BILL ANALYSIS �
AB 1892
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Date of Hearing: April 24, 2012
ASSEMBLY COMMITTEE ON BUSINESS, PROFESSIONS AND CONSUMER
PROTECTION
Mary Hayashi, Chair
AB 1892 (Halderman) - As Amended: April 16, 2012
SUBJECT : Department of Consumer Affairs: construction defect
solicitations.
SUMMARY : Requires the Department of Consumer Affairs (DCA) to
post the following notice on its Internet Web site: "If you
receive a construction defect solicitation, please check with
your builder in addition to taking any further action."
EXISTING LAW
1)Provides construction defect liability standards for newly
constructed housing and a process for the resolution of
construction defect disputes, including a pre-litigation
process that allows builders to repair defects before a
homeowner can file suit.
2)Establishes, within the State and Consumer Services Agency,
the DCA, which is comprised of a number of boards, bureaus,
and commissions for the purpose of ensuring that those private
businesses and professions deemed to engage in activities
which have potential impact upon the public health, safety,
and welfare are adequately regulated in order to protect the
people of California.
FISCAL EFFECT : Unknown
COMMENTS :
Purpose of this bill . According to the author, "Existing law
provides a detailed 'Pre-litigation' process for homeowners and
builders to engage in to resolve construction defects before
resorting to litigation. This is called the "SB 800" process.
It is complicated, and difficult to understand unless you are a
lawyer. Currently the only websites that list information on
the "SB 800" process are trial attorney's websites. As they
have direct financial benefit from not using the SB 800 process,
and going to trial instead, they have a clear bias.
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"Homeowners are generally not knowledgeable about the
intricacies of construction defect law, and what their rights
are. A builder has an obligation to inform a home buyer that
their home is covered under "SB 800," but it may be several
years later, and ownership of the home may have changed by the
time there is an alleged defect. Homeowners need to be able to
educate themselves on construction defect law, and what their
pre-litigation options are, in order to make an informed
decision about whether or not to pursue litigation. Currently
there are no impartial parties disseminating this information in
language and terms that the average homeowner can understand."
Background . SB 800 (Burton and Wesson) Chapter 722, Statutes of
2002, was considered landmark legislation in the area of
construction defect litigation. The bill effected two
significant reforms. First, the bill established definitions of
construction defects for the first time, in order to provide a
measure of certainty and protection for homeowners, builders,
subcontractors, design professionals and insurers.
Second, the bill imposed a procedure that a homeowner must
follow before bringing suit against a builder. The homeowner
must send a written notice to the builder setting out the nature
of the claim. The builder must acknowledge the claim in
writing. The builder may then elect to conduct inspection and
testing of the alleged defect within a specified period, and
must provide certain documentation to the homeowner on request
regarding building plans and specifications.
The builder may then offer to repair the alleged violation
within a prescribed period. Such an offer to repair must also
compensate the homeowner for all applicable damages recoverable.
Upon receipt of the offer to repair, the homeowner has a
prescribed period in which to authorize the builder to proceed
with the repair. The offer to repair must also be accompanied
by an offer to mediate the dispute if the homeowner so chooses.
The homeowner is relieved from any further pre-litigation
process if the builder fails to acknowledge the claim within the
time specified, elects to not go through this statutory process,
fails to request an inspection within the time specified, fails
to make the offer to repair or otherwise strictly comply with
the obligations of the statute within the times specified, or if
the contractor performing the repair does not complete the
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repair in the time or manner specified.
The mission of DCA is to protect and serve California consumers
while ensuring a competent and fair marketplace. DCA helps
consumers learn how to protect themselves from unscrupulous and
unqualified individuals and protects professionals from unfair
competition by unlicensed practitioners.
DCA issues licenses in more than 100 business and 200
professional categories, including doctors, dentists,
contractors, cosmetologists and automotive repair facilities.
DCA includes 40 regulatory entities (nine bureaus, one program,
twenty-five boards, three committees, one commission, and one
office), which establish minimum qualifications and levels of
competency for licensure. They also license, register, or
certify practitioners, investigate complaints and discipline
violators. The committees, commission and boards are
semiautonomous bodies whose members are appointed by the
Governor and the Legislature. DCA provides them administrative
support. DCA's operations are funded exclusively by license
fees.
Previous legislation .
AB 20 (Halderman) of 2011 requires an attorney who solicits or
consults with a client or potential client for purposes of
filing an action for defects in the design or construction of an
improvement to residential real property to provide a written
notice at the time of the solicitation or consultation, as
specified. This bill was held in Assembly Judiciary Committee.
AB 2803 (Parra) of 2006 requires a direct mail solicitation that
urges a person or entity to take an action that may lead to the
filing of a claim for residential construction deficiencies to
disclose alternatives to litigation and potential adverse
consequences of litigation. This bill was held in Assembly
Judiciary Committee.
AB 612 (Houston) of 2006 requires an advertisement or other
solicitation sent by mail that urges a person or entity to take
an action that may lead to the filing or a claim for residential
construction deficiencies to disclose specified information.
This bill was held in Assembly Judiciary Committee.
AB 108 (Houston) of 2005 requires an advertisement by an
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attorney or law firm that urges a person or entity to take an
action that may lead to the filing or a claim for residential
construction deficiencies to disclose specified information.
This bill was held in Assembly Judiciary Committee.
AB 2689 (Houston) of 2004 requires an advertisement by an
attorney or law firm that urges a person or entity to take an
action that may lead to the filing or a claim for residential
construction deficiencies to disclose specified information.
This bill was held in Assembly Judiciary Committee.
AB 752 (Briggs) of 2001 imposes substantial disclosure
requirements with regard to advertising by attorneys who
practice in the area of construction defect litigation. This
bill was held in Assembly Judiciary Committee.
SB 800 (Burton and Wesson) Chapter 722, Statutes of 2002,
provides for detailed and specific liability standards for newly
constructed housing, creates a pre-trial process that includes a
builder's right to repair an alleged defect, and provides
third-party inspectors with immunity from liability.
AB 1700 (Steinberg), Chapter 824, Statutes of 2001,
substantially reformed the pre-litigation dispute resolution
process for construction defect actions involving common
interest developments.
REGISTERED SUPPORT / OPPOSITION :
Support
California Building Industry Association
Opposition
None on file.
Analysis Prepared by : Angela Mapp / B.,P. & C.P. / (916)
319-3301