Attorney and expert witness fee awards. Perhaps the most significant amendment is the repeal of a section that allowed for an award of attorneys' and experts' fees to the prevailing party (Ariz. Rev. Stat. Ann. § 12-1364). Contract law and existing Arizona law allow awarding attorneys' fees in limited circumstances. The recovery of expert witness fees is generally prohibited in Arizona for construction defect claims. The effect of this repeal may financially prevent home buyers from litigating otherwise meritorious claims.

Material defects. As amended, the Act only allows claims for a "material deficiency" that violates applicable building codes, results from the use of defective materials, or fails to "adhere to generally accepted workmanship standards in the community." Purchasers can no longer commence litigation over minor defects.

Right to repair or replace. The revised Act allows the seller the right, but not the obligation, to repair or replace any defective construction. In a change from the original Act, the purchaser may not reject the seller's offer to repair or replace. The seller may also choose to repair or replace a portion of the defective construction and offer compensation for the balance.

Monetary compensation. The seller may elect to offer the purchaser monetary compensation, which the purchaser may refuse. If an offer of monetary compensation or other consideration is accepted by the purchaser, the parties may negotiate a release.

Dismissal of claims. If the purchaser does not comply with the terms of the Act, a court must dismiss the claim.

Homeowner association obligations. The revised Act no longer permits a homeowner association's notice to rely on a representative sample of defects in the unit. The association must instead provide the same level of detail as an individual homeowner. If a homeowner's association brings the claim, it must disclose to its members the expected litigation costs and the anticipated impact on home values before filing the suit. The association must also demonstrate compliance with its community documents before filing the suit.

Tolling of the statute or limitations and statute of repose. The statute of limitations and statute of repose for claims against all construction professionals involved is tolled until 30 days after substantial completion of repairs.

Introduction as evidence. In contrast to the original Act, the parties' conduct and notices may be introduced as evidence in the purchaser’s dwelling action.

Sellers and construction professionals. The definition of "seller" now includes "construction professionals," defined as "an architect, contractor, subcontractor, developer, builder, builder vendor, supplier, engineer or inspector performing or furnishing the design, supervision, inspection, construction or observation of the construction of any improvement to real property."

Construction defect. The definition of "construction defect" contains a materiality provision that prevents claims for minor defects. Claims are limited to those resulting from construction code violations, defective materials or equipment or failure to adhere to generally accepted workmanship standards in the community.

Material deficiency. This new definition requires that a defect actually impair the structural integrity, functionality or appearance of the dwelling or be likely to do so in the future if not repaired or replaced.

Initial notice. Before filing a claim, a purchaser must give the seller written notice detailing the basis of the action. The purchaser must then allow the seller to inspect the construction defect within ten days.

Seller response. After receiving the initial notice, the seller has 60 days to send a good faith written response specifying its intent to:

Preventing suits based on minor defects and limiting claims to material defects.

Limiting awards of attorneys' fees and experts' fees, which may prevent purchasers from bringing suits for low cost defects.

Obligating the purchaser to accept the seller's offer to repair or replace defective construction.