The California Legislature’s 2001-2002 session came to a frenetic end just after midnight on August 31st with an unexpected eleventh-hour agreement on a $98.9 billion state budget and scores of last minute deals on major policy issues that had eluded resolution during the previous 20 months.

Among the late accords was a two-bill package to define construction defects, give builders and contractors a right of repair, and extend the statute of limitations on personal injury lawsuits.

Homebuilders, insurers, and trial lawyers had been feuding for more than a decade over the explosion of construction defect litigation and its detrimental effects on the availability of affordable housing. Liability insurance coverage, particularly for condominiums, has become largely unavailable.

Trial lawyers had little incentive to negotiate a bill until the state Supreme Court decision in Aas v. Superior Court holding that construction defects must cause actual damage or injury before a lawsuit in tort could be filed against the builder.

The compromise bill, SB 800, effectively eliminates the Aas defense for newly constructed housing but gives builders and contractors an absolute right of inspection and repair prior to litigation. Also, the bill defines construction defects for most components of a home and sets express warranty periods of one to ten years for each component.

The "price" of relief from construction defect litigation was SB 688, a bill that extends the statute of limitations on personal injury and wrongful death actions from one to two years and increases the amount of time a plaintiff’s attorney has to respond to a motion for summary judgment.

SB 800 does not solve all of the problems. It does nothing about defects in existing homes, the lack of insurance for subcontractors, and an insurer’s obligation to contribute to a builder’s defense costs.

Key legislators and stakeholders have agreed to seek a resolution of these issues next session.

The content of this article does not constitute legal advice and should not be relied on in that way. Specific advice should be sought about your specific circumstances.