Residential construction defect disputes in California can be costly, complicated and confusing.

Many of the complications involve the Right to Repair Act, also known as SB 800, which the Legislature passed in 2002. It took effect in 2003.

In this two-part post, we will discuss two court decisions that have interpreted key aspects of SB 800. One case involves the subrogation rights of insurance companies on homeowners’ insurance claims. The other case involves the question of whether SB 800 is the exclusive remedy for homeowners for construction defects.

Let’s start with the question of which defects SB 800 covers and whether it is the exclusive remedy. The case we’d like to inform you about is Liberty Mutual Ins. Co. v. Brookfield Crystal Cove LLC, decided by the California Court of Appeals in 2013. (219 Cal. App. 4th 98)

The Liberty Mutual case concerned a dispute about water damage that resulted when a pipe in a sprinkling system burst. The homeowner had to move out for several months (staying in a hotel) while the builder fixed the damage.

The insurance company for the homeowner paid for the hotel. The insurer also covered other expenses related to the homeowner’s relocation.

Then the insurer sought to get those expenses back by making a subrogation claim against the home builder. The home builder contended that the claim was too late because SB 800 sets forth a four-year limit on construction defect claims for plumbing system defects.

The insurer contended, however, that SB 800 is not the exclusive remedy for construction defects. Through a subrogation action on behalf of the homeowner, the insurer sought to bring common law claims to which the four-year statute of limitations for plumbing defects under SB 800 would not apply.

The California Court of Appeals agreed with the insurer. The court said SB 800 did not impose limits on claims when there is actual property damage.

In part two of this post, we will discuss the practical implications of this decision. We will also take note of another important appellate case, KB Home Greater Los Angeles, Inc, v. Superior Court. That case concerns that status of subrogation claims when an insurer takes action to repair without informing the builder first.

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Even in an auto-dependent culture, sidewalks are important infrastructure. From business customers to dog walkers, all sorts of people benefit from well-placed pavement that helps knit a city together.

The question of who should pay to maintain sidewalks, however, has become a contentious one in Los Angeles.

Who should pay to do that – property owners or the city? In this post, we will update you on the controversy.

Ordinance on the obligation to repair

Since 1974, Los Angeles has had an ordinance making the city responsible for repairing sidewalks damaged by city trees. The ordinance was passed at a time when the city was flush with federal funds.

Those funds have long since dried up. And the city has struggled to keep up with its duty to repair the tree damage. Thousands of linear miles of sidewalks throughout Los Angeles have fallen into disrepair. This isn’t only a matter of appearances, either; cracked and broken-down streets are also dangerous, especially to the disabled.

Advocates for the disabled have therefore been particularly concerned with LA’s sagging streetscape. Faced with a lawsuit brought by disabled residents, the city has finally committed to a multi-year maintenance project, pegged to cost $1.4 billion.

That agreement, however, was hardly a resolution to the overall sidewalk problem. Last week, the LA City Council approved a plan for a new proposed ordinance that has the working title “fix and release.”

Fix and release

The wording of the proposed fix-and-release ordinance is still being drafted. But the idea is to have the city fix sidewalks, then hand off the obligation to maintain them to property owners.

It’s not a quick fix. The first priority would be sidewalks near government buildings and business or commercial property. Priority would also be given to severely damaged sidewalks and to sidewalks along highly-traveled routes.

Residential homeowners would have to bide their time. But if a property owner wants to step in and take care of the repairs without waiting for the city, the city is prepared to offer a rebate of half of the cost of repair, as long as the repair is done within three years after the fix-and-release program begins.

Next steps

The program hasn’t started yet. A key next step is to draft a new ordinance to repeal the old one that made the city responsible for sidewalks damaged by trees.

And of course the budget commitment will have to be clarified. But by the time the new fiscal year rolls around in July, the fix-and-release program is expected to be underway – with important implications for the city’s streetscape.

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The Harvard Business Review (HBR) is a highly prestigious, often-cited source of information on leading trends and the prevailing views of business elites. As such, it is hardly an oracle of the future.

And so, when HBR devotes significant space to a phenomenon such as coworking, it suggests that the phenomenon has already become influential among decision makers.

In the case of coworking that is indeed the case. And as we will discuss in this post, the rising popularity of coworking has important implications for the commercial leasing market in Los Angeles.

HBR on the benefits of coworking spaces

Coworking spaces are workplaces in which members don’t all work for the same company yet share a communal setting. This setting often features lots of amenities, such as free beer on tap or the ability to bring your dog to work.

It isn’t amenities such as free beer or gourmet coffee that are the real driver, however, behind the increasing popularity of such spaces. As the HBR noted in a recent issue, the popularity comes from the perception that a coworking setup offers a more meaningful way to work.

