New Law Dramatically Affects Missouri Home Builder Liabilities

New Law Dramatically Affects Missouri Home Builder Liabilities

New law dramatically affects Missouri home builder liabilities

Missouri’s governor recently signed Senate Bill 591 (SB591), which will go into effect August 28, 2020. SB591 is an extremely important amendment to the Missouri Merchandising Practices Act (MMPA) that can have huge impacts on home builders in Missouri. Today, we’ll outline why SB591 matters to builders like you, how you can protect yourself against additional legal exposure, and what 2-10 Home Buyers Warranty (2-10 HBW) is doing to guide Missouri home builders through this monumental change.

Why SB591 matters to Missouri home builders

Prior to SB591’s passage, the MMPA was a source of significant litigation risks for Missouri home builders. In many cases, the MMPA exposed Missouri home builders to punitive damages and attorney’s fees in cases where homeowners claimed that their newly constructed home had a defect. This exposure even existed among builders who offered express written warranties.

In short, the MMPA allowed homeowners to sue builders for punitive damages and attorney’s fees over even superficial defects. Under the MMPA, such claims could qualify as misrepresenting the product (i.e., house) the builder sold. This often forced builders to agree to large, financially burdensome settlements, based on the MMPA’s low standard of proof. This was a big financial threat to builders, who often had little recourse to challenge the claims.

SB591 narrows the scope of the MMPA as it relates to home builders. It gives home builders a clearer path to eliminating this expensive exposure. But as a Missouri home builder, you’ll need to take two distinct steps to protect yourself.

How Missouri home builders can protect themselves against additional exposure

There are two distinct steps you must take to protect yourself under SB591, according to Section 407.020.2(3) of the bill.

  1. Include precise and specific disclaimer language in your sales contracts.

AND

  1. Provide an express written warranty.

In terms of the first step, you should talk to your local legal counsel as soon as possible about updating the language in your sales contracts. If you do not have counsel, please contact us and we can provide recommendations for local representation.

Again, you MUST take both steps to protect yourself under SB591. If you don’t, you may expose your company to litigation under the MMPA, which can be prohibitively expensive and difficult to defend against.

What 2-10 HBW is doing to guide Missouri home builders through this change

2-10 HBW is the leading provider of third-party express warranties for new-construction homes. We are working to make sure that all Missouri home builders can get the protection that SB591 allows.

We urge you to contact us to help you take advantage of the protections these changes to the law provide. 2-10 HBW has a local warranty representative, located in the Greater St. Louis area, who is well versed in the Missouri building climate and available to help. We are here and ready to work with you to help personalize your coverage and minimize your risk under SB591.

It’s extremely important to reiterate that unless you provide an express warranty and precise sales-contract language, you may be exposing yourself to additional litigation risks. A third-party express written warranty from 2-10 HBW meets one of the two critical components of protecting yourself from litigation under the MMPA.

As our current Builder Members know, an express written warranty from 2-10 HBW provides a ton of protection. SB591 is another example of the power a third-party warranty from 2-10 HBW has to protect you.

On top of the protections a third-party warranty from 2-10 HBW provides under SB591, you get additional benefits. For example, a third-party warranty gives you valuable third-party validation of your work. It sets expectations between you and your buyers, which helps everyone know who’s responsible for what. And it can protect your bottom line if unexpected defects ever occur.

Conclusion

The passage of SB591 is a good thing for Missouri home builders but only if you take two important steps.

  1. Contacting your local counsel about including precise and specific disclaimer language in your sales contracts.

AND

  1. Providing an express written warranty.

SB591 becomes effective on August 28, 2020. Please contact us for guidance on how a third-party warranty from 2-10 HBW can help you take advantage of the protections SB591 provides.

Read the Full Bill here

Read the Lexology article here

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Disclaimer: 2-10 HBW is not a law firm and is not providing legal advice. The information provided in this article is subject to the terms and conditions of this website, and is only intended to be used for informational purposes and not for the purpose of providing legal advice. You should contact your attorney to obtain advice with respect to any particular issue or problem. Use of and access to this information or any of the links contained herein does not create any obligation or relationship between you and 2-10 HBW.