On March 17, 2006, Pennsylvania Governor Edward Rendell (D) vetoed HB 1467, the Residential Construction Dispute Resolution Act (http://www.governor.state.pa.us/governor/cwp/view.asp?a=1115&q=446127). In a March 15, 2006 letter to the House returning HB 1467 without his approval [contained in the above website reference], the Governor cited several concerns with the legislation including some constitutional issues that the state's Attorney General (AG) had outlined. With so many parties weighing in on this legislation almost from its introduction last May, and every interest proposing multiple amendments, political pundits could almost have predicted the Governor's action.
Among other things, the legislation contained: a mandatory dispute resolution process to resolve legally the differences between homebuilders and homeowners for construction defects, requirements for an opportunity to repair, the limit that could be recovered in a lawsuit seeking damages and notice requirements at the time of contracting.
One needed a scorecard with a large eraser to follow all of the many changes and drafted language flying fast and furious in Harrisburg. On top of this, heavy lobbying took place with the Governor, legislators, and key House and Senate staff not only because of the specific state significance of this legislation, but the broader regional and national implications. Developers and homebuilders had a huge stake in this bill, and in fact, the PA Builders Association was very public about the passage of this legislation being a priority for its members. Other interests included legal groups (i.e., the Trial Lawyers, the Pennsylvania Bar Association, etc.), consumer activists, insurance interests, and importantly, CAI's Pennsylvania and Delaware Valley LAC and chapter members.
In fact, in its March 6, 2006 Action Alert to members, the LAC outlined the reasons why the Governor should veto HB 1467, and some of these concerns were incorporated in the Governor's March 15 transmittal letter. Arguing that the legislation restricted, rather than facilitated, the process of curing defective construction, the LAC argued that 1467 was extremely restrictive on homeowners in the Commonwealth who seek to cure defective home construction by proposing the implementation of "...a mandatory, statutory dispute resolution mechanism ... discouraging private resolution procedures ..." The LAC also questioned the applicability of the legislation to community associations.
Are there implications of this veto on other states that may be considering similar language? Given that some of the Governor's and AG's concerns dealt specifically with Pennsylvania Constitution conflicts, other states may have similar constitutional discord. Additionally, other states may already have, in place, some type of dispute resolution process and consumer protections to cover such problems. Prior to proposing similar language, states would also be wise to examine closely the scope of the problem of home builder liability insurance in their respective state, as well as the number of construction defects claims that have been submitted.
When there will be another attempt at similar legislation is not known at this time, although with so many players involved in HB 1467, the likelihood of a Pennsylvania reappearance, in one form or another, is somewhat high. Credit goes to the CAI Pennsylvania and Delaware Valley LAC and chapter members for understanding the full implications of this ever-changing bill, and responding aggressively to help make a difference to a bill that would have hindered the process to right a defect.