Arizona recently amended its Purchaser Dwelling Action statute to, among other things, involve all contractors in the process, establish the parties’ burdens of proof, add an attorney fees provision, establish procedural requirements and limit a subcontractor’s indemnity exposure. The governor signed the bill—2019 Ariz. SB 1271—on April 10, 2019, and the changes go into effect and apply, retroactively “to from and after June 30, 2019.” The following discussion details some of the changes to the law.
Notice to Contractors and Proportional Liability
Under the revised law, a “Seller” who receives notice of a Purchaser Dwelling Action (PDA) from a residential dwelling purchaser pursuant to A.R.S. § 12-1363* has to promptly forward the notice to all construction professionals—i.e. architects, contractors, subcontractors, etc., as defined in A.R.S. § 12-1361(5)—that the Seller reasonably believes are responsible for an alleged construction defect. A.R.S. § 12-1363(A). Sellers can deliver the notice by electronic means. Once construction professionals are placed on notice, they have the same right to inspect, test and repair the property as the Seller originally placed on notice. A.R.S. § 12-1362(B), (C).
To the extent that the matter ultimately goes to suit, A.R.S. § 12-1632(D) dictates that, subject to Arizona Rules of Court, construction professionals “shall be joined as third-party defendants.” To establish liability, the purchaser has the burden of proving the existence of a construction defect and the amount of damages. Thereafter, the trier of fact determines each defendant’s or third-party defendant’s relative degree of fault and allocates the pro rata share of liability to each based on their relative degree of fault. However, the seller, not the purchaser, has the burden of proving the pro rata share of liability for any third-party defendant. A.R.S. § 12-1632(D).