Construction defects.

The entire 'Certified Buildings' chapter (Sections 939-939.5) is deleted. This optional program allowed builders to get buildings certified through private inspection during construction, which would then give the builder its own claims process and deemed releases if claimants refused repairs for more than 7 days.

New Section 945.6 provides that the amendments apply to structures regardless of date of substantial completion or close of escrow (retroactive application), EXCEPT for claims where a Section 910 notice was served before the operative date and actions already commenced before the operative date.

A new Chapter 6 (commencing with Section 945.9) is added to Title 7 of Part 2 of Division 2 of the Civil Code. The full content is not visible in the truncated diff.

New Section 895 adds detailed definitions for 'structure,' 'designed moisture barrier,' 'actual moisture barrier,' 'moisture barrier,' 'unintended water,' 'living space,' 'nonhabitable space,' 'actionable water intrusion,' 'close of escrow,' and 'claimant/homeowner.' These definitions establish the framework for how water intrusion claims are evaluated.

Section 896 is substantially rewritten with detailed construction standards organized into categories: water issues (doors, windows, roofs, decks, foundations, hardscape, stucco/siding, retaining walls, plumbing, showers, tile), structural issues, soil issues, fire protection issues, plumbing/sewer (4-year limitation), electrical (4-year limitation), and other areas including manufactured products, heating, air conditioning, noise transmission, irrigation, wood posts, steel fences, paint, roofing materials, landscaping, ceramic tile, dryer ducts, and public health hazards. Many categories have specific time limitations ranging from 1 to 5 years from close of escrow.

Section 897 is revised so that unaddressed functions or components are actionable only if they cause damage 'to another component part' rather than just 'causes damage,' narrowing the scope of the catch-all provision.

New Section 898 lists items that are NOT violations if they do not result in damage to another building component: hairline cracking, efflorescence, temporary moisture condensation, and staining outside of living space. This creates a safe harbor for minor cosmetic issues.

Section 930(b) changes from mandatory dismissal ('the motion shall be granted') to discretionary action. The builder may now bring a motion to dismiss without prejudice OR, in the alternative, a motion to stay. The court has discretion on awarding attorney's fees.

Section 942.2 (insurer deductible protection) is delayed from immediate effect to 'Effective July 1, 2027.' Insurers will not be prohibited from asserting repairs as voluntary payments against deductibles until that date.

Fiscal committee review changed from 'yes' to 'no,' indicating the bill no longer requires fiscal committee approval, likely because the retroactivity and scope changes altered the fiscal analysis.

Amendments to Civil Code Section 5800 (volunteer officer/director liability protection with minimum insurance requirements of $500,000 for developments of 100 or fewer units and $1,000,000 for larger developments) were entirely removed from the bill.

Amendments to Civil Code Section 6150 (requiring association boards to provide written notice to all members at least 30 days before filing a civil action against a developer, including a bold warning that litigation may affect property value and ability to sell or refinance) were entirely removed from the bill.

Section 945.2 changed from a flat prohibition on recovering investigative costs (abrogating Stearman v. Centex Homes) to allowing recovery of investigative costs if, after written notice is served, the builder is provided at least 21 days' notice before any inspections and testing and an opportunity to attend.

Section 945.1 was modified to clarify that the filing conditions apply per violation and added the phrase 'unless otherwise agreed to by the parties,' giving claimants and builders flexibility to negotiate around the pre-filing requirements.

The pre-litigation notice requirement under Section 910 no longer requires that in cases involving a group of homeowners or a homeowners association, the notice be signed by each affected homeowner and verified by the association president for common area claims. The notice now only needs to be signed by the claimant.

Section 930(b) now provides that in addition to a motion to dismiss, a builder may alternatively bring a motion to stay proceedings until the pre-litigation requirements are satisfied, giving courts an additional tool and potentially preserving claims rather than dismissing them outright.

A new introductory paragraph was added to the Legislative Counsel's Digest describing existing law on construction defect claims and summarizing the bill's changes, including the prohibition on insurer voluntary payment assertions and the authorization of builder releases for repair work.

Section 945.2 was removed from the list of sections the bill adds to the Civil Code, eliminating an entire provision from the bill.

