The California Legislature is considering legislation that would dramatically alter the landscape of residential construction defect litigation. Assembly Bill 1903, currently pending before the Senate Judiciary Committee, proposes extensive amendments to California's Right to Repair Act (Civil Code sections 895-945.5) that would substantially strengthen procedural protections for builders while narrowing the scope of recoverable construction defect claims.
If enacted, the legislation would affect virtually every stage of a construction defect dispute- from the initial notice of claim through litigation and settlement- and would introduce an entirely new certification process for newly constructed condominium projects. This article details some of the most significant proposed changes.
Higher Burden for Construction Defect Plaintiffs
Perhaps the most consequential change is the bill's modification of the proof required to establish liability. current law generally requires a claimant to demonstrate the residence fails to satisfy one of the statutory performance standards established under the Right to Repair Act. AB1903 would instead require claimants to establish three separate elements:
- A violation of an applicable statutory performance standard;
- The violation caused appreciable, present, non-speculative physical damage to another building component; and
- The violation resulted from the original construction.
By requiring proof of resulting physical damage, not merely a violation of a statutory performance standard, the bill would effectively move California closer to the standard articulated in Aas v. Superior Court, (2000) 24 Cal.4th 627, which limited recovery for construction defects absent resulting property damage before the legislature enacted SB 800. For builders and insurers, this represents a potentially significant narrowing of actionable claims.
Expanded Pre-Litigation Notice Requirements
AB 1903 substantially expands the information homeowners must provide before litigation may commence. In addition to identifying the claimed defects, notices would now need to include:
- The claimant's signature,
- Photographs, reports, repair estimates, and other available evidence,
- Identification of the location of the alleged damage; and
- Sufficient detail to allow evaluation of each claimed violation.
The legislation also provides that the notice carries the same force and effect as a notice commencing legal proceedings. These enhanced notice requirements appear designed to provide builders with significantly more information before inspections and repairs begin.
Mandatory Dismissal for Failure to Follow Pre-Litigation Procedures
The proposal strengthens the Right to Repair Act's pre-litigation process by creating mandatory enforcement mechanism. If a claimant fails to substantially comply with the statutory procedures, a builder may file a motion to dismiss without prejudice. Unlike current practice, the bill requires courts to grant the motion.
Courts would also have discretion to award attorney fees and costs incurred in bringing or opposing the motion. This provision could significantly increase the importance of strict compliance with statutory requirements before filing suit.
Builders Could Obtain Releases Following Repairs
Current law generally prohibits builders from requiring homeowners to execute releases in exchange for repairs performed under the statutory repair process. AB 1903 would reverse that approach.
Under the proposal, builders could obtain a release or waiver one year after completing repairs performed pursuant to the statutory process. The change would provide builders with greater finality following successful repairs while reducing the likelihood of subsequent litigation over the same conditions.
Elimination of Certain Damages and Litigation Tools
The legislation would also narrow available damages and litigation practices.
Among other changes, AB 1903 would:
- Prohibit recovery of investigative costs
- Prohibit construction defect claims based upon statistical extrapolation
- Limit testing to conditions realistically expected for the component being evaluated; and
- Expressly abrogate Stearman v. Centex Homes, (2000) 78 Cal.4th 611, with respect to recovery of investigative costs.
These changes could significantly affect how plaintiff experts investigate and prosecute large-scale residential construction defect cases, particularly those involving homeowner associations.
New Certified Building Program for Condominiums
One of the bill's most innovative, and likely controversial, provisions establishes a voluntary "Certified Building" program for newly constructed condominiums. Under the proposal, builders can elect to undergo comprehensive private inspections throughout construction, covering grading, foundations, framing, waterproofing, exterior systems, plumbing, roofing, and critical life-safety components.
Once construction and any necessary repairs receive approval, the inspector would certify the project as a Certified Building. That certification could substantially alter how future defect claims are handled.
Builders of Certified Buildings would be permitted to establish their own post-construction claims process. If repairs are completed and approved following a homeowner's claim, the homeowner would generally be deemed to have provided a full release. Likewise, homeowners who refuse or impede repair efforts could be deemed to have released their claims.
The proposal would apply only to condominiums constructed on or after January 1, 2027.
Greater Emphasis on Repair Over Litigation
Viewed collectively, the proposed amendments shift California's construction defect framework toward encouraging repairs before litigation. Builders would receive:
- Stronger procedural protections
- Expanded opportunities to cure alleged defects
- Greater ability to obtain finality following repairs; and
- Additional mechanisms to resolve disputes without extended litigation.
At the same time, homeowners would face more detailed notice obligations, higher evidentiary burdens, and narrower avenues for recovering litigation-related expenses.
What Stakeholders Should Watch
AB 1903 remains proposed legislation and faces significant opposition from consumer organizations, homeowners' associations, and plaintiffs' groups, while receiving support from the California Building Industry Association, housing advocates, and numerous local governments. If enacted in its current form, the bill would represent one of the most significant revisions to California residential construction defect law in more than two decades.
Builders, developers, contractors, and design professionals should closely monitor the legislation as it moves through the legislative process, particularly the provisions concerning mandatory dismissal, heightened proof requirements, repair releases, and the new Certified Building framework, each of which has the potential to substantially alter both litigation strategy and claims handling practices.
The WSHB team actively participated in industry discussions with builders and the California Building Industry Association regarding the proposed reforms and continue to track the bill's progress as it advances through the legislature.
