Home warranty dispute resolution process

For help with questions about the home warranty dispute resolution process, send an email message to ENE.DLI@state.mn.us

Home warranty dispute resolution process forms (PDFs)

Application to initiate dispute resolution process

Application to become a "neutral"

Background: 2010 legislature creates early neutral evaluation process

In its 2010 session, the Minnesota legislature enacted legislation (view Session Laws Chapter 343) creating a home warranty dispute resolution process homeowners and builders or home improvement contractors are required to employ before a homeowner warranty dispute may proceed to litigation pursuant to Minn. Stat. 327A (unless the parties agree to use an alternative dispute resolution mechanism). The goal of this legislation is to encourage and facilitate settlement of these disputes and limit the costs to all parties by providing an unbiased and nonbinding evaluation of the relative merits of the parties' positions. The dispute resolution process is administered by DLI, and applies to home warranty claims in which the builder was given notice of a claim on or after Jan. 1, 2011.

In home warranty disputes, the new dispute resolution process -- or an alternative dispute resolution process -- is required. With one exception ...

The home warranty dispute resolution process outlined here -- or an alternative resolution method -- is only required in cases where the builder or home improvement contractor has complied with all of the notice and opportunity to repair (NOR) provisions of the warranty law. If the builder or home improvement contractor fails to comply with the NOR requirements regarding inspection and offer to repair, the homeowner is not obligated to use a dispute resolution process before commencing litigation.

Dispute resolution process doesn't diminish other legal options

While the home warranty dispute resolution process is underway it "stops the clock" on any time limits or statutes of limitations for an action based on a breach of the warranty law as well as any other action in contract, tort, or other law for any injury to real or personal property or bodily injury or wrongful death arising out of the alleged loss or damage. It begins when the homeowner mails a notice of claimed defect to the builder or home improvement contractor, and extends for 180 days or until the completion of the dispute resolution process, whichever is later.

The parties are free to agree on an alternative dispute resolution process in lieu of the process outlined by DLI. If the parties do agree to an alternative process, they are required to notify DLI of their decision in writing, and provide a description of the process they selected no later than the date the parties are required to select a neutral.

The timeline

The basic timeline for the home warranty dispute resolution process begins when the homeowner rejects the builder or home improvement contractor's offer to repair (though a builder can also initiate the dispute resolution process).

The party initiating the process submits a completed application to DLI.
DLI then selects three names at random from the roster of individuals who have been approved to act as neutrals (neutral application form). DLI will send a disclosure form to each of the three potential neutrals, asking them to disclose any potential conflicts of interest that they may have with the parties.
Once those responses have been received, DLI will forward to the parties copies of these disclosure forms and the application forms that each of the three potential neutrals submitted to DLI in order to be placed on the roster of neutrals. By law, the names of the three potential neutrals must be provided to the parties by DLI within 10 days. The information submitted to DLI by the neutrals will include a summary of their education, experience, training and credentials, as well as the hourly rate that the neutral shall charge (the costs of the dispute resolution process are split by the parties, unless otherwise agreed, and are to be paid directly to the neutral).
Within five business days of their receipt of the neutrals' information, the parties must select the neutral. If the parties cannot mutually agree on a neutral, the builder or home improvement contractor strikes one name from the list of three, and then the homeowner strikes a name. The remaining person is then assigned to be the neutral for that case and the parties are required to contact the neutral to inform them of their selection, and to provide the name to DLI.
Once the neutral has been selected, he or she shall convene a mandatory conference, which must take place within 30 days of the selection of the neutral, unless the parties mutually agree to hold the conference at a later date. At least seven days prior to the conference, the parties shall submit to the neutral all of the information and documentation that they feel the neutral will need to understand the dispute, including the scope of the alleged damages and any estimates of repair costs. Prior to the conference, the parties are free to communicate with the neutral to express their expectations and ideas for a successful outcome. Also, the law limits the number of hours the neutral can bill the parties to six, unless the parties mutually agree to allow the neutral to spend more time on the case, understanding that the fees charged by the neutral are to be split between the parties, unless otherwise agreed.
The conference may be held at the home that is the subject of the dispute, or it may be held at any other site agreeable to the parties. Each party must remit payment of the $25 administrative fee to the neutral at the time of the conference. The neutral must then submit these fees to DLI within 10 days of the conference.

The findings and the neutral's recommendations

After reviewing the information and documentation provided by the parties and after consulting with the parties at the conference, the neutral shall issue to the parties a nonbinding, written determination, which must include, to the extent possible, findings and recommendations on the scope and amount of repairs necessary, if any. This written determination must be mailed to the parties within 10 days of the conference.

The written determination of the neutral and all communications relating to the home owner warranty dispute process other than those between a party and DLI, are deemed confidential settlement communications pursuant to Rule 408 of the Minnesota Rules of Evidence. Further, no party may use the written offer of repair provided by the builder or home improvement contractor, a counteroffer to repair, or the neutral's written determination as evidence of liability in subsequent litigation between the parties, and the neutral may not be called to testify regarding the dispute resolution process proceedings.

Help with questions

For help with questions about the home warranty dispute resolution process, send an email message to ENE.DLI@state.mn.us