BILL ANALYSIS �
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|SENATE RULES COMMITTEE | SB 652|
|Office of Senate Floor Analyses | |
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|327-4478 | |
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THIRD READING
Bill No: SB 652
Author: DeSaulnier (D)
Amended: 4/30/13
Vote: 21
SENATE JUDICIARY COMMITTEE : 6-0, 5/7/13
AYES: Evans, Anderson, Corbett, Jackson, Leno, Monning
NO VOTE RECORDED: Walters
SUBJECT : Real property disclosures: construction defect
litigation
SOURCE : Author
DIGEST : This bill requires the seller of any real property to
disclose to a potential buyer all construction defect damage
claims, including the status of such claims, made by the seller.
ANALYSIS :
Existing law:
1. Requires the transferor of real property, consisting of one
to four dwelling units, to provide a statutory transfer
disclosure statement (TDS) as soon as practicable before
transfer of title. (Civil Code (CIV) Section 1102.3(a))
2. Codifies the form and content of the TDS, which includes
numerous disclosures, including whether the seller is aware
of any significant defects or malfunctions in specified
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components of the home. (CIV Section 1102.6)
3. Provides construction defect liability standards for newly
constructed housing and a pre-trial process for the
resolution of construction defect and building standards
violations disputes. (CIV Section 895 et seq.)
This bill requires the seller of any real property to disclose
to a potential buyer all claims, including the status of such
claims, for construction defect damages made by the seller.
Background
In 2002, the Legislature enacted SB 800 (Burton, Chapter 722,
Statutes of 2002) in response to concerns expressed by builders
and insurers over the costs associated with construction defect
litigation, as well as concerns expressed by homeowners and
their advocates over the effects of the California Supreme Court
decision that held that defects must cause actual damage prior
to being actionable in tort. (See Aas v. Superior Court (2000)
24 Cal.4th 627)
SB 800 provided a pre-litigation procedure in which a homeowner
must present a notice of claimed defects to a builder, who is
given the opportunity to correct the defect. Although SB 800
was enacted to relieve builders from rampant litigation and
simplify defect repair procedures for consumers, SB 800 has
resulted in the unintended consequence that a subsequent
purchaser of the property may be unaware that the original
homeowner has made defect or building standards violations
claims against the builder's warranty.
In order to provide better notice to a subsequent purchaser of
claimed defects and building standards violations in the
property, this bill requires the property seller to disclose all
prelitigation claims presented to the builder and provide the
status of the claims to a potential purchaser.
Prior legislation . SB 800 (Burton, Chapter 722, Statutes of
2002) - See Background.
FISCAL EFFECT : Appropriation: No Fiscal Com.: No Local:
No
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SUPPORT : (Verified 5/9/13)
Advanced Automatic Sprinkler, Inc.
Builders Flooring
California Building Industry Association
California Living and Energy
California Professional Association of Specialty Contractors
Circle M Contractors, Inc.
Citadel Tile and Flooring
Civil Justice Association of California
Construction Employers' Association
Crown Fence
Diversified Roofing Services, Inc.
EZ Electric
Fiber Care Baths, Inc.
Fischer Tile & Marble
Fredrickson, Mazeika and Grant, LLP
G.H. Slack and Son
Geremia Pools
Heffernan Insurance Brokers
Joseph Holt Plastering, Inc.
Just-Star Construction, Inc.
Larry Methvin Installation, Inc.
Los Gatos Construction Co., Inc.
Magic Glass and Door
Martin Roofing Co., Inc.
Masonry Industry Labor Management Cooperation Trust
MB Builders, Inc.
Michael Ehrenfield Company
Nevada Republic Electric West, Inc.
New Way Landscape and Tree Services
Northern California Tile Industry Labor Management Cooperation
Committee Trust
Pro Wall Lath and Plaster, Inc.
San Diego Rain Gutters
Sierra Stair Works, Inc.
Signature Homes
Viking Insulation Company
Viloria Construction, Inc.
West Coast Drywall
Wirtz Quality Installations, Inc.
ARGUMENTS IN SUPPORT : According to the author's office,
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existing law requires a homeowner to follow a mandatory
procedure (pursuant to SB 800) prior to filing a construction
defect lawsuit that includes a builder's absolute right to
repair prior to a homeowner filing a lawsuit with the hopes that
this will reduce litigation. The process begins with a
homeowner submitting a written claim of alleged violation(s) to
the builder; the builder must acknowledge receipt of the claim
and has the right to conduct an inspection of the claimed
defect(s). The builder is then allowed to repair the defect(s).
If the builder fails to repair the defect(s), or the homeowner
is dissatisfied with the repairs, the homeowner may proceed with
the filing of a lawsuit.
Existing law also requires that a seller of real property
disclose at the time of transfer anything that materially
affects the value of the property.
There is presently no statutory requirement that a homeowner
notify a potential buyer of a construction defect within the
home. For example, if a homeowner receives a cash settlement
based on an alleged defect, the homeowner does not need to
disclose the nature of the defect to the prospective purchaser
or whether a repair was made. A potential buyer should be aware
of this fact and know whether or not that defect has
subsequently been repaired.
AL:k 5/9/13 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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