BILL NUMBER: SB 652 AMENDED
BILL TEXT
AMENDED IN SENATE APRIL 30, 2013
AMENDED IN SENATE APRIL 22, 2013
INTRODUCED BY Senator DeSaulnier
FEBRUARY 22, 2013
An act to amend Sections 910, 916, and 944 of the Civil
Code, relating to construction defect litigation. An
act to add Section 1102.3b to the Civil Code, relating to real prope
rty.
LEGISLATIVE COUNSEL'S DIGEST
SB 652, as amended, DeSaulnier. Residential construction
defect litigation: notice requirements. Real property
disclosures: construction defect litigation.
Existing law requires the transferor of residential property to
make certain disclosures to a prospective transferee and requires
these disclosures to be made on a specified form. Under existing law,
the transferor is required to disclose any lawsuits by or against
the transferor threatening to or affecting the real property, as
specified. Existing law makes any person who willfully or negligently
violates or fails to perform any specified duty liable in the amount
of actual damages suffered by a transferee.
Existing law prescribes a process for determining liability in an
action seeking the recovery of damages arising out of, or related to,
deficiencies in residential construction, design, and related issues
and sets forth specified standards in this regard. Existing
law requires a claimant alleging a violation of these standards to
follow a specified, prelitigation procedure, which includes providing
a builder who has allegedly violated those standards a notice
describing the claim in reasonable detail sufficient to determine the
nature and location, to the extent known, of the claimed violation.
Existing law limits the damages that a claimant may recover in an
action in this regard. Existing law also allows a builder to inspect
the claimed unmet standards within 14 days after acknowledgment of
the receipt of a claim and, if the builder intends to hold specified
parties responsible for its contribution for an unmet standard,
requires the builder to provide notice to the specified parties in
order to attend an inspection.
This bill would require the notice given to the builder
to describe the claim in reasonable, specific detail, including
observed evidence, that is sufficient for the builder to determine
the nature and location of the claimed violation, the way in which
the standard was not met, and the date and time that the claimed
violation was observed or determined not to meet the standard. The
bill would require a homeowner who makes a claim for damages to
record the claim in a Notice of Settlement, as provided, and to
notify a subsequent potential purchaser of the claim and the status
of the repairs. Failure to make this disclosure would be the basis
for a cause of action by a subsequent purchaser of the property to
require the seller to make the identified repairs or pay the
subsequent purchaser the amount of damages necessary to make the
repairs. The bill would also require the notice provided to the
builder to contain an acknowledgment of these obligations. This bill
would additionally revise the timeline in which a builder may inspect
a claimed unmet standard and the timeline and manner in which the
builder may notify a specified third party of an inspection.
the transferor of any real property to additionally
disclose to a potential transferee all claims for damages relating to
deficiencies in residential construction, as specified, made by the
transferor and the status of those claims.
Vote: majority. Appropriation: no. Fiscal committee: no.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 1102.3b is added to the
Civil Code , to read:
1102.3b. In addition to the disclosures required by Section
1102.6, the transferor of any real property subject to this article
shall disclose to a potential transferee all claims for damages made
by the transferor pursuant to Title 7 (commencing with Section 895)
of Part 2 of Division 2 and the status of these claims.
SECTION 1. Section 910 of the Civil Code is
amended to read:
910. Prior to filing an action against any party alleged to have
contributed to a violation of the standards set forth in Chapter 2
(commencing with Section 896), the claimant shall initiate the
following prelitigation procedures:
(a) The claimant or his or her legal representative shall provide
written notice via certified mail, overnight mail, or personal
delivery to the builder, in the manner prescribed in this section, of
the claimant's claim that the construction of his or her residence
violates any of the standards set forth in Chapter 2 (commencing with
Section 896). That notice shall provide the claimant's name,
address, and preferred method of contact, and shall state that the
claimant alleges a violation pursuant to this part against the
builder, and shall describe the claim in reasonable, specific detail,
including the specific observed evidence of the violation and its
location within the home or common area, that is sufficient for the
builder to determine the nature and location of the claimed
violation, the way in which the standard was not met, and the date
and time that the claimed violation was observed or determined not to
meet the standard. The notice shall be signed by the claimant
certifying that each claimed violation is known to the claimant to
exist in the locations described. That document shall have the same
force and effect as a notice of commencement of a legal proceeding.
(b) The notice shall be a written statement signed and verified by
the claimant containing all of the following:
(1) An acknowledgment of the claimant's obligation to make a
disclosure to a subsequent potential purchaser as required by Section
944.
(2) The name of the property owner or reputed owner.
(3) A statement of the claimant's allegation of damages.
(4) A legal description of the property.
(c) The notice requirements of this section do not preclude a
homeowner from seeking redress through any applicable normal customer
service procedure as set forth in any contractual, warranty, or
other builder-generated document; and, if a homeowner seeks to do so,
that request shall not satisfy the notice requirements of this
section.