Section 897's catch-all provision was narrowed. The old text stated that an unaddressed function or component is actionable 'if it causes damage.' The new text requires that it 'causes damage to another component part,' meaning standalone damage without harm to a separate component may no longer be actionable under the catch-all.

The separate definitions for 'designed moisture barrier' and 'actual moisture barrier' were removed from Section 895. Only a single 'moisture barrier' definition remains, described as a discrete component whose primary purpose is preventing water intrusion into the building enclosure.

Water intrusion standards in Section 896 were simplified by removing references to 'designed or actual moisture barriers' and internal barriers within systems. For example, the window/door standard no longer references internal barriers within the systems themselves, and the roof standard no longer includes a definition of what constitutes a 'system.'

A standard requiring that foundation systems and slabs not allow water or vapor to enter the structure so as to limit installation of flooring materials was removed from Section 896(a). This eliminates a basis for claims about moisture interfering with flooring choices.

Removed the provision (former Section 929) that allowed builders to make a cash offer without repair and obtain a full release, including waiver of Section 1542, in exchange for either a cash payment or repair. Builders can no longer use this mechanism under the bill.

Removed the exclusive remedy provision (former Section 942.1) that would have made the construction defect title the sole remedy for any claim seeking damages arising from residential construction, design, surveying, planning, supervision, testing, or observation of construction. Homeowners may now potentially pursue claims outside this title.

Removed the amendment to Section 5980 that would have excluded construction defect claims from an association's standing to institute, defend, settle, or intervene in litigation pertaining to damage to separate interests it is obligated to repair.

Removed the provision (former Section 945.3) that would have protected common interest development associations and their officers and directors from breach of fiduciary duty liability for deciding not to file a construction defect claim or action.

Restructured Section 910(a) notice requirements from a single paragraph into five numbered subparts, organizing the required elements (claim statement, signature/contact info, description of violation, evidence, and legal effect) more clearly. Changed 'observable evidence' to 'evidence' in several places, potentially broadening what must be included.

Removed empty subsection 942(a)(4) and renumbered subsequent sections. Updated the bill's title to reflect the reduced list of amended and added code sections.

Creates a new optional 'certified building' program (Chapter 4.5, Sections 939-939.3) allowing builders to obtain private inspections during construction. Once certified, the status cannot be challenged, and the builder gains the right to set its own claims process, unrestricted inspection and repair access, and a deemed release if the homeowner blocks access for more than 7 days.

New Section 942.1 makes the construction defect title the exclusive remedy for any claim seeking damages arising from residential construction, design, surveying, planning, supervision, testing, or observation of construction, whether based on statute, common law, or contract.

Section 5980 excludes construction defect claims (Title 7) from the association's standing to sue for damage to separate interests, effectively preventing homeowner associations from bringing construction defect lawsuits on behalf of members.

Section 942 raises the burden of proof: homeowners must now affirmatively demonstrate (1) a violation exists, (2) it caused appreciable nonspeculative present physical damage to another component part, and (3) it was caused by original construction. Previously they only needed to show the home did not meet the applicable standard.

Section 926 is repealed. It previously prohibited builders from obtaining a release or waiver in exchange for legally mandated repair work and allowed claimants to sue after repairs for inadequate repair. Its removal allows builders to obtain releases for repairs.

New Section 945.2 prohibits recovery of investigative costs, abrogates Stearman v. Centex Homes (2000), prohibits claims based on extrapolation, and limits testing of structural components to conditions realistically expected at that location.

Section 910 expands prelitigation notice requirements to include observable evidence of damage, copies of photographs, estimates or reports, and the specific room where evidence is found. For groups or associations, each affected homeowner must sign, and common area claims must be verified by the association president.

Section 930 changes the builder's remedy for noncompliance from a motion to stay (which the court could deny) to a motion to dismiss that the court must grant if the claimant failed to follow prelitigation procedures.

New Section 6150(a)(4) requires a bold 12-point warning statement in pre-filing notices to members stating that filing may affect property value, ability to sell or refinance, and may require access, depositions, discovery responses, and disclosures to future buyers.

New Section 945.3 provides that association officers and directors are not liable for breach of fiduciary duty for deciding not to file a construction defect claim or action.

