The Washington Legislature has spawned a block of bills this year that would expand contractor liability for defects in new home construction. Senate Bill 5550, the centerpiece of Sen. Brian Weinstein’s “Homeowners’ Bill of Rights,” includes a new home warranty containing 10-year coverage provisions and increasing the statute of limitations for filing construction defect claims from six years to 10. While appearing laudable on its face, these “solutions” would actually hurt homeowners and new homebuyers by driving up liability insurance rates, forcing small contractors out of business and unnecessarily increasing the cost of housing.

Home building professionals, including electricians, plumbers, HVAC installers, contractors and every business in between, recognize that challenges exist in ensuring every new residential dwelling meets industry and governmental standards, and they take pride in meeting and exceeding these challenges. Currently, the state requires all contractors to register with the Department of Labor and Industries, post bonds for either $12,000 (general) or $6,000 (secondary contractors), and hold a valid liability insurance policy. Additionally, thousands of dollars in fees are paid on each home to building and planning departments responsible for platting, permitting and inspecting new developments and making certain that quality standards are met. Unfortunately, quite a few unregistered contractors choose not to follow the law, and overworked or poorly-trained building inspectors may mistakenly overlook construction defects, leading to future consumer complaints.

While the building industry believes that education and enforcement of existing laws can help improve quality construction, SB 5550, sponsored by a trial lawyer, would only open the floodgates of litigation, give attorneys more items to sue contractors over and generally increase the liability exposure that insurance companies have to cover. The result? Just look back a few years when contractor insurance rates in Washington skyrocketed – tenfold in some cases – and created an insurance crisis that still impacts housing affordability. The irony is that when small contractors cannot afford to obtain the insurance required for registration, they have an incentive to go underground in pursuing their livelihoods. This significantly undermines housing stock quality, tax revenue collection and general respect for the law.

To address construction quality and liability issues, the building industry worked with the Legislature in 2002 to pass the CURE law, which requires homeowners to give a builder notice of construction defects and an opportunity to remedy them before commencing a lawsuit. This has been highly successful in reducing expensive litigation and has given insurers the confidence to offer contractor liability policies again in Washington, while ensuring that homeowners received fair treatment. However, instead of working with builders to increase standards and provide incentives for quality construction, Sen. Weinstein’s legislation would penalize good builders to get to the bad and have a devastating impact on the insurance market in the process.

The goal should be to find solutions early so as not to require legal action in the first place. Every industry has a few bad apples, but you don’t fix the problem by throwing out the whole apple barrel.

What’s bothersome here is the highly theatrical political approach used in presenting the problem. In typical fashion, a plethora of pictures illustrating the most extreme examples of shoddy construction are paraded at public hearings, and the chair of the proceedings spouts such sarcastic rhetoric as “I wouldn’t buy a home unless I hired a lawyer first.”

The truth is, the vast majority of homes built have no significant construction problems in spite of the numerous environmental and geological challenges present in every type of development. Many responsible builders provide and stand by home warranties, and they go above and beyond in correcting mistakes to meet the needs of their customers. Word of mouth spreads quickly, and a few dissatisfied homeowners can seriously damage a builder’s reputation.

Quite simply, the market demands and expects quality construction. A civil and thoughtful discussion on increasing standards is highly preferable to the vacuous charades too often used by opportunistic legislators.

The premise of SB 5550 is to protect consumers by expanding the building industry’s exposure to liability. But how does forcing contractors underground when they can’t buy insurance increase the quality of construction? How are consumers helped when insurance rates raise the price of a home by several thousand dollars? How are fewer choices in the market good for competition and housing affordability? It appears the only beneficiaries of this legislation are trial lawyers.