Commercial and Industrial Common Interest DevelopmentsConstruction Defect Litigation

Section § 6874

Explanation

This law requires that when a homeowner association (HOA) and a builder settle disputes over construction defects in common areas or individual properties, the HOA must inform all its members about how the issues were resolved. The notice should include a description of the defects that will be fixed, an estimated timeline for repairs, and the status of any unresolved claims. If the information provided changes, the HOA can update it. Importantly, sharing this information doesn't affect any confidentiality protections. 'Defects' also cover any damage caused by those defects.

(a)CA Civil Law Code § 6874(a) As soon as is reasonably practicable after the association and the builder have entered into a settlement agreement or the matter has otherwise been resolved regarding alleged defects in the common areas, alleged defects in the separate interests that the association is obligated to maintain or repair, or alleged defects in the separate interests that arise out of, or are integrally related to, defects in the common areas or separate interests that the association is obligated to maintain or repair, where the defects giving rise to the dispute have not been corrected, the association shall, in writing, inform only the members of the association whose names appear on the records of the association that the matter has been resolved, by settlement agreement or other means, and disclose all of the following:
(1)CA Civil Law Code § 6874(a)(1) A general description of the defects that the association reasonably believes, as of the date of the disclosure, will be corrected or replaced.
(2)CA Civil Law Code § 6874(a)(2) A good faith estimate, as of the date of the disclosure, of when the association believes that the defects identified in paragraph (1) will be corrected or replaced. The association may state that the estimate may be modified.
(3)CA Civil Law Code § 6874(a)(3) The status of the claims for defects in the design or construction of the common interest development that were not identified in paragraph (1) whether expressed in a preliminary list of defects sent to each member of the association or otherwise claimed and disclosed to the members of the association.
(b)CA Civil Law Code § 6874(b) Nothing in this section shall preclude an association from amending the disclosures required pursuant to subdivision (a), and any amendments shall supersede any prior conflicting information disclosed to the members of the association and shall retain any privilege attached to the original disclosures.
(c)CA Civil Law Code § 6874(c) Disclosure of the information required pursuant to subdivision (a) or authorized by subdivision (b) shall not waive any privilege attached to the information.
(d)CA Civil Law Code § 6874(d) For the purposes of the disclosures required pursuant to this section, the term “defects” shall be defined to include any damage resulting from defects.
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Section § 6876

Explanation

If a homeowners' association plans to sue a developer for damages related to common areas or homes they maintain, they must tell the association members at least 30 days before filing the lawsuit. This notice must explain that a meeting will occur to discuss the issues and possible solutions, including legal action, and provide the meeting's details. If there's a risk that the deadline to file the lawsuit will pass, the association can notify members up to 30 days after filing the suit.

(a)CA Civil Law Code § 6876(a) Not later than 30 days prior to the filing of any civil action by the association against the declarant or other developer of a common interest development for alleged damage to the common areas, alleged damage to the separate interests that the association is obligated to maintain or repair, or alleged damage to the separate interests that arises out of, or is integrally related to, damage to the common areas or separate interests that the association is obligated to maintain or repair, the board shall provide a written notice to each member of the association who appears on the records of the association when the notice is provided. This notice shall specify all of the following:
(1)CA Civil Law Code § 6876(a)(1) That a meeting will take place to discuss problems that may lead to the filing of a civil action.
(2)CA Civil Law Code § 6876(a)(2) The options, including civil actions, that are available to address the problems.
(3)CA Civil Law Code § 6876(a)(3) The time and place of this meeting.
(b)CA Civil Law Code § 6876(b) Notwithstanding subdivision (a), if the association has reason to believe that the applicable statute of limitations will expire before the association files the civil action, the association may give the notice, as described above, within 30 days after the filing of the action.
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