Since the "Building Boom" of the 1980's defective construction may be defined as a deficiency in the design or construction of a building or structure resulting from a failure to design or construct in a reasonably workmanlike manner, and/or in accordance with a buyer's reasonable expectation. The most dangerous defects have the capacity of failure, resulting in physical injury or damage to people or property.
However, many types of defects do not present an increased risk of injury or damage to other property but nevertheless may cause harm to the property owner in the form of loss of use, diminution in property value, and expenses incurred while defects are identified and/or corrected.
Many states have more specifically defined the term "Construction Defect" for purposes of applying statutes that dictate processes for remedying and litigating construction defect claims. These statutory definitions or "Statute of Limitations" vary state by state.
When analyzing a claim based on a design or construction defect, one needs to determine if the defect was "patent" or "latent." A defect is considered "patent" if it was readily discoverable or apparent by a reasonable visual inspection. If, however, the defect is hidden or otherwise not discoverable by a reasonable visual inspection, it is then defined as "latent." The distinction is of great importance because the two defects have different time limits for filing a lawsuit.
The 4 year statute of limitation applies to patent defects. Individuals engaged in performing or furnishing design, specifications, surveying, planning, supervision or construction observation services cannot have a lawsuit filed against them more than four years after the substantial completion of such improvement for any of the following:
The 10 year statute of limitation applies to latent defects. Individuals who develop real property or are engaged in performing or furnishing design, specifications, surveying, planning, supervision, testing, or construction observation services cannot have a lawsuit filed against them more than 10 years after the substantial completion of such improvement for any of the following:
On December 4, 2000, the California Supreme Court decided the case of Aas v. Superior Court, 24 Cal. 4th 627 (2000), which held that a homeowner could not recover damages in a negligence lawsuit against a developer unless he or she suffered actual physical damage. As a result of this decision, a homeowner could not recover damages against a builder, even if the builder had violated building codes resulting in, for example, a home with significant earthquake and fire risks, until the homeowner suffered actual physical damage. While the homeowner retained the right to sue, if applicable, for breach of warranty and breach of contract, and possibly recover under those causes of action, the Aas decision caused great concern among homeowners, consumer groups and trial lawyers.
Consumer and trial lawyer groups worked to get the legislature to address the results of Aas and give the consumer a remedy to builder negligence or violation of building codes even if no actual damage had occurred. The building and insurance industry, however, concerned about the escalating cost of litigation wanted to make sure that any new law would also address developer and insurance industry concerns about unnecessary and costly litigation.
The resulting law creates a complex series of requirements, rules and procedures to address construction defects in California. The goal of the legislation is that the law will result in benefits to homeowners by providing them a means to effectively have construction defects addressed and, at the same time, by allowing builders the right to try to fix problems prior to a homeowner being allowed to file suit, reduce litigation.
For those properties where a purchase agreement was signed prior to January 1, 2003, the relevant law is codified in California Code of Civil Procedures Sections 337 and 337.15. These statutes allow a homeowner a four year statute of limitation to sue for patent construction defects and a ten year statute of limitation for latent defects. Also, the Aas decision described above applies to these properties and a homeowner cannot recover for damages unless they can establish actual physical damages due to the defects.
The law applies to all newly-constructed residential property intended to be sold as an individual dwelling unit (for example a single family home or a condominium unit) where the purchase agreement was signed by the seller on or after January 1, 2003. It does not apply to condominium conversions. (Cal. Civ. Code §§ 896, 938)
The law applies to all builders of new residential properties. The term "Builder" under SB 800 includes all of the following: "any entity or individual including, but not limited to a builder, developer, general contractor, contractor, or original seller, who at the time of sale, was also in the business of selling residential units to the public." (Cal. Civ. Code § 911(a)) The law also applies to all "general contractors, subcontractors, material suppliers, individual product manufacturers, and design professionals" to the extent these parties caused a violation of the SB 800 standards as a result of a "negligent act or omission or breach of contract." (Cal. Civ. Code § 936)
1 = California Council of the American Institute of Architects (AIACC)
2 = California Association of Realtors (CAR)
The citations contained herein may be out-of-date and are believed to be accurate to 2006. It is intended only to provide general answers to general questions and is not intended as a substitute for individual legal advice. Advice in specific situations may differ depending upon a wide variety of factors and localities. Therefore, readers with specific legal questions should seek the advice of an attorney.
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