Home warranty dispute resolution process
For help with questions about the home warranty dispute resolution process, contact us at ENE.DLI@state.mn.us
What is the home warranty dispute resolution process (HWDRP)?
Under Minnesota’s home warranty law, a homeowner’s recourse to address a warranty dispute is a civil lawsuit. However, before a lawsuit can be filed, homeowners involved in a warranty dispute with a builder or home improvement contractor may have to apply to use this home warranty dispute process (or an approved alternate process) or wait 60 days before a claim can escalate to litigation. The goal of the HWDRP is to encourage settlement of disputes and limit costs by using an unbiased and nonbinding evaluation of the dispute, though the HWDRP does have financial costs and its outcome is not binding on the homeowner or the builder or home improvement contractor.
In home-warranty disputes, the dispute resolution process may be 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, the homeowner cannot pursue a lawsuit until they have either applied to use the HWDP or waited 60 days from the date the builder provides a written offer of repair. If the builder or home improvement contractor fails to comply with the NOR requirements (fails to provide a written offer of repair, for example) the homeowner is free to pursue litigation through the courts immediately.
Builder not required to participate
Whether or not the builder or home improvement contractor has complied with the NOR requirements of the warranty law, they are not required to participate in the HWDRP. The consequence of not participating is that the homeowner is free to begin litigation immediately.
In cases where the cost of making the desired repairs falls within the $15,000 conciliation court threshold, the cost of the HWDRP may cause the parties to decide not to participate and allow the matter to go to court instead.
Dispute resolution process doesn't diminish other legal options
While the HWDRP 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 HWDRP, whichever is later.
The parties are free to agree on an alternative dispute resolution process instead of the one described here. If the parties do agree to an alternative process, they are required to notify us of their decision and provide a description of the process they selected no later than the date the parties are required to select a neutral.
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 us.
We select three names at random from the roster of individuals who have been approved to act as neutrals (neutral application form). We will send a disclosure form to each of the three selections, asking them to disclose any potential conflicts of interest that they may have with the parties.
Within 10 days we will forward to the parties copies of these disclosure forms and the application forms that each of the three potential neutrals submitted to be placed on the roster of neutrals. The information submitted to us by the neutrals includes 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 us.
Once the neutral has been selected, within 30 days he or she schedules a mandatory conference (unless the parties mutually agree to hold the conference at a later date). At least seven days prior to the conference, the parties must submit to the neutral all of the information and documentation that they feel the neutral will need to understand the dispute. Prior to the conference, the parties are free to communicate with the neutral to express their expectations and ideas for a successful outcome. The neutral can bill the parties for no more than six hours of work, 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 pay a $25 administrative fee to the neutral at the time of the conference who then submits these fees to us 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 issues a nonbinding, written determination, that includes the 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 us, are confidential. 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 future litigation between the parties, and the neutral may not be called to testify regarding the dispute resolution process proceedings.