SB 800, Part 2, Legal Limitations

When Senate Bill 800 was passed, the intent was to create a bill that would benefit both builders and consumers. The bill was designed to control to the soaring costs and occurrence of litigation involving construction defects. This bill affects newly constructed homes, town homes, and condos sold after the first of January 2003. One of the most controversial parts of the bill that will have the greatest affect on new home buyers is the fact that the bill establishes new statutes of limitations within which a claim for a construction defect must be made.

The new statutes of limitations contained in this bill are not all inclusive in terms of what they cover. Rather, they have been designed to apply to only specific components, under certain conditions, and for only stated periods of time. While these new statutes of limitations will be offering relief to builders, manufacturers and insurance companies, they are going to impact a homeowner’s ability to seek relief from construction related claims, as well as limit their ability to discover defects. Let me explain.

SB 800 requires several different specific periods of warranty coverage to protect the interest of the new homebuyer. The most basic coverage builders must offer is a minimum one year express warranty covering the “fit and finish” of certain building components. This is similar to the one-year warranty builders are offering now, yet it is limited to only the cosmetic and finish items in the house.

There are strict time limitations contained in the bill which require builders to be responsible for certain construction defects for up to a ten-year period. Although the ten-year time frame is similar to the previous California statute of limitation for latent (hidden) defects, SB 800 specifically lists categories of items that would be covered. These categories include the most litigated issues involving new construction; water penetration through the exterior of the building (siding, roof, windows and doors), structural issues (foundations, framing), soil issues (movement, settlement, drainage), and fire protection issues.

With regards to water penetration the bill expressly states that water shall not pass beyond, through or around any windows, doors, roof, decks, balconies, flashings, or trim of the building. Foundations, slabs, patios, walks, and drainage systems, installed as part of the original construction shall not allow water, vapor, or soil erosion to enter or come in contact with the building so as to cause damage to another building component.

The provisions governing structural and fire protection issues state that all structural components and foundations are required to be constructed according to the wind, fire, and seismic design criteria set forth in the code adopted at the time of construction, and shall not cause the structure to be unsafe. The requirements for soil basically state that soil shall not cause the ground upon which the structure is built, to become unusable for its intended purpose, and shall not allow damage to be caused to other portions of the house.

While these provisions of SB 800 provide much protection for the consumer, the particular provisions for the plumbing, mechanical, and electrical systems, there are substantial limitations on the provisions for walks and patios, landscaping and drainage systems, and manufactured products (windows, doors, fireplaces, plumbing and electrical fixtures, etc.).

The plumbing, mechanical, and electrical systems are required to operate properly and not impair the use of the house, or cause an unreasonable risk of fire. However, no action is allowed for defects in these systems after four years from the date of the original construction. This language suggests that these systems only need to be designed and installed so that they remain serviceable for a four-year period, which is a small percentage of a house’s normal life span of 50 to 75 years. Changing or repairing these systems because of material or installation defects can be expensive, disruptive to the structure, and should not really be necessary during the normal life of the house.

Paint and stains shall be applied so as not to cause deterioration to the building surfaces for as long as the manufacturer warranties them, yet no action can be brought after five years. Installed irrigation systems and drainage are required to “survive” for only one year, except that a claim can be made within two years of the close of escrow.

Finally, there is a “catch-all” clause that states the provisions in the bill are intended to address every function or component of the building, and if there is an issue that is not specifically addressed by these standards, it shall be actionable if it causes damage.

Also, if there is no representation of a “useful life” for a particular manufactured product, then the useful life will only have to be one year.

Anyone reading through SB 800 will realize that the time frames to file a claim for a construction defect are not as clear or specific as the bill intended. The fact that the bill contains some vague language, sets numerous warranty periods with various restrictions, and requires specific action on the owner of the building to maintain the building, will change how construction related issues are resolved, or tried and defended in court. A homeowner who is not familiar with the provisions of this bill could be at a definite legal disadvantage in trying to resolve a dispute involving construction defects.

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