Governor Signs Bill to Ensure That $1M+ Settlements of Construction Defect Lawsuits Involving Apartment Balconies are Reported to Regulators

September 18, 2018

Updated September 19, 2018, to add details on the scope of the defect claims whose settlements must be reported.

For Immediate Release – Office of State Senator Jerry Hill – September 18, 2018

Governor Signs Bill by Senator Jerry Hill to Ensure That $1M+ Settlements of Construction Defect Lawsuits Involving Apartment Balconies are Reported to Regulators

Approval of SB 1465 Completes Hill’s 2018 2-Bill Package Addressing the Berkeley Balcony Tragedy

Signing Comes Just 1 Day After Governor’s Approval of SB 721 to Require Inspections of Apartment Balconies, Decks, Outdoor Stairs and Walkways

SACRAMENTO – Starting January 1, contractors who pay a million dollars or more to settle construction defect lawsuits involving apartment balconies and other load-bearing structural elements must report those deals to the Contractors State License Board, under legislation signed today by Governor Jerry Brown.

Governor Brown’s approval of Senate Bill 1465 came just one day after he signed SB 721, which sets requirements for periodic inspections of balconies, decks, outdoor stairs, walkways and other load-bearing, elevated exterior elements at apartment buildings and complexes.

“SB 721 and SB 1465 will save lives by improving the oversight of construction contractors and the balconies they build at apartments,” said Senator Hill, D-San Mateo and Santa Clara Counties, who authored both bills with Senator Nancy Skinner, D-Berkeley. “The new settlement reporting requirement for contractors mandated by SB 1465 and the statewide inspection and repair standards set by SB 721 will help us prevent tragedies like the Berkeley balcony collapse.”

Six young people died and seven of their friends were severely injured when a fifth-story balcony failed at a Berkeley apartment building in June 2015. Poorly sealed and weakened by dry rot, the balcony tore away from the building during a birthday party, sending the 13 victims plummeting to the ground. Waves of grief and sympathy swept through the Irish American community and Ireland in the aftermath. The dead and the injured were college students or recent graduates of Irish descent, and all but one were visitors from Ireland.

The general contractor that built the Berkeley apartment complex paid $26.5 million to settle construction defect cases in the three years before the collapse – information that was not known to regulators until it was discovered and disclosed by news reporters.

Since the tragedy that killed her 22 year-old daughter Ashley and 21-year-old niece Olivia Burke of Dublin, Ireland, Jackie Donohoe of Rohnert Park has represented the families of all the victims at every hearing held in the Capitol on measures to tighten oversight of contractors and balconies.

“The success of this legislation owes much to Jackie Donohoe, her strength, her courage and her commitment,” said Senator Hill. “Time after time, she testified about the need for stronger laws and the devastating grief and frustration that torment families who lose loved ones in preventable tragedies.”

In all, three bills have been signed into state law in response to the Berkeley balcony collapse.

In 2016, the Legislature passed and Governor Brown signed SB 465 by Senator Hill and then-Senator Loni Hancock, D-Oakland, to increase oversight of contractors. The bill also laid the groundwork for SB 1465 by directing the Contractors State License Board to study the issues surrounding settlements of construction defect lawsuits.

The CSLB helped craft SB 1465. The bill requires contractors who settle construction defect lawsuits that involve load-bearing elements of multifamily rental residential structures for a million dollars or more to report those deals to the CSLB. The reporting requirement applies to settlements of claims of damage to a property, a person or people allegedly resulting from a failure, or a condition creating a substantial risk of failure, in load-bearing portions of a multifamily rental residential structure. The bill does not limit the types of load-bearing elements or multifamily rental residential structures that can be involved in the underlying claims. The settlement reports would be confidential unless the board pursues disciplinary measures. Architects and engineers must provide settlement information to their licensing boards, but no such requirement existed for construction contractors until the governor signed SB 1465 into law.

SB 721, the third bill, specifically addresses the periodic inspection of outdoor, elevated load-bearing elements at apartment buildings and complexes with three or more units. The load-bearing elements subject to inspection are balconies, decks, porches, stairs, walkways, entryways and other surfaces designed for human use that extend beyond the exterior walls of a structure, are six feet or more above the ground, and rely on wood or wood-based products for stability and support. Under SB 721, 15 percent of those load-bearing, elevated exterior elements must be inspected every six years.

The requirements of SB 721, like those of SB 1465, are effective January 1.

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Resources:

SB 1465 Fact Sheet:
https://sd13.senate.ca.gov/sites/sd13.senate.ca.gov/files/pdf/sb1465-factsheet.pdf

SB 721 Fact Sheet:
https://sd13.senate.ca.gov/sites/sd13.senate.ca.gov/files/factsheet_sb_721.pdf

SB 465 Fact Sheet
https://sd13.senate.ca.gov/sites/sd13.senate.ca.gov/files/pdf/sb465_factsheet.pdf

Media Contact: Leslie Guevarra, 415-298-3404, leslie.guevarra@sen.ca.gov