Against the backdrop of a long-mounting statewide housing shortage, California lawmakers seem poised to finally overhaul rules that have choked condo construction for more than two decades.
On Tuesday, the California State Assembly unanimously supported AB 1903, with a 70-0 vote (10 lawmakers did not record a vote). Authored by Berkeley Assemblymember Buffy Wicks, the bill targets the state’s condo defect liability law, which leaves developers and general contractors vulnerable to expensive lawsuits for any mistakes made in the construction of a condo for up to 10 years from the sale of a newly built unit. Fodder for lawsuits ranges from bubbling paint to structural issues in the foundation.
Wicks’ bill offers developers and contractors a right to repair any issues before they can be sued. For owners who still want to pursue a lawsuit, the claims must involve damage beyond the defective (and repaired) component. Developers who repair a defect would also have the option to be released from liability if they obtain a third-party quality control certification during construction inspections.
The threat and expense of lawsuits have stifled developers following the condo defect liability law which went into effect in 2003. Since 2005, condo construction has fallen 90 percent throughout the state, according to a report by the Terner Center for Housing Innovation, out of UC Berkeley — a decline which housing analysts have tied directly to defect liability policies. The upfront costs of litigation have proven severe as well, with developers having to pay four times as much for insurance on a condo project as compared to a standard multifamily development.
Construction defect laws have become a hot topic in other states as lawmakers look for ways to make homeownership more accessible. Colorado passed a similar bill to AB 1903 last year. In a state like California which boasts the priciest median home price, according to Forbes, the condo market can be a good strategy for boosting ownership opportunities.
“By spreading relatively higher land costs across denser housing, builders can offer middle-income families the chance to own a part of the California dream,” pro-housing organization California YIMBY said of AB 1903.
Not to mention the upside for developers who have had to navigate condo risk for decades. Some developers, such as Swenson Builders in Santa Cruz, have found ways to work around the 10-year liability window by building their multifamily projects as condos but leasing the units as apartments for the first 10 years. Others, such as Bosa Development’s 400-unit Andia project in San Diego and Build Group’s hotel-condo development in downtown Napa, have pushed through with condominiums despite the laws.
California attempted to amend its condo defect rules with a similar bill in 2024 from former state Sen. Steve Glazer; however, fierce opposition from the Consumer Attorneys of California helped keep the bill from advancing out of the committee stage. The 2026 redux has been able to push through amid similar opposition from consumer advocates and homeowners’ associations.
The bill now heads to the State Senate and, if passed, will reach Gov. Gavin Newsom’s desk for a signature.
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