Builders, Law Firm Back Legislation
* This letter is in reference to “Measure Would Hurt Homeowners, Benefit Negligent Builders” (Sept. 10). We want to set the record straight on several points. The building industry, California Trial Lawyers Assn., and insurance interests have worked hard to assure that the legislation in no way stops homeowners from seeking legal redress from builder-created defects in their homes.
The goal of the bill is to implement an early process that will allow resolution of construction-defects disputes without exorbitant litigation costs. In addition, the building industry wants to eliminate frivolous lawsuits filed when there is no evidence of any defect and the lawsuit is filed only to generate large contingency fees from a financial settlement.
The maximum amount of time for the process included in our legislation is 90 days, which is considerably shorter than any remedy sought through the courts. The proposed process permits the builder and the association board a chance to meet to try to resolve problems before litigation is filed.
In many construction-defect lawsuits filed today, the association board begins litigation without informing residents of the community. The measure seeks to remedy this abuse by requiring that homeowners be made aware of litigation that will affect their ability to sell or refinance their property before the association board files a suit, rather than after. The bill allows homeowners to be part of the decision-making process.
The bill does not include any provisions that allow “builders to include in the homeowner association governing documents a waiver of the association’s right to seek judicial redress,” as Kenneth Kasdan states. We are left wondering just what Mr. Kasdan has been reading? Many of the other ideas he suggests would significantly add to the time to construct and the cost of housing, but would have little effect beyond the strict liability test to which builders are already held for the performance of their product.
We are not at all surprised that a construction-defect litigator like Mr. Kasdan would be opposed to a process that could result in solutions without litigation.
CHRISTINE DIEMER
Executive Director
Building Industry Assn. of Orange County
* Currently, as a matter of law, homeowners are provided with protection designed to prevent construction defects and their devastating effects, and with legal recourse to assure compensation for repair of construction defects.
Unfortunately, from the builders perspective the legal recourse provided to homeowners and their associations is abused in proliferation of meritless construction-defects suits brought not by homeowners suffering from defects, but by homeowners’ associations bullied in to bringing litigation by threats that if any defects are present that might (but often won’t) become a problem in the future, the association might become liable for breaching its fiduciary duty to homeowners and repairing the defects.
On the other hand, many homeowners enduring construction defects in their homes only find in the end that their real interests have not been duly satisfied through the construction defects litigation process.
In addition, after a long list of defects and huge repair costs are generated during litigation to posture for a large settlement figure, the homeowner trying to sell his or her home is left with an obligation to disclose this list of defects and repair costs to potential purchasers. In most construction-defects cases the settlement is inadequate (especially after litigation fees and costs are deducted) to cover the costs of repair for all the defects listed, many of which will never cause any homeowner a problem.
The legislation, currently on Gov. Pete Wilson’s desk for signing, improves the ability of common interest development homeowners, together with their homeowners’ associations, too quickly and inexpensively address legitimate construction defects directly with builders on the basis of information and test results required to determine the existence of claimed defects.
Most importantly, before proceeding to court, and if the board rejects a meeting with the builder or a settlement offer, the board must hold a meeting open to each homeowner to inform the homeowner of any potential defects and the options available to repair and redress them, and must distribute to the homeowners the information necessary for the homeowners to decide how to proceed, including any settlement offers. This process puts the homeowner, the person with the most to lose from construction defects, back into the driver’s seat in determining how to address defects.
Availability of such information in accordance with the legislation assures that the homeowners benefit from intelligent decisions with a solid basis in fact. The current litigation process forces the homeowner to rely on decisions regarding construction defects that are products of negotiation based on conjecture and posture.
MARY LYNN K. COFFEE
Corey, Croudace, Dietrich and Dragun
Irvine
