California Construction Defect Law: Remodeling Rules Explained

California's construction defect laws can be confusing, especially for new homeowners. The state's construction defect statute of limitations establishes time limits for filing a lawsuit to protect and preserve construction defect claims. One of the primary statutes affecting construction defect claims is the Right to Repair Act (SB800), which was passed in 2002 and came into effect on January 1, 2003. This act applies to new residential construction and sets out a pre-litigation process that must be followed before filing a lawsuit. It is important to note that the act does not apply to remodels or other construction improvements that are less than a complete new home construction. Therefore, California's construction defect law, specifically the Right to Repair Act, does not apply to remodeling projects. However, other legal theories and statutes may apply to remodeling projects depending on the specific circumstances.

What is SB800?

SB800, also known as the Right to Repair Act, is a law that establishes a set of standards for residential construction in California. It was passed in 2002 and came into effect on January 1, 2003. The purpose of the law is to reduce the number of lawsuits for construction defects by providing homeowners with a pre-litigation process to resolve issues.

SB800 applies to new residential construction and not to commercial construction, condominium conversions, remodels, additions, or other construction improvements. It covers defects in virtually all aspects of a residential building, with a focus on water intrusion issues and the use of the structure by its inhabitants.

The pre-litigation process under SB800 requires homeowners to first submit a written claim to the builder's designated agent. The builder then has a set period to acknowledge the claim, conduct inspections, and offer to repair the defects. If the builder fails to adhere to the process or does not make an offer to repair, the homeowner is released from the pre-litigation requirements and can proceed with filing a lawsuit.

The law also sets out specific statutes of limitations for different types of defects, ranging from one to ten years. These time limits apply to defects that have not caused damage to other parts of the residence. For defects that have caused independent damage, homeowners are free to sue without following the pre-litigation process.

SB800 also provides certain affirmative defences for builders, such as unforeseen acts of nature, the homeowner's failure to minimise damages, and defects caused by alterations or misuse. Additionally, builders can opt out of the SB800 pre-litigation procedures, but they must include this in the sales agreement.

What is the Calderon Act?

The Calderon Act, also known as the Calderon Requirements, was the existing law for resolving construction defect claims in California before the introduction of SB 800 (or the Right to Repair Act) in 2002. The Calderon Act was in effect from 1995 until July 1, 2011, and applied to construction defect claims by homeowners against builders, developers, or original sellers.

The Calderon Act did not allow developers the opportunity to correct alleged defective workmanship before the commencement of litigation. The Act required that before a common interest association filed a construction defect lawsuit, they must serve a "Notice of Commencement of Legal Proceedings" to the developer or general contractor. This notice must include:

• The name and location of the project
• An initial list of defects sufficient to inform the respondent of the general nature of the defects
• A description of the results of the defects, if known
• A summary of the results of a survey or questionnaire distributed to homeowners to determine the nature and extent of defects
• A summary of the results of testing conducted to determine the nature and extent of defects, or the actual test results, if testing has been conducted

Upon receiving the notice, the developer/builder could request a meeting with the board of directors of the association within 25 days. The Act also specified the rights and requirements of a homeowner to bring an action for construction defects, including applicable standards for home construction, the statute of limitations, the burden of proof, the damages recoverable, and a detailed pre-litigation procedure.

The Calderon Act was replaced by SB 800, which gives developers the right to repair alleged defective work before the commencement of litigation.

What are the pre-litigation procedures?

The pre-litigation procedures for construction defects in California are outlined in SB800, also known as the Right to Repair Act. This law was enacted to give developers and builders the opportunity to correct alleged defective workmanship before legal action is taken. The pre-litigation procedures are as follows:

Firstly, the homeowner must contact the home builder and report the construction defect. The builder then has 14 days to acknowledge the claim and a further 14 days to inspect and test the claimed defect. The builder can then conduct a second inspection within 40 days.

Within 30 days of the last inspection, the builder must make an offer to repair the defect, including a reasonable completion date and compensation for any damages. The homeowner then has 30 days to either accept or deny the offer for repair. If the homeowner denies the offer, they may request repairs from a different contractor, and the builder is entitled to an additional inspection.

The builder's offer to repair must also be accompanied by an offer to mediate the dispute, with mediation taking place within 15 days and limited to four hours unless otherwise agreed upon. If the builder fails to make an offer to repair or does not comply with the specified time frames, the homeowner is released from the pre-litigation requirements and may proceed with filing a lawsuit.

It is important to note that these pre-litigation procedures only apply to new residential homes purchased after January 1, 2003. Additionally, builders are required to provide homeowners with details of the California new home warranty and pre-litigation procedures at the time of the contract. If the builder fails to do so or opts out of the process, the homeowner is not obligated to follow the pre-litigation procedures before filing a lawsuit.

What are the statute of limitations?

The statute of limitations refers to the laws that establish specific time limits within which one must file a lawsuit to protect and preserve construction defect claims. In California, there are overlapping statutes of limitations that must be addressed when evaluating the deadlines for filing a lawsuit for construction defects.

The Right to Repair Act, also known as SB800, is one of the principal statutes affecting construction defect claims in California. The Act applies to new residential construction and provides an overall limitations period of 10 years. However, there are specific limitations periods for certain types of defects. For example, there is a four-year limitation period for plumbing and sewer systems, electrical systems, and exterior pathways from the close of escrow. It's important to note that the builder must be given the "right to repair" before undertaking any legal action.

Additionally, there are other statutes of limitations that apply to construction defect claims in California, including:

• A four-year statute of limitations for injury to property, personal injury, or wrongful death caused by a defect that is "patent" or visible upon reasonable inspection.
• A three-year statute of limitations for injury to real property, which is the shortest and, therefore, requires prompt attention.
• A four-year statute of limitations for breach of contract in writing.

It's worth noting that the doctrines of equitable tolling and equitable estoppel can create exceptions to the statutes of limitations. Equitable tolling determines when the statute of limitations is considered to have commenced, while equitable estoppel allows for the filing of a claim outside the statute of limitations when the homeowner can show that the builder's actions led to the delay.

What are the remedies for construction defect claims?

The remedies available for California construction defect claims vary depending on the type of cause of action and the circumstances of the case. Courts can grant remedies to the homeowner that compensate them for any losses directly or indirectly caused by the construction defect. Here are some of the common remedies granted by California courts in construction defect cases:

• Cost of repairs: The home builder will likely be ordered to cover the cost of any repairs necessary whether or not they complete such repairs themselves.
• Loss of market value: When a home's value is harmed by a failure to follow a design, specifications, or material standards, the builder could be ordered to pay the homeowner the amount of lost market value.
• Relocation expenses: A builder may be ordered to pay relocation expenses if the home's construction is such that it cannot be reasonably repaired in a reasonable amount of time.
• Storage and temporary housing: Builders may be required to cover expenses for temporary shelter and storage if the home cannot be occupied during repairs.
• Cost of paid experts: If the home builder denies a construction defect claim, it is necessary for the homeowner and their attorney to use paid experts to verify the claim's validity. Most of the time, builders will be required to cover these costs, as well as attorney fees.
• Loss of income: Loss of income due to being unable to use a home as intended can result from construction defects.

In short, any costs or fees incurred as a result of a construction defect of any type can be recouped if the builder is found to be in violation of the California new home warranty laws.

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