SB 800 Levels the Playing Field

SAN DIEGO -- With the first day of fall comes an important new law for homeowners. On September 20, Governor Gray Davis signed into law Senate Bill 800 authored by Senator President Pro Tem John Burton, D-San Francisco, and Assembly Speaker Herb Wesson, D-Culver City. According to the Building Industry Association of San Diego County (BIA), the new law improves the business climate for homebuilding - the region’s leading industry - and it values their consumers: the new home buyer.

"This long-awaited law change levels the playing field," said Paul Tryon, BIA Executive Vice President. "It provides some much needed clarity for builders, and will improve the communication between homeowner and builder during times of dispute," added Tryon.

The new law overhauls California’s construction dispute rules by setting forth specific expectations on how new homes will be constructed, setting up a process whereby builders can fix problems in the home before lawsuits can be filed, and protecting homeowners by giving them recourse in the event real problems aren’t addressed.

"The passage of SB 800 represents a paradigm shift regarding litigation and construction," said Mike Neal, BIA president. "It changes the entire process for handling disputes, and consequently helps to curb the runaway litigation that has killed the truly affordable condo," he added.

Building industry leaders cite insurance coverage changes as an important companion to this new law. "With these improvements to the process, it is our hope that the insurance companies will respond favorably and come back into the California market, allowing builders and trade contractors to provide the homes that San Diego obviously needs," Neal added.

"We're in a whole new ballgame," said Steve Grimes, chairman of the BIA's Construction Dispute Resolution Task Force. "Construction disputes will now be based on the performance of the home, not on perceived problems that may occur. If real problems arise, they need to be addressed. This law provides a framework for dialogue between the homeowner and builder to resolve their issues prior to filing a lawsuit," said Grimes.

Long-standing stalwarts of reform, San Diego’s construction leaders were actively involved in the development and passage of the bill. Their expertise and counsel drove the process because they are painfully aware of the need for a change in the law to improve our housing situation. The region’s overall housing inventory is undersupplied and demand is ever-growing. However, the entry-level attached product, which used to comprise more than half of our entire housing stock, has been severely constrained by runaway construction dispute litigation. This new law provides builders with some process certainty, more manageable risk and it contains legal costs: things that may encourage their re-entry into the attached product market.

SB 800 was passed on the last day of this year’s legislative session after months of negotiations between the California Building Industry Association (CBIA), trial lawyers, and top legislative leaders. It passed both the California Senate and Assembly with unanimous votes in each. It represents broad recognition that the previous system for resolving construction disputes has failed and that change was needed.

SB 800 includes the following key reforms:

It defines specific functionality standards
By defining in law how a newly built home should function, it sets a high standard of quality for homeowners and, for homebuilders
It assigns maintenance and notification duties to homeowners
It assigns response and repair duties to homebuilders.
And, while it allows homeowners to take unresolved grievances to court, SB 800 creates opportunities for mediating disputes with homebuilders first as a way to limit lawsuits.
Any claim is limited to the scope of the functionality standards in the law

The bill also includes a provision governing third-party inspectors. It protects these quality control experts from outside lawsuits and sets guidelines for those who perform the inspections. According to peer review consultants, the law "raises the bar for the industry by regulating who can perform the inspections through new requirements for licensing, experience and insurance coverage levels.

The final language of SB 800 can be found at www.biasandiego.org.

The Building Industry Association of San Diego County is a non-profit trade association that provides legislative advocacy, networking, and industry communications to its 1,350 member firms that earn their livelihood in the building and development industries.

This page was last updated on 09/24/02