BILL ANALYSIS �
SB 652
Page 1
Date of Hearing: June 25, 2013
ASSEMBLY COMMITTEE ON JUDICIARY
Bob Wieckowski, Chair
SB 652 (DeSaulnier) - As Amended: April 30, 2013
PROPOSED CONSENT (As Proposed to Be Amended)
SENATE VOTE : 36-0
SUBJECT : Real Property Disclosures
KEY ISSUE : SHOULD THE REAL ESTATE TRANSFER DISCLOSURE STATEMENT
BE REVISED TO GIVE PROSPECTIVE BUYERS BETTER NOTICE OF CERTAIN
CLAIMS PRIOR TO LITIGATION?
FISCAL EFFECT : As currently in print this bill is keyed
non-fiscal.
SYNOPSIS
Existing law requires a seller of real property to disclose to a
buyer any fact materially affecting the value and desirability
of the property, including specifically any lawsuits by or
against the seller threatening to or affecting the real
property, including any lawsuits alleging a defect or deficiency
in the property. However, this disclosure fails to capture
other claims that are subject to the pre-litigation process
required by existing law. This sensible measure would address
that omission by revising the transfer disclosure statement
(TDS) to include pre-litigation claims. In order to facilitate
the transition to a revised TDS, the bill would not take effect
until July 1, 2014. There is no known opposition.
SUMMARY : Improves real estate disclosures. Specifically, this
bill requires the seller of any real property to disclose to a
potential buyer specified claims regarding the construction
disputes.
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. (Civ. Code Sec. 1102.3(a).)
SB 652
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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
components of the home. (Civ. Code Sec. 1102.6.)
3)Provides construction defect liability standards for newly
constructed housing and a pre-litigation process for the
resolution of construction defect and building standards
violations disputes. (Civ. Code Sec. 895 et seq.)
COMMENTS : The author states, "Current law requires a homeowner
to follow a mandatory procedure (pursuant to SB 800) prior to
filing a construction defect lawsuit. SB 800 provided a
pre-litigation procedure in which a homeowner must present a
notice of claimed defects to a builder, who is then given the
opportunity to correct the defect. If the builder fails to
repair the defect, or the homeowner is dissatisfied with the
repairs, the homeowner may proceed with the filing of a lawsuit.
While SB 800 was intended to relieve builders from rampant
litigation and to simplify repair procedures for consumers, it
has resulted in the unintended consequence that a subsequent
purchaser of the property may be unaware that the original
homeowner has made defect claims against the builder's warranty.
As such, this bill looks to address this lack of disclosure by
requiring a homeowner to, when selling the property, disclose
any construction defect claim and the resolution status of that
claim. From a consumer perspective, a potential buyer should be
aware of the nature of these defect claims and whether or not
that defect has subsequently been repaired."
This measure seeks to provide prospective purchasers with
potentially helpful additional information regarding claims
filed under the SB 800 pre-litigation process that are not
expressly covered by the existing disclosure form related to
litigation.
Author's Proposed Clarifying Amendments. In consultation with
interested stakeholders, the author has reached consensus on the
following thoughtful amendments to replace the current
provisions of the bill.
Civil Code section 1102.6 is amended to revise the transfer
disclosure statement effective July 1, 2014 as follows:
SB 652
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(C)(16) Any lawsuits by or against the Seller, or claims for
damages by the seller pursuant to Section 910, threatening to or
affecting this real property, including any lawsuits, or claims
for damages by the seller pursuant to Section 910, alleging a
defect or deficiency in this real property or "common areas"
(facilities such as pools, tennis courts, walkways, or other
areas co-owned in undivided interest with others) ?.. ____Yes
___No
REGISTERED SUPPORT / OPPOSITION :
Support
Advanced Automatic Sprinkler, Inc.
American Subcontractors Association of California
Builders Flooring
California Building Industry Association
California Living & 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 & Grant, LLP
G.H. Slack & Son
Geremia Pools
Granville Homes
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 & Tree Services
Northern California Tile Industry Labor Management Cooperation
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Committee Trust
Pro Wall Lath & Plaster, Inc.
Republic Electric
San Diego Rain Gutters
Sierra Stair Works, Inc.
Signature Homes
Viking Insulation Company
Viloria Construction, Inc.
West Coast Drywall
Wirtz Quality Installations, Inc.
Opposition (as proposed to be amended)
None on file
Analysis Prepared by : Kevin G. Baker / JUD. / (916) 319-2334