Can Homeowners Evade the Right to Repair?

By Nick Cammarota

There has been a growing trend by the plaintiff’s bar to attempt to bypass SB 800’s prelitigation right to repair process by filing a lawsuit in court first. SB 800 – the homebuilder “fix-it” law – was sponsored by CBIA in 2002 and applies to all new homes sold on or after Jan. 1, 2003. The plaintiff’s bar strategy has been to force the builder to defend the case, thereby incurring attorneys’ fees and expert costs in an effort to leverage the builder into settling the matter rather than pursuing a repair.

The California Court of Appeal for the Fourth District has now opined on this practice.

In Standard Pacific Corporation v. Superior Court of San Bernardino County (Garlow), the Court held that a plaintiff who does not send the statutorily required notice to the builder and provide the builder with an opportunity to repair, may not file suit without first establishing the builder’s failure to comply with the requirements of Civil Code section 912.

Section 912 requires the builder to do all of the following:

  • Provide the homeowner with copies of plans, specifications, grading plans, soil reports, Department of Real Estate public reports and engineering calculations within 30 days of a written request.
  • At the time of sale, provide the homeowner with copies of:

    a) All builder and product manufacturer maintenance recommendations and warranty information.

    b) A copy of SB 800 which is intitialed and acknowledged by the purchaser and the builder’s sales representative.

    c) A notice of the existence of the prelitigation procedures and a notice that the procedures impact the homeowner’s legal rights – initialed and acknowledged by the purchaser and the builder’s sales representative (these notices must also be recorded on title to the property).
  • At the time of sale the builder shall instruct the homeowner to provide all documents to any subsequent purchaser.

If the builder fails to comply with any of these requirements, the homeowner is released from the prelitigation procedures set forth in SB 800 and may file a lawsuit.

On the other hand, if a plaintiff files a lawsuit without first pursuing the notice and opportunity to repair process in SB 800, the builder may request the court to stay or possibly dismiss the case. If the builder is successful, the builder is entitled to payment of his or her attorney’s fees and court costs.

In the Standard Pacific case, the plaintiffs merely alleged that the builder had not complied with the requirements set forth in Civil Code section 912, above. The plaintiffs did not support this assertion with any factual showing and argued that the burden was on the builder to prove that the builder had complied with all of the requirements of section 912. By shifting the burden to the builder, the plaintiffs claimed that the prelitigation right to repair was an opt-in statute that the builder had to prove he or she was entitled to.

The Court looked at the legislative intent of SB 800 and found that, among other things, SB 800 was intended to benefit builders by reducing or eliminating some construction defect claims and reducing litigation costs.

The Court stated that "It would hardly diminish unnecessary costs if plaintiffs were encouraged to file suit and then put the builder to the effort and expense of proving that it had complied with section 912 – especially as the builder could not know in advance in what respect the plaintiff contended it had failed to comply. Rather, it is far more economical to allow a plaintiff to sue only where it has already marshaled adequate evidence of noncompliance, which can be presented to the builder and, if necessary, to the court."

At the conclusion, the Court sent the matter back to the trial court for a determination as to whether the builder complied with section 912. If the trial court finds that the builder did comply, the builder will be awarded its attorney fees and the plaintiffs will be required to give the builder an opportunity to repair.

Nick Cammarota is the general counsel for CBIA. He can be reached at ncammarota@cbia.org. To read the complete court decision in this case, click here.