SAN FRANCISCO — The homeowners association for a historic landmark in San Francisco has received $1.5 million settlement following application to the Senate Bill 800 claims process years earlier.
Also known as California’s “Builder’s Right to Repair Act”, SB 800 claims is a pre-trial resolution process applying to new construction or major remodeling dating back to Jan. 1, 2003. The correction of any defect that, if left ignored, would cause actual — as opposed to economic — damage was covered by SB 800. These claims have application time limits that are complex and left many complaints unaddressed.
Damage from a pre-existing defect that occurred outside of the four years was not specifically addressed by SB 800, and this situation continued for 10 years.
Then came Liberty Mutual Insurance Company v. Brookfield Crystal Cove (2013). Following the ruling, associations were no longer bound by SB 800 or civil-procedure awards and could now use tort actions to recover awards from actual physical damage that occurred to common areas as a result of defects.
A year later, in Burch v Superior Court, Liberty was reaffirmed and extended the rights of associations, stating that a builder could be held directly responsible for negligence pertaining to damages occurring beyond the time limit set by SB 800.
A third option has recently emerged. Another case ruling said that parties to an agreement could design their own claims procedure as long as the terms were not “unconscionable.”
Rachel M. Miller, senior partner of The Miller Law Firm, told the Northern California Record that when “ the developer wants to deviate from the standard pre-litigation procedures set up under SB 800, they can opt out and establish their own procedures if they disclose this in the [covenants, conditions and restrictions].”
The parties mentioned previously included 201 Sansome Street Owners Association and Swinerton Builders, and concerned an office building formerly known as the Royal Insurance Building, which was converted by Swinerton in 2006 into 46 residential and two commercial units.
Following the work, according to a news release, Sansome Street Owners Association claimed that the building was plagued with numerous cases of water damage, improperly sealed windows, a damaged elevator, plumbing problems and numerous structural cracks.
The Association submitted SB 800 papers to Swinerton and the process, which, according Miller, can take between 1½ to two years, was in its second year when she was hired to re-evaluate the claim proceedings.
Within 15 months, Miller had a resolution that pleased the Association and was acceptable to Swinerton.
Asked about their reaction to the settlement, Miller told the Record that it was extremely fair.
“The HOA [homeowners association],” she said, “recovered enough money to fix the priority building repairs required.”
Miller also addressed the lengthy process.
“First, this is a historic building in the city,” she said. “This required oversight by experts familiar with city-planning requirements for restoration of historic buildings … Further, the developer of this project was long gone, took the money from the unit sales and left town. So it took time to find a responsible entity and then determine what insurance they had to pay for these damages.”
Miller noted that the prior law firm hired by Sansome practiced only general corporate law and charged on an hourly basis during the course of the 18 months.
“We hope that Homeowners Associations now know they have choices to hire construction defect specialty counsel who can help them on a contingency fee basis,” she said.
The Northern California Record attempted to speak with Swinerton Builders, but was told by its national media officer, Jack Blanchat, that the company declined to comment.