Since the members don’t all work for the same employer, traditional office politics are downplayed. Instead, there is the opportunity to collaborate and have conversations with other professionals – some of whom are doing very different types of work.

Harvard Business Review conducted surveys that identified other sources of satisfaction as well with the coworking setting. Another benefit is participants in coworking spaces often have the opportunity to help each other out, using their unique skills sets. And they get to do this in ways that don’t involve trying to climb the corporate ladder.

Small wonder, then, that so many people have found coworking so meaningful – and that it is becoming so popular. This is reflected in the Coworking Manifesto, an online statement that has been signed by people in upwards of 1,700 workspaces.

Implications for commercial leases in LA

The popularity of coworking is also affecting the commercial leasing market in Los Angeles. As the LA Times reported this week, firms that offer coworking space are getting plenty of business from tenants looking for that space.

As the Times pointed out, it used to be that coworking settings were associated mostly with startup companies (often in the tech industry) and with independent professionals looking for someplace other than or in addition to a home office.

What’s happening now is that more and more companies in more and more industries are looking at the advantages of coworking spaces.

It isn’t only the collaborative benefits of the shared space that are driving this, of course. The fact that leases for coworking space tend to be short-term is another. Many companies like the flexibility of such arrangements.

After all, a company may seek to respond to an opportunity in its industry by adding contract jobs or perhaps expanding in a new city. Using a coworking space allows for such responsiveness, while also keeping costs down and allowing for a way of working that employees have enthusiastically embraced.

What’s best for a particular company

As with any other commercial lease, it’s important to get sound legal counsel before signing off on a lease for a coworking space. By doing so, you will be in position for the proverbial win-win: furthering your own interest while doing something that benefits others as well.

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In economic theory, supply and demand are two laws, not one. The law of supply is one principle; the law of demand is another.

But you don’t need to have received an A in Econ 101 to know that supply and demand are intimately related – and that together they have a great effect on price. This is certainly true in the area of real estate, as we will discuss in this post.

What are some of the supply-and-demand factors that are affecting real estate investment and development in Los Angeles?

National (and global) trends

Nationally, U.S. commercial real estate has been on a strong run for the last six years. Prices have been climbing steadily every since the 2008 crash.

Today the Wall Street Journal reported that a plateau on prices appears to be in site. There are complex forces behind this, relating more to global stock markets than anything to do with particular real estate deals.

These global trends are starting to affect interest rates. Bonds that are backed up by commercial mortgages are expected to decline significantly this year compared to a year ago.

But there is still a lot of momentum in the market. Banks and insurance companies have money to lend and are often willing to do so. Real estate is still an attractive investment in many cases, often through the vehicle of a real estate investment trust (REIT).

The market in Southern California

Here in Southern California, the national and global trends we outlined above play out in a context of a real estate market that remains very dynamic. To put it in the simplest terms, it’s still pretty hot.

One way this is reflected is a highly competitive market for residential housing. In general, there is more supply than demand – especially for homes that are not on the high end of the market. This has been reflected in scenarios involving all-cash offers and bidding wars in some cases.

How is this likely to affect real estate investment and commercial real estate? Let’s take one clear example: the strength of REITs.

The benefits of REITs include ease of purchase and the receipt of quarterly dividend income. And with an REIT, these benefits are available without the burden of actively managing the property.

Pursing and protecting your interests

Of course, it’s important to get sound legal and financial counsel before investing in an REIT or any other real estate project. The laws of supply and demand create many opportunities for rich returns. But to get the best results it’s best to get guidance from trusted professionals who know how to help you pursue and protect your interests.

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Finding the right space for your business feels exciting. It marks growth and creates stability. The challenge is that commercial leases in California are long and detailed contracts. If you rush through them, small details can lead to major problems later. Knowing where many tenants stumble helps you sidestep the same mistakes.

HIDDEN COSTS IN LEASE TERMS

A lease that looks affordable on paper may hide expensive obligations. Triple net leases often pass along property taxes, insurance and maintenance. If those costs are not capped, they can rise faster than expected. Careful review keeps you from committing to payments that hurt your bottom line.

UNCLEAR REPAIR AND MAINTENANCE DUTIES

Another trap lies in repair language. Landlords sometimes expect tenants to handle repairs that go beyond day-to-day upkeep, even structural issues. Unless the lease states who is responsible, you could face bills that were never in your budget. Clarity up front protects you from these surprises.

RESTRICTIONS THAT LIMIT GROWTH

Your lease should fit your business today and in the future. Use clauses that limit operations or block subleasing can prevent growth. When your company changes direction or expands, these limits may stop you from making smart moves. Spotting restrictive language early preserves flexibility.

OVERLOOKED DISPUTE RESOLUTION TERMS

Most tenants skip over dispute resolution clauses yet they carry real weight. Some require arbitration, others force you to handle cases far from your property. Both options can add time and expense if conflict arises. Addressing this section before you sign can save you headaches later.

