In 2019, California enacted several important laws surrounding construction. These deal with a variety of issues, ranging from structural hazards to licensing violations. Whether you are a homeowner or a construction industry professional, the new laws may impact your ongoing or planned projects. Check out our legislative digest below to find out more about all these new laws.
Senate Bill 721 (SB-721) – The Balcony Bill
SB-721, also known as the Balcony Bill, was enacted in response to a tragic balcony collapse in a Berkeley apartment building. The incident claimed 6 lives and caused 7 injuries after the balcony’s rotten joists gave way during a party. Dry rot, caused by poor moisture proofing during construction, and exacerbated by neglect, took the blame for the joists’ failure.
SB-721 aims to prevent similar disasters. It mandates inspections of exterior elevated elements, such as balconies, decks, stairways, and walkways, in multifamily residential buildings with over three dwelling units. The inspections must be performed by a licensed architect, licensed civil or structural engineer, a building contractor with specified licenses, a certified building inspector, or a building official.
Owners of affected buildings must have the inspections performed by January 1st, 2025, and every 6 years going forward. Conditions found to pose an immediate threat to the safety of occupants must be rectified without delay. If the repairs are not urgent, the owner has 120 days to secure a permit for the work, and another 120 days to complete the work. If the repairs are not completed within 180 days of the inspection report, the inspector must notify the owner and the local enforcement agency. From this point, the owner has 30 more days to complete the work before being subjected to a civil penalty in the form of a fine ranging from $100 to $500 per day until the repairs are finished.
Senate Bill 981 (SB-981) – Water Treatment Contracts
With some exceptions, existing law allows buyers to cancel a home improvement contract within 3 days of execution. SB-981 allows contractors to install water treatment devices sold under a home improvement contract within the 3-day rescission period. Should the buyer rescind the contract, the bill requires the contractor to remove the device from the buyer’s property at their own cost, and restore the property to its original condition within 20 days.
Senate Bill 1087 (SB-1087) – PACE Financing
Property Assessed Clean Energy (PACE), is a mechanism for financing energy efficiency and renewable energy improvements on residential and commercial properties. The program allows owners to finance the up-front costs of eligible improvements and pay them back through an assessment of the property.
Despite its innovative approach to enabling energy efficiency upgrades, the program has been exploited by aggressive salespeople, who have often taken advantage of vulnerable homeowners. As a result of forceful sales tactics, many homeowners wound up with debt they could not afford.
Senate Bill 1087 (SB-1087) was enacted to protect homeowners from assuming debt that’s outside their means. The bill’s provisions require rigorous training, testing, and oversight over PACE assessment solicitors. The bill also outlines eligibility criteria that both the homeowner and their property must meet to qualify for PACE financing.
Senate Bill 1465 (SB-1465) – Civil Actions Reporting
In California, building contractors are licensed and regulated by the Contractors State License Board (CSLB), an agency within the Department of Consumer Affairs. Before SB-1465, contractors had to inform the CLSB of all criminal convictions stemming from their work but were not obligated to disclose the results of civil actions. An investigation into the Berkeley balcony collapse found that the contractor that constructed the building had paid out $26.5 million in damages over the course of 3 years before the disaster. Unaware of the civil actions, the CSLB never had grounds to investigate the contractor.
SB-1465 addresses the loophole in reporting actions against contractors. It requires contractors to inform the CSLB of court decisions, settlements, and arbitration awards over $1 million if they stemmed from defects in multifamily residential buildings. The bill further requires contractors’ insurers to submit their reports of applicable actions to the CSLB.
Assembly Bill 2705 (AB-2705) – Workers’ Compensation Insurance
In California, contractors performing most construction activities worth over $500 need a current license from the CSLB. As a precondition for obtaining and keeping their license, contractors must have a valid Workers’ Compensation Insurance Certificate to cover the medical costs of their employees’ workplace injuries and the resulting lost wages. Under existing law, licensed contractors operating without valid insurance are guilty of a misdemeanor, and their offense may be prosecuted within 2 years of commission.
Unlicensed contractors, operating legally or illegally, were not subject to the same requirement. Homeowners, who hired unlicensed contractors would unwittingly become their workers’ employers. As a result, some homeowners became vicariously liable for injuries sustained by their contractors’ workers.
AB-2705 is an effort by the state to compel unlicensed contractors to insure their workers against on-job injuries. The bill requires contractors operating without a license to hold a valid Workers’ Compensation Insurance Certificate. The bill also subjects them to the same criminal penalties and statute of limitations imposed on their licensed counterparts.
Assembly Bill 3126 (AB-3126) – Contractor Bonding
A building contractor may default on a project for many reasons, such as financial setbacks or performance defects. To protect the owner and the contractor from the implications of a default, the CSLB requires contractors to post a $15,000 bond when applying for their license. The CSLB may disburse the bond amount to the project owner affected by the default, or the contractor’s workers who lost their wages as a result of one.
Until recently, a contractor applying for a license could satisfy this requirement by posting a surety bond or providing a deposit certificate to the CSLB. AB-3126 removes the deposit certificate option and instead allows the contractor to submit a surety bond, lawful money, or a cashier’s check to the Board.
While we hope that you find this digest useful, please note that the information above is presented for educational purposes only and does not amount to legal advice. If you have questions or concerns about your legal rights and responsibilities, please consult an attorney.