Key takeaways

The Right to Repair Act is the virtually exclusive remedy for residential construction defects in California, covering both economic loss and actual property damage.

Homeowners cannot bypass the Act's mandatory prelitigation notice-and-cure procedures by pleading common law theories like negligence or strict liability.

The California Supreme Court expressly disapproved prior appellate decisions that allowed common law claims to proceed independently when actual property damage occurred.

Claims for breach of contract, fraud, and personal injury remain expressly excluded from the Act's exclusivity provisions.

Builders must strictly adhere to the statutory timelines for acknowledging claims, inspecting properties, and offering repairs to preserve their rights under the Act.

The Decision

In McMillin Albany LLC v. Superior Court (2018) 4 Cal.5th 241, the California Supreme Court established that the Right to Repair Act functions as the virtually exclusive remedy for residential construction defects. Authored by Justice Goodwin Liu and filed on January 18, 2018, the opinion resolved years of uncertainty regarding whether homeowners could bypass statutory prelitigation procedures by pleading common law tort claims.

The case originated from a dispute involving 37 new single-family homes in Kern County. The homeowners purchased these properties from developer and general contractor McMillin Albany LLC at various times after January 2003. When defects emerged, the homeowners filed a lawsuit asserting common law negligence and strict liability theories. They intentionally sought to avoid the Right to Repair Act's mandatory prelitigation dispute resolution process.

McMillin Albany LLC moved to stay the litigation, arguing the homeowners were required to comply with the statutory notice-and-cure provisions before filing suit. The lower courts allowed the common law claims to proceed, relying on prior appellate precedent. The California Supreme Court reversed. The Court held that homeowners seeking recovery for construction defect damages are subject to the Act's prelitigation procedures regardless of how the claims are pleaded. The ruling confirmed that the Act displaces common law remedies for both economic loss and actual property damage arising from construction defects.

Why It Matters

The Supreme Court's ruling fundamentally realigns residential construction defect litigation in California. By enforcing the exclusivity of the Right to Repair Act, the Court closed a widely used procedural bypass that had allowed plaintiffs to file lawsuits immediately upon discovering property damage.

This decision restores the legislative compromise enacted in 2002. Builders receive a guaranteed opportunity to inspect alleged defects and offer repairs or compensation before facing the costs and adversarial pressures of formal litigation. Plaintiffs can no longer use creative pleading to accelerate disputes into the court system. The ruling guarantees that the nonadversarial dispute resolution process serves as the mandatory first step for nearly all residential defect claims, reducing early litigation costs and encouraging practical resolutions over protracted legal battles.

Who Should Care

For lawyers

Plaintiff attorneys must calendar and execute the statutory prelitigation notice process before drafting a complaint. Attempting to plead around the statute using common law negligence or strict liability is no longer a viable strategy. Defense counsel can now reliably use motions to stay litigation if a plaintiff files suit prematurely. However, defense attorneys must also ensure their developer and builder clients strictly comply with the statutory deadlines for acknowledging notices and conducting inspections. Failing to adhere to the statutory timeframe releases the plaintiff from the prelitigation process, allowing the lawsuit to proceed.

For consumers

Homeowners discovering water intrusion, foundation cracks, or mechanical failures in new construction cannot immediately take their builder to court. The law requires homeowners to send a formal written notice to the builder detailing the specific defects. Homeowners must then allow the builder access to the property to inspect the issues and propose a repair plan or offer financial compensation. Litigation is only an option if the builder ignores the notice, fails to offer a compliant repair, or performs inadequate repairs.

Legal Background

The legal framework governing California construction defects has undergone significant structural shifts over the past two decades. The foundation of the current system traces back to Aas v. Superior Court (2000) 24 Cal.4th 627.

Decided on December 4, 2000, in an opinion by Justice Kathryn Mickle Werdegar, Aas addressed the application of the economic loss rule to residential construction. The California Supreme Court held that the economic loss rule bars homeowners from suing in negligence for construction defects if they cannot show actual property damage or personal injury. Under Aas, a homeowner who discovered severe building code violations—such as missing shear walls or improperly installed flashing—had no tort remedy unless those defects had already caused physical damage to the property. Their only recourse lay in contract and warranty law, which often provided limited relief.

The Legislature passed the Right to Repair Act two years later in direct response to the Aas decision. Enacted by SB 800 (Stats. 2002, ch. 722) and codified principally at Civil Code section 895 et seq., the Act applies to new residential units sold on or after January 1, 2003.

Despite the comprehensive nature of SB 800, appellate courts soon divided on its scope. In Liberty Mutual Insurance Co. v. Brookfield Crystal Cove LLC (2013) 219 Cal.App.4th 98, the Fourth District Court of Appeal interpreted the Act narrowly. The Liberty Mutual court reasoned that the Legislature intended SB 800 solely to abrogate Aas by providing a remedy for economic loss. The appellate court held that where construction defects had caused actual property damage, the Right to Repair Act was not the exclusive remedy, leaving common law claims intact. This created a dual-track system: homeowners with no physical damage used the Act, while those with physical damage bypassed the Act and filed common law lawsuits.

