BILL ANALYSIS
SENATE JUDICIARY COMMITTEE
Senator Ellen M. Corbett, Chair
2009-2010 Regular Session
AB 927
Assemblymember Calderon
As Amended April 22, 2009
Hearing Date: June 9, 2009
Civil Code
ADM
SUBJECT
Common Interest Developments: Construction Defects
DESCRIPTION
Current law sets forth prelitigation dispute resolution
processes and procedures before a common interest development
(CID) homeowners' association may commence a design or
construction defect action against a builder, developer, or
general contractor of a CID of 20 or more units. Current law is
set to expire on July 1, 2010. This bill would extend the
sunset date to July 1, 2017.
BACKGROUND
The Davis-Stirling Common Interest Development Act (the Act)
generally governs CIDs. The Act defines CIDs as a community
apartment project; a condominium project; a planned development;
or a stock cooperative. The Act also defines an association
(generally a homeowners' association) as a nonprofit corporation
or unincorporated association created for the purpose of
managing a CID. In 1995, the Act was amended to establish
prelitigation dispute resolution processes and procedures before
an association may commence a design or construction defect
action against a builder, developer, or general contractor of a
CID. (SB 1029, Calderon, Ch. 864, Stats. 1995; Civ. Code Sec.
1375.) In 2001, the Act was further amended to require a notice
of commencement of legal proceedings, specified timelines, and
procedures for filing a complaint before commencing an action
against a builder, developer, or general contractor. (AB 1700,
Steinberg, Ch. 824, Stats. 824.) Section 1375 is set to expire
July 1, 2010. This bill would extend the sunset date to July 1,
(more)
AB 927 (Calderon)
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2017.
CHANGES TO EXISTING LAW
Existing law , the Davis-Stirling Common Interest Development
Act, provides for the creation and regulation of common interest
developments. (Civ. Code Sec. 1350 et seq.)
Existing law requires that, before an association files a
complaint for damages against a builder, developer, or general
contractor ("respondent") of a CID based upon a claim for
defects in the design or construction of the CID, the
association must comply with specified requirements of the Act.
Those requirements include, but are not limited to, filing a
notice regarding the commencement of legal proceedings,
participating in a dispute resolution process, preparing a case
management statement, and participating in a meet and confer and
settlement process. (Civ. Code Sec. 1375.)
Existing law provides that Section 1375 will become inoperative
on July 1, 2010.
This bill would extend the operative date of Section 1375 to
July 1, 2017.
COMMENT
1. Stated need for the bill
The sponsor, the California Building Industry Association
(CBIA), writes:
[Civil Code] Section 1375 requires a homeowners' association
to notify [respondent/builders] before it files a construction
defect lawsuit and establishes a meet and confer process to
encourage settlement of construction defect claims in common
interest developments of 20 or more units. CBIA sponsored AB
1029 (Calderon) in 1995, which enacted Civil Code Section
1375. That section was amended by AB 1700 (Steinberg), also
sponsored by CBIA. The result of both measures is a
compromise between the building industry, consumers, consumer
attorneys, homeowners associations, subcontractors, insurers,
and other stakeholders. Section 1375 now establishes a
process that gets all parties to a construction defect claim
talking to each other in an attempt to avoid litigation.
AB 927 (Calderon)
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Consumers are benefited by notification from the homeowners'
association prior to filing litigation and, if the process
works, earlier resolution of their claims. Consumers also
receive, at the outset, a variety of technical documents
regarding the design and construction of the project.
Builders get a notice of claim and an opportunity to inspect
and test structures to determine the location and scope of a
defect and to offer to discuss a settlement proposal with the
homeowners' association board. Early resolution of these
claims mitigates the loss suffered by all parties and may
avoid unnecessary litigation costs.
Section 1375 is set to expire July 1, 2010. This bill would
extend the sunset date to July 1, 2017. To the best of
committee staff's knowledge, the Section 1375 processes and
procedures are working.
2. This bill would extend the sunset date on Section 1375
versus removing the sunset date
Initially this bill, as introduced, would have deleted the
expiration date in Section 1375. In the Assembly Judiciary
Committee, "in order to maintain the status quo," the author
amended the bill to extend the sunset date by seven years,
rather than delete it entirely.
Support : Civil Justice Association of California
Opposition : None Known
HISTORY
Source : California Building Industry Association
Related Pending Legislation : None Known
Prior Legislation :
SB 1029 (Calderon, Ch. 864, Stats. 1995) See Background.
AB 1700 (Steinberg, Ch. 824, Stats. 2001) See Background.
Prior Vote :
AB 927 (Calderon)
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Assembly Judiciary Committee (Ayes 10, Noes 0)
Assembly Floor (Ayes 79, Noes 0)
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