(d) It is the intent of the Legislature that a form may be
developed and provided by the builder prior to the close of escrow
that includes the elements of the notice required by this section. If
the builder provides the form to the original purchaser, the
claimant or his or her legal representative shall fill out the form,
signed by the claimant, in order to initiate a claim pursuant to this
title. The claimant shall acknowledge that the claimant has read and
understood the section of the claim form regarding the requirement
to disclose any lawsuits for construction defects to future
purchasers pursuant to Section 1102.6 and the penalties for filing
fraudulent claims.
SEC. 2. Section 916 of the Civil Code is
amended to read:
916. (a) If a builder elects to inspect the claimed unmet
standards, the builder shall complete the initial inspection and
testing no sooner than 10 business days but no later than 14 business
days after acknowledgment of receipt of the notice of the claim, at
a mutually convenient date and time. Any delay in reaching agreement
on the date and time of the inspection shall automatically extend the
14-day time limit contained in this section for a period of time
equal to the delay. If the homeowner has retained legal
representation, the inspection shall be scheduled with the legal
representative's office at a mutually convenient date and time,
unless the legal representative is unavailable during the relevant
time periods. All costs of builder inspection and testing, including
any damage caused by the builder inspection, shall be borne by the
builder. The builder shall also provide written proof that the
builder has liability insurance to cover any damages or injuries
occurring during inspection and testing. The builder shall restore
the property to its pretesting condition within 48 hours of the
testing. The builder shall, upon request, allow the inspections to be
observed and electronically recorded, video recorded, or
photographed by the claimant or his or her legal representative.
(b) Nothing that occurs during a builder's or claimant's
inspection or testing may be used or introduced as evidence to
support a spoliation defense by any potential party in any subsequent
litigation.
(c) If a builder deems a second inspection or testing reasonably
necessary, and specifies the reasons therefor in writing within three
days following the initial inspection, the builder may conduct a
second inspection or testing. A second inspection or testing shall be
completed within 40 days of the initial inspection or testing. All
requirements concerning the initial inspection or testing shall also
apply to the second inspection or testing.
(d) If the builder fails to inspect or test the property within
the time specified, the claimant is released from the requirements of
this section and may proceed with the filing of an action. However,
the standards set forth in the other chapters of this title shall
continue to apply to the action.
(e) If a builder intends to hold a subcontractor, design
professional, individual product manufacturer, or material supplier,
including an insurance carrier, warranty company, or service company,
responsible for its contribution to the unmet standard, the builder
shall provide notice so that person or entity receives notice of the
initial, or if requested, second inspection, including date, time,
and location, and a copy of the claim, at least five business days in
advance, of any alleged unmet standard and may participate in the
repair process. The subcontractor, design professional, individual
product manufacturer, or material supplier, including an insurance
carrier, warranty company, or service company, shall provide an
updated email and physical address at which this notice may be
provided. The builder shall rely on the most recent email or physical
address the subcontractor, design professional, individual product
manufacturer, or material supplier, including an insurance carrier,
warranty company, or service company, has provided. The claimant and
his or her legal representative, if any, shall be advised in a
reasonable time prior to the inspection as to the identity of all
persons or entities invited to attend. This subdivision does not
apply to the builder's insurance company. Except with respect to any
claims involving a repair actually conducted under this chapter,
nothing in this subdivision shall be construed to relieve a
subcontractor, design professional, individual product manufacturer,
or material supplier of any liability under an action brought by a
claimant.
SEC. 3. Section 944 of the Civil Code is
amended to read:
944. (a) If a claim for damages is made under this title, the
homeowner is only entitled to damages for the reasonable value of
repairing any violation of the standards set forth in this title, the
reasonable cost of repairing any damages caused by the repair
efforts, the reasonable cost of repairing and rectifying any damages
resulting from the failure of the home to meet the standards, the
reasonable cost of removing and replacing any improper repair by the
builder, reasonable relocation and storage expenses, lost business
income if the home was used as a principal place of a business
licensed to be operated from the home, reasonable investigative costs
for each established violation, and all other costs or fees
recoverable by contract or statute.
(b) (1) Upon settlement of a claim, or upon completion of repairs
by the builder in response to a claim, the claimant shall immediately
record a Notice of Settlement in the Office of the County Recorder
where the property is located. The Notice of Settlement shall include
the original Notice of Claim and shall be signed by the claimant. In
addition, the Notice of Settlement shall state either that the
repairs were made to the satisfaction of the homeowner or that
payment was made by the builder in lieu of repairs.
(2) A claimant shall notify a subsequent potential purchaser of
the property of the amount and nature of the claim and whether or not
the claimed violation was repaired consistent with subdivision (a)
of Section 1102.1, which provides that it is the existing obligation
of the parties to a real estate contract, or their agents, to
disclose any fact materially affecting the value and desirability of
the property, including, but not limited to, the physical conditions
of the property.
(3) Failure to satisfy the requirements of paragraph (1) shall be
the basis for a cause of action by a subsequent purchaser of the
property to require the claimant to make the repairs identified in
the claim or pay a subsequent purchaser the amount of damages
necessary to make the repairs.