a bigger share of this market instead of the fly-by-nights," he said.