Four-Year Time Limit for Construction Defect Claims Under Right to Repair Act Doesn’t Apply to Actual Damage Claims

Yee Law Group Inc. > Four-Year Time Limit for Construction Defect Claims Under Right to Repair Act Doesn’t Apply to Actual Damage Claims

Developers who count on California’s “Builder’s Right to Repair Act,” commonly known as “SB 800,” to close the door on construction defect claims four years after closing or completion of a project should be aware that in many respects they are sadly mistaken. A California Court of Appeals decision last year makes clear that SB 800’s four-year statute of limitations only applies when the alleged defect has not caused actual damage; claims based on actual damages are not governed by the time limits set forth in that act.

Liberty Mutual Insurance Company v. Brookfield Crystal Cove LLC

In Liberty Mutual Insurance Company v. Brookfield Crystal Cove LLC, 219 Cal.App.4th 98 (2013), the Court of Appeals held that an action to recover damages arising from defective plumbing is not subject to the four-year plumbing statute of limitations set forth in SB 800 if actual damage has occurred as a result of the plumbing defect.

The Court looked at the history of SB 800, which was passed in 2002 as a response to a California Supreme Court decision which held that construction defects that had not caused any actual damage were not actionable. SB 800 established a right to sue for such defects even if no actual damage had been incurred so long as the action was brought within the various time limits set forth in the act. Different components and trades have varying time limits in SB 800.

The appellate court in Liberty Mutual noted that the primary purpose of SB 800 was to allow homeowners to recover the cost to repair certain specified construction defects even though no actual damages had yet occurred, and not to limit those claims where actual damages had been incurred and were at issue. As such, the Court held that the preexisting statutes of limitations found elsewhere in the Code as to construction defects applied to claims of actual damages arising from construction defects. Specifically, the court cited sections 337.1 and 337.15 of the California Code of Civil Procedure which provide limitations periods on patent defects (four years) and latent defects (10 years) respectively.

The Liberty Mutual decision reaffirms that SB 800, far from imposing additional limitations on homeowners’ construction defect claims, simply provides an additional avenue for homeowners and associations to recover damages for the costs of repair even without a showing that the defect has caused any harm.

This article has been prepared by Yee Law Group Inc., PC for informational purposes only and does not, and is not intended to, constitute legal advice. The information is not provided in the course of an attorney-client relationship and is not intended to substitute for legal advice from an attorney licensed in your jurisdiction.

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