RCW 64.35.110 — No duty to offer a qualified warranty—Insurer sets terms—Scope of inquiry—Conditions.

1. (1) No insurer is bound to offer a qualified warranty to any person. Except as specifically set forth in this section, the terms of any qualified warranty are set in the sole discretion of the qualified insurer. Without limiting the generality of this subsection, a qualified insurer may make inquiries about the applicant as follows:

   1. (a) Does the applicant have the financial resources to undertake the construction of the number of units being proposed by the applicant's business plan for the following twelve months;
   2. (b) Does the applicant and its directors, officers, employees, and consultants possess the necessary technical expertise to adequately perform their individual functions with respect to their proposed role in the construction and sale of units;
   3. (c) Does the applicant and its directors and officers have sufficient experience in business management to properly manage the unit construction process;
   4. (d) Does the applicant and its directors, officers, and employees have sufficient practical experience to undertake the proposed unit construction;
   5. (e) Does the past conduct of the applicant and its directors, officers, employees, and consultants provide a reasonable indication of good business practices, and reasonable grounds for belief that its undertakings will be carried on in accordance with all legal requirements; and
   6. (f) Is the applicant reasonably able to provide, or to cause to be provided, after-sale customer service for the units to be constructed.
2. (2) A qualified insurer may charge a fee to make the inquiries permitted by subsection (1) of this section.

3. (3) Before approving a qualified warranty for a condominium, a qualified insurer may make such inquiries and impose such conditions as it deems appropriate in its sole discretion, including without limitation the following:

   1. (a) To determine if the applicant has the necessary capitalization or financing in place, including any reasonable contingency reserves, to undertake construction of the proposed unit;
   2. (b) To determine if the applicant or, in the case of a corporation, its directors, officers, employees, and consultants possess reasonable technical expertise to construct the proposed unit, including specific technical knowledge or expertise in any building systems, construction methods, products, treatments, technologies, and testing and inspection methods proposed to be employed;
   3. (c) To determine if the applicant or, in the case of a corporation, its directors, officers, employees, and consultants have sufficient practical experience in the specific types of construction to undertake construction of the proposed unit;
   4. (d) To determine if the applicant has sufficient personnel and other resources to adequately undertake the construction of the proposed unit in addition to other units which the applicant may have under construction or is currently marketing;

   5. (e) To determine if:

      1. (i) The applicant is proposing to engage a general contractor to undertake all or a significant portion of the construction of the proposed unit; and
      2. (ii) The general contractor meets the criteria set out in this section;
   6. (f) Requiring that a declarant provide security in a form suitable to the qualified insurer;
   7. (g) Establishing or requiring compliance with specific construction standards for the unit;
   8. (h) Restricting the applicant from constructing some types of units or using some types of construction or systems;
   9. (i) Requiring the use of specific types of systems, consultants, or personnel for the construction;
   10. (j) Requiring an independent review of the unit building plans or consultants' reports or any part thereof;
   11. (k) Requiring third-party verification or certification of the construction of the unit or any part thereof;
   12. (l) Providing for inspection of the unit or any part thereof during construction;
   13. (m) Requiring ongoing monitoring of the unit, or one or more of its components, following completion of construction;
   14. (n) Requiring that the declarant or any of the design professionals, engineering professionals, consultants, general contractors, or subcontractors maintain minimum levels of insurance, bonding, or other security naming the potential owners and qualified insurer as loss payees or beneficiaries of the insurance, bonding, or security to the extent possible;
   15. (o) Requiring that the declarant provide a list of all design professionals and other consultants who are involved in the design or construction inspection, or both, of the unit;
   16. (p) Requiring that the declarant provide a list of trades employed in the construction of the unit, and requiring evidence of their current trade's certification, if applicable.

[ 2004 c 201 s 1901.]