What the Court and Legislature Did

The Right to Repair Act establishes a highly structured, statewide framework for resolving defect claims. Civil Code section 896 sets forth detailed functionality standards that the components of a dwelling must satisfy. These standards cover water intrusion, structural integrity, mechanical systems, and other critical building components. Crucially, a violation of a standard is actionable even absent property damage or personal injury, directly overturning the limitation established in Aas.

The Legislature paired these standards with a mandatory prelitigation, nonadversarial process outlined in Civil Code sections 910 through 938. The sequence requires strict adherence by both parties:

Notice: The homeowner serves written notice of claimed standards violations (Civil Code section 910).
Acknowledgment: The builder acknowledges receipt within a specific statutory timeframe (Civil Code section 913).
Inspection: The builder exercises the right to inspect and test the alleged defect (Civil Code section 916).
Resolution: The builder may offer to repair the defect (Civil Code section 917) or pay compensation in lieu of repair (Civil Code section 929).

Additionally, Civil Code section 941 establishes a strict temporal boundary. With limited exceptions, no action to recover under the Act may be brought more than 10 years after substantial completion of the improvement.

In McMillin, the California Supreme Court analyzed this statutory architecture and concluded the Legislature intended a comprehensive overhaul of defect litigation, not merely a targeted fix for the Aas decision. The Court found that the text, structure, and legislative history of SB 800 demonstrated an intent to displace common law remedies for both economic loss and property damage.

To solidify this interpretation, McMillin expressly disapproved Liberty Mutual Insurance Co. v. Brookfield Crystal Cove LLC and subsequent appellate decisions to the extent they were inconsistent with the holding. The Supreme Court pointed to Civil Code section 943, subdivision (a), which explicitly lists the claims placed outside the Act's exclusivity. Because claims for breach of contract, fraud, and personal injury are expressly preserved by the statute, the Court reasoned that the Legislature did not intend to preserve common law negligence and strict liability. If the Legislature had wanted those common law claims to survive, it would have included them in the section 943 exceptions.

How It May Be Applied

Moving forward, the battleground in residential construction defect claims will center on statutory compliance rather than pleading theories. Builders have a powerful tool to stay litigation, but they must use it correctly. If a builder fails to acknowledge a homeowner's notice, misses the deadline to inspect, or fails to complete accepted repairs within the statutory parameters, the builder forfeits the protections of the prelitigation process. Homeowners will aggressively monitor builders for procedural missteps to secure an early release from the statutory stay.

Furthermore, litigation will likely focus heavily on the adequacy of the repairs offered under Civil Code section 917. If a builder's repair fails to bring the home into compliance with the functionality standards of section 896, the homeowner retains the right to sue.

Finally, plaintiffs will continue to utilize the exceptions preserved by Civil Code section 943, subdivision (a). Where applicable, plaintiffs will plead fraud or breach of contract alongside statutory violations. Because these specific claims are not displaced by the Act, they provide the only remaining avenues for plaintiffs seeking remedies outside the strict confines of the Right to Repair Act.

Before and After the Right to Repair Act

Legal Era	Governing Authority	Rule for Economic Loss (No Physical Damage)	Rule for Actual Property Damage
Pre-2003	Aas v. Superior Court	No tort recovery permitted. Claims barred by the economic loss rule.	Common law negligence and strict liability claims permitted.
2003–2018	Liberty Mutual interpretation of SB 800	Right to Repair Act applies. Homeowners can seek remedies for standards violations.	Common law claims permitted. Plaintiffs can bypass the Act.
Post-2018	McMillin Albany LLC v. Superior Court	Right to Repair Act applies exclusively.	Right to Repair Act applies exclusively. Common law displaced.

Plain-English Callout

The legal shift created by the Supreme Court is straightforward: builders get the first opportunity to fix their mistakes. If a homeowner finds a defect in a new house built after 2002, they cannot rush to the courthouse and file a lawsuit. Instead, state law requires the homeowner to notify the builder and allow them access to inspect the problem. The builder then has the option to repair the defect or offer a cash settlement. Only if this out-of-court process breaks down can the homeowner proceed with formal litigation.

This article is general legal information and commentary about developments in California law. It is not legal advice, does not address your specific situation, and is not a substitute for advice from a licensed attorney. Reading this article and contacting us through this website do not create an attorney-client relationship.

Sources & authorities

Cal. Civ. Code § 896 — Right to Repair Act building standards (SB 800) — source
Cal. Civ. Code § 943 — Right to Repair Act as the exclusive remedy for construction defects — source

Supreme Court cements Right to Repair Act as exclusive defect remedy

Key takeaways