BILL ANALYSIS
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CONSENT
Bill No: AB 927
Author: Calderon (D)
Amended: 4/22/09 in Assembly
Vote: 21
SENATE JUDICIARY COMMITTEE : 5-0, 6/9/09
AYES: Corbett, Harman, Florez, Leno, Walters
ASSEMBLY FLOOR : 79-0, 5/4/09 (Consent) - See last page for
vote
SUBJECT : Common interest developments: construction
defects
SOURCE : Author
DIGEST : This bill extends the sunset date from July 1,
2010 to July 1, 2017 on provisions of existing law that
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.
ANALYSIS : 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
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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 extends the operative date of Section 1375 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, Chapter 864, Statutes of
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,
Chapter 824, Statutes of 2001.) Section 1375 is set to
expire July 1, 2010. This bill extends the sunset date to
July 1, 2017.
Prior Legislation
SB 1029 (Calderon), Chapter 864, Statutes of 1995)
AB 1700 (Steinberg), Chapter 824, Statutes of 2001)
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FISCAL EFFECT : Appropriation: No Fiscal Com.: No
Local: No
SUPPORT : (Verified 6/10/09)
California Building Industry Association (source)
Civil Justice Association of California
ARGUMENTS IN SUPPORT : The California Building Industry
Association (CBIA), states:
[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.
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.
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ASSEMBLY FLOOR :
AYES: Adams, Ammiano, Anderson, Arambula, Beall, Bill
Berryhill, Tom Berryhill, Blakeslee, Block, Blumenfield,
Brownley, Buchanan, Caballero, Charles Calderon, Carter,
Chesbro, Conway, Cook, Coto, Davis, De La Torre, De Leon,
DeVore, Duvall, Emmerson, Eng, Evans, Feuer, Fletcher,
Fong, Fuentes, Fuller, Furutani, Gaines, Galgiani,
Garrick, Gilmore, Hagman, Hall, Harkey, Hayashi,
Hernandez, Hill, Huber, Jeffries, Jones, Knight,
Krekorian, Lieu, Logue, Bonnie Lowenthal, Ma, Mendoza,
Miller, Monning, Nava, Nestande, Niello, Nielsen, John A.
Perez, V. Manuel Perez, Portantino, Price, Ruskin, Salas,
Saldana, Silva, Skinner, Smyth, Solorio, Audra
Strickland, Swanson, Torlakson, Torres, Torrico, Tran,
Villines, Yamada, Bass
NO VOTE RECORDED: Huffman
RJG:nl 6/10/09 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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