Construction defects, an analysis of SB 800
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California Governor Gray Davis recently signed into law Senate Bill 800, a law that some say will lead to increasing production of affordable condominiums and townhouses, thereby easing the state’s chronic housing crisis. The bill is rather complex and lengthy, and it leaves questions unanswered. It is expected that it will be amended and refined in the future. One significant question is how a recent Federal case that contained an arbitration clause will affect this new law. This law only covers new homes sold after January 1, 2003. It partially reforms California’s construction dispute and litigation laws by giving builders the right to fix any problems that develop before a lawsuit can be filed against them, and the law also protects homeowners by giving them recourse in the event problems are not addressed. As contractors know, for the past decade or so there has been such a high volume of lawsuits involving construction defects with attached housing, usually made up of condominiums and townhouses, that the price of insuring such housing, if available, has become sky-high. Numerous lawsuits, resulting in multimillion-dollar settlements, have caused insurers to either stop selling the insurance or to raise the price of the policies that contractors need in order to build the condominiums. As a result, builders are extremely wary of such projects in California, causing what the Building Industry Association claims is a statewide housing construction shortfall of about one million units over the past decade. Under existing law, an owner has 10 years to sue the builder for latent defects, ones that are not discoverable under normal inspection, such as structural problems that cause damage. Existing law also says Source : accessmylibrary.com |