A controversial new construction defect law seen as a compromise between disgruntled new home owners, suit-wary builders and insurers overloaded with risk takes effect in California Jan. 1, 2003.

SB 800 also known as the "FIX IT" law and "The Homebuilder Right-To-Repair Law" is designed to stem the tide against new home construction defect litigation and encourage much needed residential real estate construction in the Golden State.

Over the years, the cost of the growing numbers of construction defect suits, often brought by new home consumers dissatisfied with construction quality and attempts to repair, proved too costly for both builders and insurers. As insurers withdrew from the home construction business, builders and subcontractors who couldn't afford what coverage was available were forced to curtail production. Condo and townhome construction was hit hardest.

The state's building industry says insurance costs add an average $20,000 to the cost of already expensive California housing.

The new law's critics say the law and others like them in are unnecessary because protections are already in place. Enforcing existing laws and building quality homes would have been a direct, more immediate solution.

"These new 'right to repair' laws, contractual provisions and other methods introduced by the building industry are, in my opinion, an insult to home-buying consumers, our justice system and legislature. The building industry knows full well they have the 'obligation to repair' new homes via existing laws, health and safety codes, during the construction process, and that their continued efforts of 'right to repair' nonsense are blatant attempts to escape responsibility for substandard housing," said Madera, CA-based Sandy Skipper-Lopez, director of a national advocacy group for new home consumers, Homeowners Against Deficient Dwellings (HADD).

HADD says nationwide it gets 8 to 10 complaints about new home defects every day (70 a week, 300 a month). Half all nationwide complaints are about problems so severe, the homes "probably should be bulldozed" said Nancy Seats HADD's Liberty, MO president.

Twenty percent of the complaint's HADD receives come from California and half of those complaints include comments about neighboring home owners who have similar problems with new homes.

Builders and insurers say the law is necessary because it is also designed to curtail the growing number of what the industries deem frivolous lawsuits over problems the builder often isn't given sufficient time to address.

"The only home owners we know that have filed in court, only do so after numerous failed attempts for resolve. I am at a complete loss that our legislators are not listening to the home owners themselves," said Skipper-Lopez.

The new law gives the home building industry another opportunity to prove it will respond to consumer complaints before they reach the courtrooms. In turn, that should bring insurers back into the fold and allow builders to give Californian's more homes with prices that may not escalate as fast.

Building a foundation for dispute resolution without litigation, the new law, for the first time takes defining defects out of the courtroom and details the responsibilities of both home builders and home buyers.

Builders who don't put up a quality homes get the right to make repairs. Consumers, who must perform certain sensible home maintenance tasks, get the right to non-binding mediation and litigation if they aren't satisfied with mediation.

With a host of exceptions among the many provisions, the new law generally:

Published: December 19, 2002

Use of this article without permission is a violation of federal copyright laws.

A journalist for 35-years, Broderick Perkins parlayed an old-school daily newspaper career into a digital news service offering editorial content and consulting services. Perkins' San Jose, CA-based DeadlineNews Group includes the flagship news site, DeadlineNews.Com, offering real estate, personal finance and consumer journalism, and a backshop, the Deadline Newsroom.