According to HousingWire, California lawmakers are preparing to tackle condominium construction defect legislation when they return from summer recess. Assembly Bill 1903, which has already cleared committees and passed one chamber, aims to establish a genuine "right-to-repair" process that would allow developers to fix construction problems before facing litigation. The bill has been amended several times following concerns from consumer advocates, with those changes narrowing its original scope and making some of its provisions less aggressive than first proposed.
A companion measure, Assembly Bill 1406, would increase the liquidated damages cap on new condo sales from three percent to six percent of the purchase price. Supporters see this as "condo deposit reform" meant to modernize one of the nation's strictest rules and discourage buyers from walking away from contracts. However, the California Association of Realtors opposed the bill in committee, citing concerns that it would shift financial risk from builders to buyers, and the bill now faces significant obstacles to passage.
The push for these reforms stems from a dramatic decline in condo construction across California over the past two decades. Research from UC Berkeley's Terner Center for Housing Innovation shows that condo starts in Los Angeles have never recovered from their collapse during the Great Recession, falling from more than eight thousand units annually at their 2005-06 peak to much lower levels. Researchers have found that defect liability litigation and insurance costs represent a substantial portion of project expenses, adding significant hard costs per unit to typical projects.
The amendments to AB 1903 reflect compromises made during the legislative process. The bill originally included a "certified building" process that would have allowed private inspectors to certify projects and lock in builder-controlled repair procedures, but that framework was removed. Other provisions were softened rather than eliminated, such as limits on investigative costs that now require builders to receive twenty-one days' notice, and a change making motion-to-dismiss procedures discretionary rather than automatic.
What I am seeing locally in the Bay Area and East Bay is strong interest in anything that might increase housing supply and address affordability. The condo market here has been hit hard by the same construction decline affecting the rest of California, and many of our clients are feeling the impact. If AB 1903 moves forward, it could potentially make condo development more economically viable for builders, which would be good news for buyers looking for ownership options at various price points.
