Schwarzenegger Limits Construction Defects

Governor Signs Bill to Limit Construction Defects

May 12th, 2010

by Mandy Jackson, Staff Writer

Homebuilders are much more optimistic about condominium construction now that Gov. [Arnold Schwarzenegger] has signed legislation that puts some constraints on construction defect lawsuits.

On Sept. 20, the governor signed SB 800, which was passed unanimously by both the state Senate and Assembly this summer.

Paul Tryon, executive vice president of the Building Industry Association of San Diego County, said, “It provides some much-needed clarity for builders and will improve the communication between homeowner and builder during times of dispute.”

Builders have contended California’s construction defect laws needed reform because they permitted a multitude of lawsuits, which have driven insurers out of California, increased liability insurance premiums and decreased condo construction.

In San Diego County, where the median price of a home is more than $300,000, condominiums are considered entry-level housing for first-time homebuyers.

The new law specifies expectations for how homes will be built and perform, and sets timelines for builders to respond to homeowners’ complaints before a lawsuit can be filed.

Homeowners or homeowners associations have to file a complaint with the builder in writing before filing a lawsuit. The builder has 60 days to inspect the homes and propose a plan to repair the damage or make a cash offer. Homeowners have 30 days to accept the plan.

Repairs must begin within 14 days of the homeowners’ acceptance of a plan and be completed within 120 days.

Tryon said the law addresses the functionality of homes. It doesn’t outline how homes should be built, but outlines how they should perform. For example, the law says water should not be able to get through or around doors, windows, roofs and other parts of the house.

The statute of limitations for construction defect claims remains at 10 years after the close of escrow on a new home, unless otherwise indicated by the law. For instance, there is a four-year limitation on plumbing and sewer issues.

Additionally, the law holds homeowners responsible for regular maintenance outlined by homebuilders and product manufacturers. They can still take unresolved complaints to court, but the resolution process includes opportunities for mediation.