PROTECTING YOUR BUSINESS

A commercial lease is more than a rent check. It defines your rights and responsibilities for years. By catching hidden costs, unclear duties, restrictive clauses and unfair dispute rules, you safeguard your business. Speaking with a real estate attorney before signing helps ensure your lease supports your goals and keeps your investment secure.

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Every property development deal starts with a vision: new buildings, new tenants, new opportunities. Maybe you’re chasing a dream project or expanding your portfolio. Either way, the stakes are high. One missed detail, one shaky contract or one unexpected delay can throw everything off. That’s why bringing in legal support at the right time isn’t just a smart move, it’s how you protect the future you’re building.

BEFORE YOU SIGN ANYTHING

The deal begins long before construction starts. Once you’re talking numbers, timelines or partnerships, it’s time to involve legal counsel. A real estate attorney can review letters of intent, draft contracts and make sure you’re protected from the start. Having legal guidance early on helps set clear terms that avoid confusion down the road.

WHEN ZONING OR LAND USE ISSUES COME UP

Zoning laws in LA and Orange County can be tricky. One misstep can stall or even shut down your project. An attorney helps you understand local rules, file for zoning changes or respond to community challenges. They can also advise you on setbacks, easements and land use limitations that might impact your plans.

DURING PERMITS AND ENVIRONMENTAL CHECKS

Getting permits is more than checking boxes. You’ll need to meet strict deadlines, file the right documents and sometimes deal with environmental reviews. A lawyer who knows the system can guide you through each step. If a review is required, they can help make sure you follow state and federal rules while keeping your timeline intact.

IF A DISPUTE BEGINS TO SURFACE

Disputes happen in real estate. Whether it’s with a contractor, tenant or partner, the sooner you act, the better. Legal support early on can help you manage the conflict and avoid going to court. A strong legal response can protect your project, your budget and your reputation.

WHAT TO KEEP IN MIND

Property development is full of moving parts. Bringing in legal support at key moments can protect your investment and help you stay focused on the bigger picture. If you’re unsure whether a situation calls for legal help, it often does. Speaking with a trusted attorney can bring clarity and keep your project on track.

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Artificial intelligence (AI) has transformed industries, including real estate. AI-powered tools and platforms have revolutionized property search and management by providing personalized recommendations and predictive analytics, which help buyers and investors make informed decisions. These technologies help to analyze large amounts of data, including market trends, property values, and consumer preferences, to offer insights that were previously difficult to obtain. AI has also streamlined operations through automation, reducing the time and effort required for tasks such as property valuation, document management, and customer service.

As is true with any technology, with the benefits come risks. One that is of particular concern is the use of these same technologies for title fraud. Title fraud involves the illegal transfer or manipulation of property ownership records, often resulting in significant financial loss and legal complications.

HOW DOES AI-DRIVEN TITLE FRAUD WORK?

Fraudsters can use AI to manipulate digital records, create convincing fake documents, and impersonate individuals in real estate transactions. These capabilities make it easier for fraudsters to commit title fraud, potentially leading to:

• Financial loss: Victims may lose their property or face costly legal battles to reclaim ownership.
• Legal complications: Resolving title fraud can involve lengthy and complex legal processes, straining resources and time.
• Damage to reputation: Investors and buyers may suffer reputational harm, affecting future business opportunities.

It is important for anyone involved in real estate transactions to be aware of these potential risks so they can take steps to protect their investment.

HOW CAN I PROTECT MY REAL ESTATE INVESTMENT?

Proactive measures are important. It is always wise to verify the authenticity of property documents and ownership records. It is also helpful to regularly review transaction records and stay informed about any changes in property ownership. Promptly address any discrepancies or suspicious activities.

AI-driven title fraud poses a serious threat to real estate investments. Understanding the risks and adopting preventive measures will help protect property ownership. By conducting thorough due diligence, utilizing secure technology, and monitoring transactions closely, investors and property buyers can safeguard their investments against fraudulent activities.

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Transparency is very important in real estate transactions. Sellers must disclose known issues affecting a property’s value or desirability. Failure to do so can cause serious legal consequences. This is where nondisclosure claims come in, and buyers and sellers must understand how they work.

WHAT IS A NONDISCLOSURE CLAIM?

A nondisclosure claim is an available legal remedy for when a seller fails to inform the buyer about known problems with the property. These issues could include structural damage, pest infestations or legal disputes. If the buyer discovers these problems after the sale, they may have grounds for legal action.

COMMON ISSUES TO DISCLOSE

Under California law, sellers of residential properties with one to four units must provide a Real Estate Transfer Disclosure Statement (TDS). This form requires sellers to reveal known facts and details about the property’s condition that might affect a buyer’s purchase decision.

