South Carolina’s Right to Cure Act
I often tell clients that preparing to file a lawsuit is like preparing to fly a plane – it is important to be deliberate and thorough as you choose your parties, prepare your Complaint, and meet the other elements necessary to ensure that you are set up for success. This is particularly true in the context of a lawsuit based on construction defects in a residence. Here, you must comply with the South Carolina Notice and Opportunity to Cure Construction Dwelling Defects Act, found at S.C. Code Ann. 40-59-810 – 840, more commonly referred to as the Right to Cure Act.
A. What is the Right to Cure Act?
The Right to Cure Act is a product of the South Carolina Legislature, which decided that some construction lawsuits might be avoided if the homeowner was first required to give the contractor notice of the alleged defect and to give that contractor the right to fix, or “cure” the problem.
In general, this is a good idea. A lawsuit is an extreme measure and provides hardships for the defendant and the plaintiff as well. If a matter can be worked out without the need for litigation – whether it’s a construction lawsuit or any other – then that’s always preferable. And this sort of mechanism is particularly useful in the construction context, which involves complexities of building practices, codes, and installation instructions and involves collaboration between trades. I’ve had situations where I intended to include a particular subcontractor as a defendant in a lawsuit, but after that subcontractor responded to my Right to Cure letter and explained the situation, I became convinced that the defect was not the fault of that sub, but another. I therefore did not include the responding sub in the lawsuit.
The steps required by the Act can also lead to some worthwhile information. For example, a contractor or subcontractor responding to a Cure letter may inform you that they sub-ed the work out to others, who should then be named as defendants. This saves the plaintiff time, by being able to closely group the RTC letters, rather than sending one batch after another, with 30-day periods for each.
B. What Does the Right to Cure Act Apply To?
The Right to Cure Act applies to any civil lawsuit or arbitration proceeding that (1) relates to a single-family home or a multi-family dwelling (of a certain size) and (2) is based on alleged defects relating to the design, construction, condition, or sale of or remodel of a dwelling.
C. How Does the Right to Cure Act Work?
In short, you have to provide notice to the offending party (your potential defendant) before you file suit. Importantly, your notice should be done in a specific manner. The notice must be in writing, sent by Certified Mail, to the last known address of the party.
The letter must (1) state that the claimant is asserting a construction defect; (2) provide a description of the claim or claims in enough detail so that the contractor can determine the general nature of the defect; and (3) describe the results of the defect (such as water damage). The letter should then state that the contractor or subcontractor has thirty days from the date of service to (1) inspect, (2) offer to remedy, (3) offer to settle, or (4) deny the claim. The homeowner must provide reasonable access for an inspection and the parties will agree on a time.
Of course, it is imperative that you keep a copy of the letter and proof of service for the event that the party does not respond.
D. What If I Don’t Comply?
While the law requires that the notice be sent before filing suit, in most cases, there isn’t a severe penalty for non-compliance. Section 40-59-830 provides that, in this situation, the defendant may file a motion with the Court making note of the non-compliance and the Court will then stay the action until the plaintiff has complied.
However, you can run into trouble if you repair the defective work before complying with the Act. One judge – former Chief Justice Jean Toal, acting as a trial judge – held that when a party made the repairs without first complying, the party waived any claims relating to that work. The reasoning was that by making the repairs, the plaintiff made it impossible to comply with the Act. Thus far, this is only the holding of one trial court judge and is therefore not binding on other courts, but this is a landmine to be avoided.
E. What If I Don’t Want the Contractor to Try to Fix the Problem?
Quite understandably, many of my clients are appalled by the idea of allowing the contractor to come in to try to fix the defective issue. After all, the contractor is the one who screwed up the issue to begin with – why would a homeowner want to allow him or her back to do more work on the home? How could you have any confidence in that work?
In these situations, I note that the Act does not specify how the “fix” must be done or what the terms are on which an agreement can be reached. Again, I think this is sound policy, as the homeowner should have the right to have a say in whether and how repairs are to be done. I often specify in my RTC letter that any repairs are to be expressly agreed-upon in writing beforehand and that repairs must include any work necessary to restore the home to its prior condition, such as replacement of drywall and repainting, where appropriate. I further require that the work be overseen by a third-party of our choosing, at the contractor’s expense. These conditions allow for the contractor to do the work while at the same time ensuring that my client has confidence in the repair.
F. Special Considerations
One odd issue I ran into involved a mechanic’s lien. I represented homeowners who had an addition done to their home. The 90-day window from the last work had long passed when we sent the Right to Cure letter. The contractor inspected and – despite my warning regarding the mech lien period – filed the mech lien against my clients. I filed to dissolve the lien and, at the hearing, opposing counsel argued that the “work” performed within the 90-day window was when the contractor came out and inspected the home pursuant to the Right to Cure Act. I was surprised that opposing counsel had the nerve to make that argument and I was shocked when the trial judge bought it. But once a judge rules in a matter like this, even if he or she is dead wrong, it’s hard to undo.
The Right to Cure Act is often seen as a burden to plaintiffs, but it has its advantages. Be sure to comply and advise your clients of the Act in your first meeting, but use the Act to your benefit as best you can.