Developer Risk: Court Enforces Builder’s SB 800 Election

Opt Out of SB 800’s Prelitigation Procedures Carefully

The Fifth District Court of Appeal (Court) has held that once a builder chooses to draft their own prelitigation process as authorized by SB 800, and that process ultimately proves to be unenforceable, the builder may not then follow the statutory right-to-repair process. SB 800, the Homebuilder “Fix-It” Construction Dispute Resolution Law, was enacted in 2002 and applies to homes sold beginning January 1, 2003. SB 800 sets forth a process to avoid litigation by requiring homeowners to provide the builder with a notice of a defect, an opportunity to inspect, a right to repair and mediate a claim.

SB 800 allows the builder to elect to write their own alternative contractual non-adversarial provisions (ANAP) rather than follow the statutory prelitigation process. The election must be made at the time the home is first sold.

In Anders v. Superior Court, a builder was sued for construction defects and attempted to enforce the builder’s ANAP. The trial court found that the ANAP was unenforceable. The builder then argued that they should be able to follow the statutory right-to-repair process.

On appeal, the Court held that once the election has been made, the builder is bound by the prelitigation process chosen by the builder and cannot pursue the statutory process if the ANAP is found to be unenforceable.

For some of the homes, the builder had elected to follow the statutory prelitigation process. The homes subject to the statutory process are not affected by the Court’s decision.

For more information, contact Nick Cammarota

http://www.cbia.org/go/cbia/government-affairs/cbia-reports1/february-11-2011/court-enforces-builders-sb-800-election/

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