GOVERNOR DAVIS SIGNS CONSTRUCTION DEFECT BILL
WHICH MAY PRESAGE TROUBLE FOR SUBCONTRACTORS

As all builders and improvers of real property are aware, there has been a significant surge in construction litigation, particularly litigation involving construction defects, over the past ten to fifteen years. As this author reported some time ago, the California Supreme Court, in the case of Aahs v. Superior Court, handed down a ruling that blocked negligent suits against developers unless defects existed in construction that actually caused injury or property damage.

Under heavy pressure from the plaintiff trial bar, the legislature passed a bill, SB 800, which would permit homeowners to file suit for prospective damage, even if no damage had actually occurred, or might ever occur. The bill, which will apply to the sale of new residential units on or after January 1, 2003, may expand litigation again for claims that have not resulted in any damage to any homeowner.

It is also noted that the law will permit the builder an opportunity to make repairs, although it is noted that prior legislative measures in this regard have done little to lessen the impact of litigation. It is also noted that the statute has set forth definitions of "actionable defects," which are least tailored to construction conditions which might lead to water damage, and other damage which might be recognized as a defect by a reasonable homeowner. However, there are many facets of the statute that are vague, and would likely permit avenues to pursue even baseless claims.

Of course, time will only tell. However, SB 800 may be another albatross for builders and improvers of real property, an impact that can only be negative for all concerned.