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California's SB 800 After 15 years of construction defect lawsuits, the state of California now faces the worst housing crisis in its history. Hailed as a long-overdue measure to help assure affordable housing, SB 800 sailed through both houses of the California Legislature late last year without a single nay vote. "Known as the ‘Fix-It Bill,’ this legislation aims to put a stop to endless litigation against home builders and to set the stage for a condominium comeback that will provide affordable housing once again for California's working families," said Michael Pattinson, former president of the California Building Industry Association. Condo construction has dropped 90 percent in The Golden State, with some 100,000 less single-family homes being built each year than what the population of California demands, a crucial factor in the state’s single-family home median price of $323,700. That figure is well beyond reach of most working families, according to Pattinson, and the negative effects of such high housing costs are felt by working people every day. "Teachers, firefighters, firefighters, police officers, nurses and other key members of our communities can no longer afford to live where they work," Pattinson said. They must make ever longer commutes in order to own a home. SB 800 gives home builders the absolute right to repair problems, and defines a construction defect and the standards of quality that home buyers can expect when they purchase a new home. The bill also assigns maintenance duties to the homeowner and repairs duties to the builder. The bill allows litigation alternatives such as mediation and arbitration that will reduce costs, and gives homeowners an alternative of seeking cash settlements in lieu of actual repairs. Although one of the provisions protects homeowners by providing recourse in court if the builder fails to correct the defects or ignores the problems, the bill also allows a homeowner to sue their builder even if the repairs were made. Facing suits even after making repairs, builders may take homeowners up on the "cash offer" provision that allows them to settle the dispute in cash and "obtain a reasonable release in exchange for the cash payment." The builder even gets to negotiate the terms and conditions of the release. A "return" of insurance companies who fled the state is hoped for by supporters of the bill. Pattinson said that insurers fled California in the surge of defect lawsuits in the mid-80's and throughout the 90's. In some counties such as San Diego County, every condo project built in the last 20 years has been litigated for construction defects. Resuming high-density condo construction is a top priority, and a call to relax some of the regulatory restrictions on such projects was voiced during negotiations on SB 800. With condominium production at the present levels, many builders are converting rural land into housing tracts. High density condos in already developed cities and towns will relieve pressure on rural lands, and provide homes closer to where working people are employed. SB 800 was passed on the last day of the 2002 legislative session after months of negotiations between the association, trial lawyers, the insurance industry and top legislative leaders. Although negotiations nearly collapsed several times, the bill survived with its main provisions intact and met no resistance on the floors of either house. Ultimately, it was agreed that California’s housing affordability crisis would continue until builders could resume widespread production of affordable condos. Take a closer look at the bill: California's SB 800 - Good News & Bad News
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