NEWLY ENACTED PRE-LITIGATION REQUISITES:
CALIFORNIA CIVIL CODE §1375

A. Prior to filing of suit for construction defects, the associations must:

1. Submit formal written notice to developer/builder of damage claims.
2. Contents of notice must contain the following itemizations:

a. preliminary list of construction defects thus far identified,
b. summary of homeowner questionnaires stating the nature and extent of any alleged defects,
c. summary of findings gleaned from testing results,
d. all costs incurred in generating this information is borne by the association.

B. Developer/Builder Duties and Options

1. Developer/Builder has twenty-five (25) days following receipt of association's notice to request meet and confer with associations board of directors.
2. Topics to be discussed are limited to:

a. determining the nature and extent of preliminary defects claimed,
b. proposals for method of repair,
c. proposals to submit claims to alternative dispute resolution,
d. to define the scope of any request from developer/builder to inspect premises and common areas and to conduct own testing.

3. If developer/builder requests a meet and confer, it must simultaneously inform and notice its insurance providers of the pending claim. This notice to the insurance activates its legal obligation to the developer pursuant to the terms of its policies, primarily that of funding a defense. (See Also, Montorse Chemical Corp. v. Admiral Insurance Co. 10 CAL 4th 645)

4. Procedural steps then accelerate:

a. Within thirty (30) days of the initial meet and confer, or completion of inspections and/or testing, developer/builder must again request a second meet and confer with board of directors,
b. Developer/builder must submit to the board of directors the following:

(1) a written settlement offer,
(2) concise explanations justifying the terms of this offer,
(3) any offer to submit its contentious to alternative dispute resolution proceedings,
(4) statement of adequate funds to satisfy conditions contained in settlement offer,
(5) a summary of its test results as to nature and extent of defects, if the association declined to perform its own initial testing.
(6) Should developer/builder fail to timely submit items required, the association is relieved of any further obligation to satisfy pre-litigation requisites.

5. No less than ten (10) days after submittal of developer/builder proposals, the board of directors and developer/builder must again meet and confer about the settlement proposals advance.

C. Should board of directors reject the settlement package proposed by developer/builder, the board must either:

1. Set up and conduct another meeting open to each member of the association, no less than fifteen (15) days prior to filing a lawsuit (do not know what this is),
2. No less than fifteen (15) days before said meeting, written notice must be sent to each member specifying all of the following:

a. the purpose of the meeting is to discuss obligations and costs of filing a lawsuit (See AB 463 Goldsmith Bill),
b. discussion of any options available in lieu of suit,
c. the complete text of the developer/builder1s settlement proposals,
d. the preliminary list of defects provided by the association to developer/builder, in addition to any other documentation initially provided by the association,
e. a statement informing the members that the developer/builder is paying for all expenses incurred with the sending of the above documents and proposals, in addition to paying three dollars ($3) per member to hold the meeting,
f. any and all contents utilized and/or verbalized at this meeting are privileged and inadmissible as evidence in any subsequent legal proceeding unless agreed to by the association.

D. Alternatively, should the builder, at any time, fail to satisfy all the previously set forth requisites, the association may file its lawsuit thirty (30) days following written notice sent to each member. The notice must contain:

1. the preliminary list of defects initially provided to the developer/builder, including any other documents so provided,
2. information on where and when association members may inspect these documents,
3. all the options available to adequately address the construction deficiencies throughout the development,
4. a statement that if five (5%) percent of the member request a special meeting within fifteen (15) days of this notice's mailing or hand delivery to each, another meeting of the membership must be held, unless the CC%R's provide for a different procedure,
5. Compliance with above alternatives, following the refection of settlement proposals, will excuse the association from satisfying the conditions set forth in Civil Code §1368.4 (the newly enacted Goldsmith Bill, AB 463). NOTE: Any and all time guidelines following the initial notice may be modified by the mutual agreement of the association and the developer/builder.

E. In the event of substantial noncompliance with the prerequisites:

1. Should the association fail to comply with the procedural prerequisites of the legislation, the developer/builder has ninety (90) days after their answer to the complaint (suit) has been served (not filed) to seek judicial relief.
2. Failure to meet this time table results in a waiver of the right to contest the association's procedural standing, and of its lawsuit.
3. Also, upon the verified application of either the association or the developer/builder alleging substantial noncompliance, then must hold a hearing within twenty-one (21) days of the application.

a. Said hearing will be used to determine compliance of either party.
b. Should the court find that the association is in noncompliance, the court may suspend the lawsuit's progress for up to ninety (90) days, in order to establish compliance.
c. The court must then calendar another hearing at the end of the ninety (90) days to review if compliance has been met.
d. Should the court find that the association is still in noncompliance, it can choose to discuss the action as filed without prejudice or fashion any equitable remedy that serves the interest of justice.

(1) The court may never dismiss the action with prejudice.
(2) The court must also consider the extent of the developer/builder's compliance.

4. Should the developer/builder fail to pay the expense incurred in the mailing and those for holding the open meeting, the court must order it paid within thirty (30) days of its order, plus interest.