Section 929 expands the builder's ability to obtain a release: previously limited to cash-only offers with a 'reasonable' release, now allows a full and general release including waiver of Section 1542 in exchange for either cash payment or repair.

New Section 6150(c) requires 75 percent of association members to vote in favor before a civil action can be filed against a developer. Failure to obtain the vote is a defense resulting in dismissal. Vote records are discoverable without redaction.

New Section 942.2 prohibits insurers from asserting repairs as voluntary payments, claiming they were made without consent, or denying that repair costs count against a deductible or self-insured retention.

Fiscal committee designation changed from 'no' to 'yes,' indicating the amendment introduced state fiscal impact that was not present in the original bill.

The requirement for builders to provide a minimum one-year express written limited warranty covering fit and finish items (cabinets, mirrors, flooring, walls, countertops, paint, trim) is entirely removed from the bill.

New Section 939.5 limits the certified buildings chapter to condominium projects (as defined in Section 4125) or townhouse developments constructed on or after January 1, 2027 only. Single-family homes and other property types are excluded.

New Section 939.4 establishes detailed inspector qualification criteria: must be a private licensed architect, engineer, or general contractor; no direct or indirect financial interest in the builder or developer; no more than 10 percent of gross professional revenue from the builder or its affiliates in the two preceding calendar years; and not an employee, agent, officer, or director of the builder, developer, or subcontractor within the preceding five years. Inspectors must certify compliance to the Department of Real Estate, which must post a list of eligible inspectors on its website by July 1, 2028.

A new inspection category is added to the certified buildings chapter: mandatory health and safety features including seismic safety and fire suppression features, in addition to the existing categories (grading, foundations, framing, plumbing, exterior applications).

Section 926 is changed from a complete prohibition on releases after repair to allowing builders to obtain a release or waiver of any kind in exchange for repair work one year after the conclusion of the repair. Previously the bill barred all post-repair releases.

Section 930(b) is changed from allowing a builder to bring a motion to stay a court action until prelitigation requirements are met, to requiring the court to grant a motion to dismiss any action if the claimant does not conform with chapter requirements. This converts a discretionary procedural tool into a mandatory dismissal.

The fiscal committee designation changes from 'no' to 'yes,' indicating the bill now carries state fiscal implications, likely due to the new Department of Real Estate obligation to maintain and post a list of eligible inspectors.

New Section 5800 added to the Civil Code providing that volunteer officers and directors of common interest development associations are not personally liable beyond insurance coverage for tortious acts or omissions, provided the act was within scope of duties, in good faith, and not willful, wanton, or grossly negligent. The association must carry minimum insurance of $500,000 (100 or fewer units) or $1,000,000 (more than 100 units). Protection only applies to volunteers who are tenants of a residential unit or own no more than two residential separate interests.

Wilson elevated from a coauthor listed separately to a joint author alongside Wicks, changing the bill's introduction line from 'Assembly Member Wicks' with Wilson as coauthor to 'Assembly Members Wicks and Wilson.'

Section 5800 clarifies that the scope of association duties covered by the liability protection includes both the decision whether to investigate latent deficiencies before the statute of limitations expires and the decision whether to commence a civil action against the builder for defects in design or construction.

Section 6150 now requires that the pre-litigation notice to association members be sent by first-class mail, certified and return receipt requested. The builder receives 'a sample of what was sent to the members simultaneously' rather than a courtesy copy of each individual notice.

Section 930(b) changed from requiring claimants to 'conform with' prelitigation requirements to only 'substantially conform,' and the resulting motion to dismiss is now 'without prejudice' rather than a plain dismissal. Attorney's fees on such motions are now limited to 'reasonable' fees actually 'incurred.'

Section 942 restructured: the requirement that all claims be subject to affirmative defenses in Section 945.5 was moved from subdivision (a) (which lists what a claimant must affirmatively prove) into a new subdivision (b), separating the elements of proof from available defenses.

Section 910 changed 'the room within the home or unit in which that evidence may be found' to 'specific location of the evidence within the residence,' broadening the description from just rooms to any specific location, and using 'residence' instead of 'home' in several places.