Protecting buyers is a good thing.

But some lawyers get rich using a defect law loophole to sue home builders up to 10 years after homes are sold, forcing huge settlements with 0 chance for actual repairs.

The problem is that making repairs under SB 800 doesn't actually protect builders from lawsuits, so developers wait to be sued to trigger coverage under their insurance policies.

Plaintiff attorneys are paid only from cash settlements, so they have little incentive to push for repairs rather than litigation. Defects are dragged into the courtroom, delaying repairs, and as a result we no longer build condominiums at scale.

The result ? California builders pay $8-18K per condo in legal insurance compared to other states, driving up condo prices. These costs are passed on to condo buyers. This is one of the many many reasons why housing is so expensive.

This bill allowed builders to fix problems in newly constructed homes before costly legal fees and court proceedings are triggered. It created a new disclosure requirement for homes that informs owners of their right to seek repairs for proven defects.

It removed the ability of Homeowner’s Associations to block successful repairs when the owner and builder both agreed in writing that repairs were successful

https://www.golden-state.org/one-law-is-killing-california-condo-building/

https://www.sacbee.com/opinion/article312956088.html

Here is research about this.

• Insurance costs are through the roof: Condo projects pay 3-4 times more for liability insurance than rental apartment projects. Developers spend $6,720-$8,400 per condo unit versus only $1,700-$2,650 for similar rental buildings.

• Almost everyone gets sued: One insurance broker estimated that 80-85% of condo and townhome projects from the past 25 years have faced construction defect lawsuits. Insurance companies now price their policies expecting that most projects will be sued within the 10-year window when lawsuits are allowed.

• Construction defect liability adds $8,100 to $18,300 per unit to building costs. That’s 1.9% to 4.4% of total construction costs

• The current system encourages lawsuits: The high number of lawsuits comes from a well-organized defect litigation industry. Law firms track when Homeowners Associations (HOAs) are formed. Then they approach HOA boards before the 10-year deadline for filing lawsuits expires. These law firms work on “contingency,” meaning HOAs don’t pay upfront costs. California law also defines construction defects very broadly.

https://ternercenter.berkeley.edu/wp-content/uploads/2025/09/241056_Construction-Defect-Liability-Impact-Report-8-18-25.pdf