Specifically, this bill requires an advertisement by an attorney or law firm that urges a person or entity to take an action that may lead to the filing or a claim for residential construction deficiencies to disclose all of the following information:

1) What alternatives to litigation are available to remedy the deficiencies.
2) Who will pay for expert fees and testing costs, and a reasonable estimate or range for them.
3) Whether a nonmonetary remedy will require payment of a fee to the attorney.
4) How much the attorney will be paid, or how their fee will be calculated.
5) Whether there will be a possibility that insufficient money remains to repair the home after the attorney, experts, and testing costs have been paid.
6) Whether the plaintiff may be liable for any costs or fees if they lose the case.
7) Whether the value of the home will be affected by filing litigation, and how that might affect the plaintiff's ability to sell or refinance the property during the litigation.
8) Whether, upon sale of the property, the owner will be required to disclose: (a) the litigation; (b) whether enough money was collected to fully fund the repair of the defects; (c) whether the defects were actually repaired.

Identical to AB 573 & AB 1038

According to the author, the sponsor has been in serious and discussions with other interested parties to address the issue of Type I indemnification agreements and related issues. As amended, this bill would provide an opportunity for the author to move forward in an effort to reach consensus on a solution to these problems. Two identical intent bills, AB 573 (Wolk) and AB 1038 (Houston), are likewise before the Committee so that these authors may likewise endeavor to seek resolution of this important issue. The author acknowledges that if the bill is significantly amended the Committee may bring the bill back for re-hearing.

In Senate

Amended 4/28/05

AB 662

La Suer

Construction Defects:

County of San Diego fires
This non-controversial bill is intended to aid persons whose homes were destroyed in the San Diego County Cedar Fire of October 2003. Specifically the law provides that nothing in Title 7 of the Civil Code shall be construed to prohibit an individual form voluntarily agreeing with a contractor to incorporate the rights and remedies of Title 7, in a contract for reconstruction of a dwelling unit or common area of a residence lost during the October 2003 Cedar Fire. This bill will sunset on January 1, 2008.

Construction Contracts: indemnity
This bill would provide that, except as specified, all agreements affecting any residential construction contract and amendments thereto entered into after 1/1/06, that purport to indemnify the builder by a subcontractor against liability for claims of construction defects or other injury to property arising from, pertaining to, or relating to the negligence of the builder or the builder’s agents, servants, or independent contractors who are directly responsible to the builder, or for defects in design furnished by those persons, or for claims that are unrelated to the scope of work in the agreement, are unenforceable. The author identifies the need for this bill as follows: "In the construction arena, developers are forcing subcontractors to contractually indemnify them for losses where the subcontractor is less than 100% negligent. In the case of a Type I indemnity agreement, the subcontractors must indemnify for losses arising out of the negligence of the developer. The only loss not indemnified for is the sole negligence or willful misconduct of the developer. In other words, if the developer is 99% negligent and the subcontractor is 1% negligent, the subcontractor must indemnify the builder for the entire loss. If the subcontractor does not agree, the developer will look for another subcontractor, essentially shopping for a willing participant.”

Type I indemnity agreements and the Presley decision have helped to cause general liability insurance rates to skyrocket as insurance companies attempt to assess the risk AB 758 of insuring work that a subcontractor is not responsible for. These two issues have had a twisted effect on the subcontractor industry. “Subcontractors who are 'here today and gone tomorrow' are the beneficiaries of these policies while the long time union contractor suffers.It is entirely unfair for the state to condone this shift of liability onto a subcontractor. Subcontractors should not be responsible for someone else's mistake."

To Senate

Amended 7/6/05

Construction defects:

prelitigation procedures
This bill would establish a general requirement for homeowners to contact the builder to inform the builder of the nature and location of a construction defect and allow the builder to inspect the defect at a mutually convenient time before the homeowner could seek legal remedies for homes purchased prior to January 2003. Exempts condominium association and other common interest development claims from the Calderon-Steinberg process for resolution of construction defect disputes if both the homeowner and the builder comply with the procedure in this bill. Supporters contend that it would help to resolve disputes quickly and effectively, avoiding the time and cost of litigation, and thereby lower the cost of insurance for builders. The Consumer Attorneys of California opposes the bill, arguing that it is unfair and unnecessary and upsets the consensus underlying SB 800 of 2002, which applies only prospectively to homes sold after January 2003.

ASM Judiciary
(Re-referred to
committee post
amendments)

Amended 4/14/05

Design-build Contracting: cities
This bill allows the cities in Solano and Yolo counties to use the design-build contracting method until January 1, 2001.

City officials must follow a four-step design build process:
1. Prepare documents describing the project and its speifications.
2. Prepare a detailed request for proposals, inviting competitive bids.
3. Establish a detailed procedure to pre-qualify design-build entities.
4. Establish the procedures to select the deign-build entity.

When pre-qualifying design-build entities, a city must collect at least 11 type of information. The entity must list its proposed mechanical subcontractors and licenses. The entity must also report past worker safety violations, contracting problems, contract defaults, license violations, payroll violations, and bankruptcies. The entity must verify this information under oaths. The bill prohibits public inspection of information that is not public under the Public Records Act. City officials must select the design-build entity by either a competitive bidding process in which the award goes to the lowest responsible bidder OR a “best value competition” in which city officials set the criteria. The winning design-build entity can use subcontractors who were not listed in its original bid. The entity must award subcontractors by following a process set by the city, including publishing notices and setting deadlines.

Senate
Appropriations
(To be heard on
8/15/05)

Amended 7/7/05