"Assembly Bill 1406 would raise the state's liquidated-damages limit on new condominium sales from 3% of the purchase price to 6%. Backers frame the bill as condo deposit reform to modernize a rule that is among the strictest in the country."
"The other bill, AB 1903, proposes changing condo construction defect liability rules to create a true right-to-repair process for condo defect claims so developers can fix problems without immediate high-stakes litigation."
"A Terner Center follow-on study estimated the impact on hard costs on an L.A. project could be $8,100 to $18,300 per unit. While construction defect liability and related costs are certainly not the sole or even primary cause of relatively tepid condominium development in California, it is an important contributing factor among many others."
California lawmakers are evaluating bills aimed at reviving condominium construction, which has significantly declined since the Great Recession. Assembly Bill 1406 proposes increasing the liquidated-damages limit on new condo sales from 3% to 6%, while AB 1903 seeks to reform construction defect liability rules to facilitate a right-to-repair process. A study by the Terner Center indicates that construction defect litigation and insurance costs contribute to the decline in condo development, with developers increasingly focusing on apartments instead of for-sale condos.
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