In difficult times, disputes can arise, so now is a good time for both owners and contractors to know their rights.
First, owners and contractors should be aware of the role of the Arizona Registrar of Contractors (the “ROC”) in construction disputes. Owners who are dissatisfied with a licensed contractor’s work can file a complaint with the ROC through an online portal. Depending on the issue raised in the complaint, the complaint will usually result in an inspection of the property by an ROC inspector. If this inspection confirms workmanship problems or other issues, the ROC will issue a “written directive” for the contractor to address the deficiencies. If the contractor fails to address the deficiencies, or if disputes remain, the inspector can refer the matter to the ROC’s legal department, which will usually issue a “citation.” The citation then begins an administrative process, culminating in a hearing, after which the ROC will decide whether to suspend or revoke the contractor’s license.
Owners should know that the ROC Complaint process is quick, user-friendly, and, at least in its early stages, does not require involvement by an attorney. Also, the possibility of discipline against a contractor’s license often gets the contractor’s attention and can lead to a negotiated resolution.
Contractors should know that they have a right to inspect the work that is the subject of the complaint, and that they have a right to take appropriate corrective action within a “reasonable period of time” after receiving the written directive. Contractors should also know that the owner must provide the contractor reasonable access to perform the corrective work.
Second, owners and contractors should be aware of common areas of dispute within a construction agreement, areas which may or may not fall within the scope of the statutory and regulatory violations for which the registrar may impose discipline. For example, every construction agreement should address how “changes” to the work and to the contract price will be implemented. Construction is an imperfect science, and the construction of a home often evolves over time. The question is not whether there will be changes, but how many, how much they will cost, and how will they be approved. Do all change orders have to be in writing, signed by contractor and owner? Or are verbal changes permissible, perhaps with subsequent written confirmation at a later date? What about “allowances” and estimated “budgets” for an item that are later exceeded? Do the terms “allowance” and “budget” imply that the scope and cost will change? Is a written change order still necessary when the contractor exceeds an “allowance” or a “budget” for a given item?
Ideally, the construction agreement should clearly define the scope of work and the cost, and should provide a specific procedure for any changes to that scope and cost. To avoid disputes on these issues, the best practice is to require a written change order, signed by both contractor and owner, for any change in the scope and cost, even if the change is to an item for which an amount was originally described as an “allowance” or “budget.”
Finally, anyone who wants to sue a licensed contractor in court needs to be aware of Arizona’s Purchaser Dwelling Act (the “PDA” – sometimes called the “right to repair” statute). This process is not unlike the inspection and written directive process administered by the ROC, but it is a prerequisite to filing suit against a contractor. Under the PDA, an owner must provide written notice of allegations of defects, must provide the contractor the opportunity to inspect, and then the contractor must respond to the written notice within 60 days. In its response, the contractor can offer to make repairs, to have another contractor make repairs, or the contractor may offer a monetary settlement. The owner may accept or reject this offer, except the owner must allow the contractor a reasonable opportunity to repair or replace the alleged construction defects or cause the alleged construction defects to be repaired by another contractor.
The PDA is complex and a full summary of the statute is beyond the scope of this article. It is sufficient to note that compliance with the PDA is a prerequisite to filing suit, and that failure to comply can result in dismissal of any lawsuit. FBN
By Jason Bliss and Trevor Kortsen
For additional information or to schedule an appointment with an attorney, visit Aspey Watkins Diesel’s website at awdlaw.com or call 928-774-1478. Aspey Watkins & Diesel’s Flagstaff office is located at 123 N. San Francisco Street on the third floor in the AWD Building next to Heritage Square.
Jason Bliss is a partner at Aspey Watkins & Diesel where he litigates construction and personal injury disputes. Trevor Kortsen is an associate at Aspey Watkins & Diesel where he handles construction disputes as well as estate planning matters.
Thanks for sharing this.