California's effort to reform laws governing construction defect liability for condominiums has failed, as Assembly Bill 1903 did not pass before the legislative session concluded. The bill, which had cleared the Assembly with no opposition in May, faced significant amendments in the Senate. Consumer attorneys and homeowner association groups opposed the revised bill, arguing it would shift risk from builders to homeowners and make it more difficult to uncover and address widespread defects.
Despite broad bipartisan support and pressure from industry groups, the bill stalled. A key analysis from a Senate committee indicated that while litigation may add costs, it is not the primary reason for the sharp decline in condo production in California since a post-2007 peak. Factors such as rising labor and material costs, permitting requirements, fees, regulatory hurdles, local opposition to housing, financing availability, buyer demand, and land values were identified as more significant culprits.
A related bill concerning liquidated damages for buyers walking away from sales contracts was also stalled in committee by the California Association of Realtors. With both major condo bills sidelined, lawmakers and industry groups are expected to regroup to address the ongoing shortfall in condo supply.
