Construction Defect Litigation

IV. Construction Defect Litigation

A. The Right to Repair Act (Civ. Code § 895 et seq.)

The Right to Repair Act ("SB 800"), enacted in 2002 and codified at Civil Code §§ 895–945.5, applies to new residential construction sold on or after January 1, 2003. It does three things:

1. Establishes functionality standards (Civ. Code § 896) — a detailed list of construction outcomes (water intrusion, structural soundness, soils, fire protection, plumbing, electrical, etc.) — that supplant the common law in covered cases.
2. Sets statutes of limitations specific to each standard, ranging from one year (irrigation/drainage) to ten years (structural). § 896(e)–(g).
3. Imposes a mandatory pre-litigation procedure (§§ 910–938) requiring the homeowner to give notice and the builder to inspect, test, and offer to repair before suit.

B. Aas v. Superior Court and the Economic-Loss Rule

Aas v. Superior Court (2000) 24 Cal.4th 627, 635–36, held that homeowners cannot recover in negligence for construction defects that have not yet caused property damage or personal injury — the so-called economic-loss rule. Aas foreclosed a wide swath of pre-2003 litigation and was the political catalyst for SB 800, which legislatively restored a right of action for purely economic damage from defects (subject to the Act's procedural strictures).

For pre-2003 housing, Aas still governs: no actual damage, no negligence claim. Breach of contract or warranty remains available where privity exists.

C. McMillin Albany — Exclusivity for Covered Defects

For a decade after SB 800's enactment, courts split on whether the Act provided the exclusive remedy for residential construction defects or merely an additional one. The split was resolved in McMillin Albany LLC v. Superior Court (2018) 4 Cal.5th 241, 247–49, which held the Act is the sole remedy for defects in covered residential construction — including economic-loss-only claims and claims for property damage caused by a defect. Common-law negligence and strict liability claims against builders for covered defects are abolished within the Act's scope.

McMillin Albany makes the pre-litigation process unavoidable. A homeowner who files suit without complying with §§ 910–938 will face a stay (or, in some courts, dismissal) until the process is exhausted.

D. Pre-Litigation Notice and Right to Cure

The notice (§ 910) must describe the claim "in reasonable detail sufficient to determine the nature and location, to the extent known," of the alleged violation. The builder then has 14 days to acknowledge, 14 more to inspect, and additional periods to test, offer repair, or pay cash in lieu. The total pre-litigation window can stretch to 120+ days.

Pitfalls:

• Sale of the home during the process does not automatically terminate the claim, but standing transfers complications.
• Class actions are permitted but the notice must be given on a unit-by-unit basis; a single class notice does not satisfy the statute.
• Insurance tender to the builder's CGL carrier should be made early; SB 800 claims often implicate "your work" exclusions and Type 1 vs. Type 2 distinctions.

V. Landlord-Tenant Litigation

A. The Tenant Protection Act (Civ. Code § 1946.2, § 1947.12)

AB 1482, the Tenant Protection Act of 2019, created statewide just-cause and rent-cap protections effective January 1, 2020 and sunsetting (absent extension) January 1, 2030. It applies to most residential tenancies after 12 months of continuous occupancy (or 24 months where a new adult is added), with significant exemptions:

• Single-family homes and condominiums owned by individuals (not corporations or REITs) where the owner has provided proper written notice of exemption;
• Housing built within the last 15 years (a rolling exemption);
• Owner-occupied duplexes; and
• Subsidized affordable housing under separate regimes.

B. Just Cause and No-Fault Termination

Section 1946.2 enumerates at-fault just causes (nonpayment, breach, nuisance, criminal activity, refusal to renew on similar terms) and no-fault just causes (owner move-in, withdrawal from the rental market under the Ellis Act, government order to vacate, intent to demolish or substantially remodel). For no-fault terminations, the landlord must pay one month's rent in relocation assistance (or waive the final month) and provide written notice that complies with the statute's specifics.

Section 1947.12 caps annual rent increases at the lesser of 5% + CPI or 10%, calculated over any 12-month period. Rolling-window calculations and the prohibition on "stacking" multiple increases are common audit points.

C. Local Ordinance Overlays (LA RSO, SF, Santa Monica, Oakland)

AB 1482 expressly preserves stricter local regulation. Key overlays GPLG attorneys encounter:

• Los Angeles Rent Stabilization Ordinance (RSO): covers most pre-1978 multifamily; tighter rent caps tied to CPI (capped at 8%); enumerated just causes; relocation assistance scaled to tenant tenure and protected status.
• San Francisco Rent Ordinance: covers most pre-1979 buildings; just cause; petition-based rent increases; significant tenant buyout regulations.
• Santa Monica Rent Control Charter Amendment: among the most restrictive in the state; rent registration, MAR (Maximum Allowable Rent), and just cause apply.
• Oakland Just Cause for Eviction Ordinance and Rent Adjustment Program: covers most multifamily; CPI-based annual increases.
• Los Angeles Just Cause Ordinance (JCO), separate from RSO, covers post-1978 units and creates additional notice and relocation obligations.

Where multiple regimes apply, the most tenant-protective prevails. Notices must comply with all applicable regimes; a single technical defect (wrong cause-list, missing relocation language, missing AB 1482 advisory) voids the notice and the resulting unlawful detainer.

D. Habitability and Constructive Eviction

The implied warranty of habitability, codified in Civ. Code §§ 1941–1942 and elaborated in Green v. Superior Court (1974) 10 Cal.3d 616, requires the landlord to maintain the premises in a condition fit for human occupation. Breach is a defense to unlawful detainer (the Green defense) and a free-standing claim for damages, including emotional distress and, in some cases, punitive damages.

Constructive eviction occurs when the landlord's act or omission substantially deprives the tenant of beneficial use; the tenant must vacate within a reasonable time to preserve the claim. Counsel handling extended-pattern habitability claims sometimes invoke the continuing-violation theory developed in the FEHA harassment context — see Birschtein v. New United Motor Manufacturing, Inc. (2001) 92 Cal.App.4th 994 — by analogy, although California courts have not squarely extended the doctrine to habitability.

E. The Ellis Act (Gov. Code § 7060 et seq.)

The Ellis Act preempts local rent-control ordinances to the extent they would prevent a landlord from going out of the rental business. It permits withdrawal of all units in a property from the rental market, subject to:

• 120 days' notice to tenants (one year for tenants who are elderly or disabled and have been in occupancy at least one year);
• Recordation of a notice of withdrawal;
• Re-rental restrictions (typically two years; ten years for re-rental at an unrestricted rate in some cities); and
• Right of first refusal for displaced tenants if the units return to the rental market.

Local ordinances impose substantial relocation assistance (San Francisco's payments routinely exceed $8,000 per tenant; Los Angeles's are scaled by tenure and protected-status). Ellis Act notices are unforgiving: a single defect (e.g., failing to record contemporaneously, failing to serve the city) restarts the clock.

This analysis is for informational purposes only and does not constitute legal advice. Consult qualified counsel for advice specific to your situation. Attorney advertising.