The law also requires real estate agents to conduct a visual inspection of the property. Then, they have a duty to disclose any issues and potential hazards, including:

• Lead-based paint: For homes built before 1978
• Natural hazards: Properties in flood zones, earthquake fault zones or fire hazard areas
• Pest infestations: Any history of termite damage or other pest issues

Failure to disclose these may lead to more than just buyer dissatisfaction.

CONSEQUENCES OF NONDISCLOSURE

If a seller or agent fails to disclose all the information about the property, the buyer could sue for damages or cancel the sale. These violations may also result in fines and disciplinary action by the California Department of Real Estate. Therefore, a full and honest disclosure is not just a formality. It is a critical legal obligation in every real estate transaction.

OBLIGATIONS OF SELLERS AND BUYERS

Sellers should disclose everything and provide all required documentation on time. For their part, buyers should:

• Review all disclosures.
• Hire a qualified home inspector.
• Consult with a real estate attorney if they suspect something important is missing.

Sellers and buyers need to understand the rights and responsibilities involved in real estate transactions. Both parties should consider consulting a real estate attorney. They can explain available legal options. They could also protect their client’s interests. Most of all, they could help prevent costly mistakes during or after the sale.

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Every professional needs to consider the risks of doing business, including facing claims about substandard services from clients. Insurance coverage is one of the most important means of mitigating professional liability. Skilled, licensed professionals often carry specialized insurance coverage.

For example, real estate agents may carry errors and omissions coverage in case they accidentally make mistakes on paperwork or give their clients improper advice. Professional liability insurance can protect individuals from lawsuits by providing direct compensation to clients affected by mistakes that they have made.

Coverage is critical to avoiding litigation and ensuring personal financial liability. How much professional liability coverage do people running their own practices or small businesses generally need to carry?

CLIENT DEMANDS OFTEN SET THE STANDARD

When a professional specifically partners with businesses, they may find that the companies that hire them have a standard expectation for insurance coverage. Frequently, those contracting with businesses need to have proof of at least a million dollars in professional liability coverage. Maintaining that amount of coverage can indemnify the professional in the vast majority of cases where clients might make a claim. It can also help make them eligible for lucrative contracts with successful businesses.

POTENTIAL LOSSES CAN INFLUENCE COVERAGE AS WELL

The nature of the services that a professional provides can influence how much coverage might be necessary for their protection. Architects who could face multiple claims from different parties if an error results in an unsafe edifice might need to carry more than a million dollars in coverage. Their policy may need to cover the losses suffered by the property owner and any injuries people incurred when an issue arose.

The more people that a single mistake could impact and the greater the likelihood of a professional’s mistakes causing substantial financial setbacks, permanent injury or death, the more important generous amounts of coverage become. Professionals may need to sit down with someone who understands liability rules and insurance regulations to decide what amount of coverage is necessary for optimal protection.

Purchasing adequate insurance coverage is a key step toward limiting personal and professional liability. Professional liability insurance can help protect people against mistakes or oversights that could not only affect their careers but also their personal finances.

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Developing multiple properties at once presents both opportunity and risk. For investors in Southern California, where real estate values are high and regulations are complex, strategic planning is important when it comes to working towards both profitability and long-term success. 

If you are a real estate developer and you’re hoping to expand your portfolio in the near future, it’s important to understand the risks and potential rewards of developing multiple properties, especially if you’re doing so simultaneously. Whether they’re mixed-use, residential or commercial, the properties in your portfolio should ideally serve your short-term and long-term goals alike.

PRIMARY CONSIDERATIONS 

One of the most important early steps is establishing the right legal structure for your investment. Investors often create separate entities—such as LLCs—for each property to limit liability and isolate risk. If one project encounters financing issues or a legal dispute, the others can remain protected. 

Financing also requires careful attention. While it may be tempting to use a single loan or credit line to fund multiple developments, this approach can leave you vulnerable if one property stalls or exceeds budget. Diversifying financing sources and securing property-specific loans can help manage cash flow and reduce financial exposure. Investors should also work closely with their legal and financial teams to review loan terms, ensure proper collateral arrangements and maintain clear documentation for each transaction.

Another strategic consideration is your development timeline. Staggering project phases—rather than building everything simultaneously—can help smooth cash flow, allow for adjustments based on market conditions and provide flexibility to respond to construction or supply chain setbacks. It also enables you to apply lessons learned from one project to the next, refining design, budgeting and marketing strategies as you go.

Finally, clear contracts with all vendors, contractors and investors are going to be important as well. Multi-property development creates many moving parts, and having solid legal agreements in place can help to prevent costly disputes and better ensure accountability at every stage.

In short, developing multiple properties demands strategic foresight and strong legal guidance. By addressing financing, legal structure, zoning, contracts, etc., from the outset, you can more effectively protect your investments and position your projects for lasting success.

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