I recently represented a builder whose work was the subject of a construction defect claim. The claim arose from the construction of four single family residences completed in 2007. The crux of the claim was that the roofs were improperly installed, leading to leakage and water damage to the homes. The lawsuit was filed in October of 2012.
After meeting with my client, I noticed that the property owners had not complied with the statutory nonadversarial prelitigation procedures that require the homeowner to give the builder notice of the alleged defects and an opportunity to repair them before litigation is commenced. (See Civil Code, §§ 910–938.) The lawsuit alleged that leaks were first noticed in May of 2008, but that the first roof was not inspected until February of 2009, with the remaining roof inspections occurring over the next eight months.
Citing the May 2008 discovery date, I demurred to the complaint alleging the action was barred by the applicable statutes of limitation for patent defects, and that the homeowners failed to comply with the statutory non-adversarial prelitigation procedure. The court overruled the demurrer as to the statute of limitations, but sustained it with regard to the failure to comply with sections 910-938.
Recently, I have discovered this to be a common error in construction defect litigation, attributing it to a lack of awareness by recent practitioners or those dabbling in construction defect litigation. While the error can be remedied in most situations, it can prove fatal to a case, such as the one cited, should the limitations period have run, exposing counsel to malpractice liability. It is important to note that should the non-adversarial prelitigation procedure be utilized, the applicable statutes of limitation are then extended 100 days after the most recent repair or attempt at repair is made, whether or not the particular defect is the one being repaired. (§927)
Sections 895 through 945.5 were enacted in 2002. Commonly referred to as the Right to Repair Act (“the Act”), it was intended, “to ‘specify the rights and requirements of a homeowner to bring an action for construction defects, including applicable standards for home construction, the statute of limitations, the burden of proof, the damages recoverable, a detailed prelitigation procedure, and the obligations of the homeowner.’” Chapter 2 of the Act sets out building standards, the violation of which constitutes a deficiency in construction for which the builder may be held liable to the homeowner. (§§ 896, 897.) Chapter 3 imposes obligations on the builder, including an obligation to furnish an express limited warranty. (§§ 900–907.) Chapter 4 of the Act prescribes nonadversarial prelitigation procedures a homeowner must initiate prior to bringing a civil action against the builder seeking recovery for alleged construction deficiencies. ( §§ 910– 938.) And Chapter 5 sets out the applicable statute of limitations, the burden of proof, the damages that may be recovered, and the affirmative defenses that may be asserted; it also makes the Act binding on successors-in-interest of the original home purchaser. (§§ 941–945.5.)
The nonadversarial prelitigation procedure set out in Chapter 4 requires that the homeowner give written notice to the builder of the claim that the builder violated the standards of Chapter 2, describing the nature and location of the claimed violations. (§ 910.) The builder has a specified time within which to acknowledge receipt of the notice; the builder may inspect and test the claimed defects (if it elects to do so) then make a written offer to repair the defects and set a reasonable completion date. (§ 917.) The homeowner may authorize the repairs as proposed, or request repairs by a different contractor. (§ 918.) The repairs must be commenced within specified time periods, done “with the utmost diligence,” and “completed as soon as reasonably possible.” (§ 921.) The builder’s offer to repair the defects must be accompanied by an offer to mediate the dispute if the homeowner so chooses. (§ 919.) If the builder fails to acknowledge receipt of the claim, fails to make an offer to repair, fails to complete the repair within the time specified in the repair plan, or fails to “strictly comply with this chapter within the time specified, the claimant is released from the requirements of this chapter and may proceed with the filing of an action.” (§§ 915, 920, 925, 930.)
However, if the homeowner fails to notify the builder of the claimed defect or provide the builder with the opportunity to remedy the defect prior to the initiation of litigation, he/she will likely find their case over before it has begun. Therefore, homeowner’s counsel should be aware of this requirement and make certain the claim is fully documented.
Counsel should also be aware that the builder, at the time of the initial sale of the home, has the option of contracting for an alternative nonadversarial prelitigation procedure in lieu of the procedure set out in Chapter 4. This option is typically utilized, with standard purchase contracts containing both mediation and arbitration provisions. If the builder elects to use alternative nonadversarial contractual provisions in lieu of the provisions of sections 910 to 938, the election is binding, “regardless of whether the builder’s alternative nonadversarial contractual provisions are successful in resolving the ultimate dispute or are ultimately deemed enforceable.” (§ 914, subd. (a).)
Developers and builders should take caution to examine their sales contracts to make certain the alternative provisions offered comply with the Act and are enforceable. As always, we would recommend that any dispute or claim be considered with legal counsel involved.
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