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Who is Entitled to “Notice” Under the Revised Purchaser Dwelling Act?

As a construction defect attorney, I know I am not alone with the frustration in trying to interpret the confusing, ambiguous, and often times nonsensical language which comprises Arizona’s Purchaser Dwelling Act, promulgated as A.R.S. § 12-1361, et seq. (the “Act”). Most recently amended in 2019, the Act’s drafters consisted of attorneys, construction professionals, real estate professionals, and members of Congress, whom compiled all of their respective interests into what ultimately produced a “word salad” for lawyers and the courts to contemplate. Thus far, there has been minimal legal precedent borne out of the revised statute, but a recent opinion rendered to date is worth evaluating.

Being a practitioner who generally defends subcontractors as third-party defendants in construction defect disputes, I presently have the pleasure of representing a defendant/third-party plaintiff general contractor (“GC”) that constructed a multi-million dollar, single family custom home situated in Paradise Valley (the “Home”). Sued by the homeowner for alleged deficiencies in construction of the home’s pool, stucco, grading, roof, and doors and windows, among other issues, the GC served a third-party complaint against the implicated trades. Given a purported problem with the Home’s large sliding door’s glass shattering, the GC brought a claim against the door’s manufacturer (“Manufacturer”). However, contrary to the other Third-Party Defendant subcontractors, the GC did not provide the Manufacturer with “notice” to inspect and offer to repair or provide monetary compensation for the alleged defect(s) under the Act. As such, the Manufacturer filed a motion to dismiss for the GC’s failure to give requisite notice pursuant to the Act.

The purpose of the Act is to allow the parties subject to a residential dwelling action—generally, the buyer of the home, the seller of the home, and the construction professionals that designed and constructed the home—to try to achieve a resolution through the repair and/or monetary offers to remediate the purported construction defects without the need to resort to litigation after construction is complete. Specifically, the Act affords those who design and construct a dwelling (and the seller’s subcontractors utilized who do so, with notice being required to be provided to them by the seller) with an opportunity to cure latent defects found by the buyer after his/her/their purchase. This makes sense since the defect(s) was/were latent and there was no opportunity to cure during the construction. And although there is no case law or clarity from the legislature on this, the Act does not apply during construction, as if the defect(s) was/were discovered at that time, there would be an opportunity to cure afforded to the seller before the purchase or the completion of the contract. The relevant excerpts from the Act are as follow:

A. Before filing a dwelling action, the purchaser shall give written notice by certified mail, return receipt requested, to the seller specifying in reasonable detail the basis of the dwelling action. A seller who receives notice under this subsection shall promptly forward a copy of the notice to the last known address of each construction professional who the seller reasonably believes is responsible for an alleged defect that is specified in the notice.

B. After receipt of the notice described in subsection A of this section, the seller and the seller’s construction professional may inspect the dwelling to determine the nature and cause of the alleged construction defects and the nature and extent of any repairs or replacements necessary to remedy the alleged construction defects.

C. Within sixty days after receipt of the notice described in subsection A of this section, the seller shall send to the purchaser a good faith written response to the purchaser’s notice by certified mail, return receipt requested. The response may include the seller’s and the seller’s construction professional’s notice of intent to repair or replace any alleged construction defects, to have the alleged construction defects repaired or replaced at the seller’s or seller’s construction professional’s expense or to provide monetary compensation to the purchaser.

A.R.S. § 1363 (A), (B), and (C). Critical to these provisions are certain definitions of the provisions’ terms, set forth in A.R.S. § 1361, paragraphs 5 and 10 respectively:

5. “Construction professional” means an architect, contractor, subcontractor, developer, builder, builder vendor, supplier, engineer or inspector performing or furnishing the design, supervision, inspection, construction or observation of the construction of any improvement to real property.

10. “Seller” means any person, firm, partnership, corporation, association or other organization that is engaged in the business of designing, constructing or selling dwellings, including construction professionals.

(Emphasis added.)

In the subject dispute, we conceded that the Manufacturer was the “supplier” of the Home’s doors and windows as set forth in A.R.S. § 1361(5). However, reading and comprehending both clauses of the Act’s definition of “construction professional” cohesively—i.e. correlating the various entities listed plus the latter half of the sentence, “performing or furnishing the design, supervision, inspection, contraction or observation of the construction of any improvement to real property”—we argued that the Manufacturer was eliminated as a construction professional under the Act entitling it to pre-litigation notice of the homeowner’s claim, as it did not perform or furnish the design, supervision, inspection, construction or observation of the construction of any improvement to the Home. We posited that to construe the language otherwise would be overreaching and produce an absurd result, using the example of a seller not being obligated to furnish notice to the supplier of a home’s smallest components, such as its drywall staples, an entity that never stepped foot on the property and had no involvement in the home’s design, supervision, inspection, construction or observation of the home’s construction. The Maricopa County Superior Court agreed.

Now, does this construal of the Act comport with its drafters’ intent? The answer to that query is as unclear as the statute’s words. Ideally in my world—as an attorney primarily advocating third-party defendants in construction defect disputes, including suppliers—the opposite result would have been achieved, affording all of those involved in a residence’s construction the opportunity to rectify what is claimed to be wrong with their work or products. However, based upon a strict construal of the Act as written, I feel that our success was warranted, much to my primary clientele’s dismay. The only remedy to this inequity is a further revision of the Act.


Previously published with Maricopa Lawyer

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