Right To Repair Act Protects Builder For Claims Arising After Owner Makes Repairs

The Right to Repair Act, which can be found in Civil Code sections 895-945.5 deals with the requirements for actions for construction defects in new residential construction. The case of KB Home Greater Los Angeles , Inc. v. Superior Court specifically deals with the builder's right to repair defects.

 

In this matter, a new home was bought from the builder, KB Home, in 2004. The purchase agreement included a right to repair addendum. In 2010, a water leak was discovered in the home. Rather than contacting KB Home to let them know about the defect and give them an opportunity to repair it, the owner contacted its insurer, Allstate. The insurance company had all repairs that needed to be made completed and then sent KB Home a notice of its intent to recover payment for loss at the subject property. In November, Allstate sent KB Home a demand for settlement of the loss for over $80,000, to which KB Home did not respond.

 

Allstate filed a complaint for subrogation against KB Home in March of 2011. A subrogation claim is typically a claim to recover for money paid to an insured asserting that the defendant was responsible for the claim. KB Home raised the defense that the owner and Allstate failed to serve a notice of claim thereby allowing KB Home to repair the defect, and therefore it could not be held liable.

 

Civil Code section 910, states in part:

 

"Prior to filing an action against any party alleged to have contributed to a violation of the standards..., the claimant shall initiate the following prelitigation procedures:

(a) The claimant or his or her legal representative shall provide written notice... of the claimant's claim that the construction of his or her residence violates any of the standards set forth... and shall state that the claimant alleges a violation pursuant to this part against the builder, and shall describe the claim in reasonable detail sufficient to determine the nature and location, to the extent known, of the claimed violation..." (emphasis added)

 

Following numerous legal pleadings to the trial court, the trial court held that the prelitigation procedure of the Right to Repair Act did not apply to Allstate's subrogation claim and that KB Home lost its right to assert a lack of notice because it received and did not respond to the notices that were given in 2010. Importantly, the notices sent by Allstate were seeking reimbursement for repairs that they had already paid for, rather than notices that there were actionable defects that required repair.

 

Allstate argued that Civil Code section 910 does not expressly require that notice be given to the builder before repairs are made. However, the appellate court held that it cannot be said that substantial compliance with the prelitigation requirements were had because KB Home was notified months after the defect was repaired. Further, KB Homes was not actually notified of the defect but of Allstate's subrogation claim to recover for the owner's loss; at that point in time there was no longer any defect for KB Home to inspect or repair. The appellate court ruled in favor of KB Home and ruled that the trial court should have entered judgment for KB Home because it was not given notice prior to making the repairs.