Pa. Gov. Rendell Vetoes Homebuilder Damages Cap Deemed Unconstitutional

March 19, 2006

Pennsylvania Gov. Ed Rendell has vetoed legislation that would have capped the damage award homebuilders must pay for faulty work and regulated the ability of property owners to sue.

The legislation had been deemed unconstitutional by Attorney General Tom Corbett, a Republican whose opinion the Democratic governor had sought on the matter.

Rendell said any legislation geared to help homebuilders lower their liability insurance costs should also require them to register with the state and establish a victim’s compensation fund.

Supporters said the legislation was intended to help resolve disputes between homeowners and builders outside of court. But Rendell contended that the bill would have driven up both sides’ legal and insurance costs and, ultimately, the cost of a new home.

Besides, he said, homebuilders can draw up contracts that afford the same, if not greater, protection, such as mandatory arbitration.

The legislation passed the House and Senate last month and was supported by a state association of home builders. However, Philadelphia’s consumer affairs director, Lance Haver, said it left out anything that benefited consumers, while making it harder for people to correct and gain compensation for shoddy workmanship.

Corbett said the legislation would have violated a constitutional provision that bars the Legislature from limiting civil damages that a victim may recover. In addition, the legislation possibly trespassed on the authority of the state Supreme Court to regulate the legal process, Corbett said.

One section of the bill would limit a damage award to the cost of the repairs if the property owner rejects a “reasonable” offer by the contractor or does not allow the contractor to repair the problem. Another requires the property owner to notify contractors 75 days before suing.

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