If you have bought a brand new home, you probably like knowing that everything that comes with it is, well, new, and that all of the materials it was built with are new too. But what happens when a builder has not thought everything through? In California, there is only one cause of action available to a homebuyer who discovers a construction defect in their new home: The California Builders’ “Right to Repair Act” (SB800).
Picture this: it’s your first Saturday morning sitting outside on the balcony of your brand new home. You spill your coffee.
You move your foot away to avoid getting burned, but raise an eyebrow when you realize that the slant of the balcony is drawing the liquid towards you…and your house. You ponder what that means when it rains. It makes you angry. You look up at the bright blue sky and yell, “I’ll sue!” All of your new neighbors stand witness on their balconies. They will never forget the first Saturday morning that you spent in your brand new home too.
The truth is, under SB800, you probably couldn’t sue immediately but getting in contact with a real estate attorney could prove valuable. SB800 gives a builder the right to inspect any alleged defect and offer to make repairs, if necessary. This pre-litigation process is usually unavoidable—even if a defect has caused actual damage.
If SB800 reminds you of the model number on your vacuum cleaner, you are not far off—the law was enacted, in part, to minimize the proliferation of construction litigation. What that really means is, the Act limits the claims that homebuyers can bring against builders. A homebuyer can only allege violations of the Act’s statutory construction standards (listed here). Traditional common law claims for residential construction defects, like negligence and strict liability, which did not require right to repair, have been absorbed by SB800. Significantly, claims for breach of contract, fraud, and personal injury still remain beyond SB800’s grasp, and may be pursued separately.
Since SB800 sucks up almost all residential construction defect claims, it is important to understand the Act’s pre-litigation repair process. Let’s go back to your slanted balcony.
The next Saturday, it rains. You notice water stains on the interior walls, below the balcony. You decide to take action. Under SB800, your first obligation is to provide the builder with written notice of the defect. Calling customer service to complain doesn’t count.
The builder has 14 days to acknowledge receipt of your claim. If the builder does not respond, you may move forward with filing a lawsuit. If the company does respond, it has 14 days from the day it acknowledges receiving notice of your claim to conduct an inspection. If, within 3 days of the preliminary inspection, the company makes a request for a second inspection, this must be performed within 40 days. If the builder fails to make an inspection within the time specified, you may file a lawsuit.
Any offer from the builder to repair the violation should arrive within 30 days from the last inspection or testing.
You would have 30 days to accept the repair plan, or request repairs by a different contractor. A builder must begin repairs within 14 days of your acceptance. Every effort should be made by the builder to complete the repairs within 120 days.
Included in its offer to repair a defect, the builder is also required to offer mediation to help resolve the dispute. If you choose mediation, a 4-hour session—paid for by the builder—must be scheduled within 15 days of your request.
If the builder does not complete repairs in the agreed upon time period, or if the builder’s repairs do not correct the violation, you may file a lawsuit. Your claims will still be limited to SB800’s statutory standards of construction and statute of limitations though.
Most statutory claims available under SB800 adhere to individual statute of limitations. Some run as short as a year from the close of escrow. It ranges. There’s 2 years for defective wood posts, 4 years for defective steel fences and 5 years for painting claims (all statute of limitations are listed with the Act’s construction standards). A minimum one-year express warranty covers the fit and finish of cabinets, mirrors, flooring, interior and exterior walls, countertops, paint finishes and trim.
Claims without specific windows run 10 years. If the 10-year statute of limitations expires during the pre-litigation process, an extension of 100 days will be granted following the completion of repairs. An extension of the 10-year statute of limitations will also be provided in the event a mediation takes place after the completion of repairs.
If a homebuyer does not go through the pre-litigation process before filing a complaint, the builder will likely succeed in getting the case stayed or dismissed until an investigation takes place.
A builder is entitled to create an alternative pre-litigation procedure, as long as it is provided to the homebuyer at the time of the sale. If a builder chooses to use its own procedure, the company cannot change its mind later and invoke SB800’s. Also, a builder cannot require a homebuyer to adhere to both its procedure and SB800’s.
What if all of your neighbor’s balconies are slanted too? Except for one very narrow exception, class-action lawsuits cannot be filed under SB800. In Kohler Co. v. Superior Court, Case No. B288935 (November 14, 2018), the Court of Appeals ruled that SB800 “does not permit class action claims except when those claims address solely the incorporation into the home of a defective component other than a product that is completely manufactured offsite.”
SB800 gives the benefit of the doubt to builders. The nature and scope of claims that a homebuyer can bring are limited. The Act’s pre-litigation procedure and short-leashed statue of limitations also means homebuyers must act quickly, and correctly, to get a shot at recovering damages for construction defects. Ultimately, the burden of proof rests on the homebuyer to demonstrate compliance with the pre-litigation procedure.