The Calderon Process is the commonly used
phrase for California's Civil Code §1375 and it does not
apply to all construction defect claims. The process applies
to all common interest developments with 20 or more units.
A common interest development in California includes a condominium
project and a planned development.
Steps
1. Notice to Builder
Associations must give written notice to a builder
before going ahead with an action for construction defects.
Notice to the builder must include all of the following:
(a) A preliminary list of defects (b) A summary of the results
of a survey or questionnaire distributed to homeowners to
determine the nature and extent of defects, if such a survey
has been conducted or a questionnaire has been distributed.
(c) Either a summary of the results of testing conducted
to determine the nature and extend of defects of the actual
test results, if such testing has been conducted.
2. 90-Day Settlement Period
Once the notice has been delivered to the builder,
the 90-day settlement period begins, unless the association
and builder agree to a longer period. Within that time,
the association and builder must either attempt to settle
the dispute or agree to submit to an alternative dispute
resolution.
3. Notice as to Tolling Statues
of Limitation
In general, when the association mails their notice,
all statutory and contractual limitations are tolled against
all responsible parties. Tolling occurs whether the parties
are named or not. The tolling period is for 150 days, or
a longer period as agreed to in writing by the association
and builder.
4. Builder's Notice to Cancel Tolling
At any time during the Calderon Process, the builder
may give written notice to cancel the tolling of the statute
of limitations. The association is then relieved of any
further obligations to satisfy the remaining requirements
in the Calderon Process.
5. Builder's Request to Meet with Board of Directors
Within 25 days of the date the builder receives the association's
notice, the builder may request in writing to meet and
confer with the board of directors to inspect the property
and conduct testing.
If the builder does not make a timely request to meet
with the board of directors or to inspect and conduct
testing, the association shall be relieved from any further
obligations under the Calderon Process.
6. Time and Conduct of Meeting
The meeting must take place no later than 10 days from
the date of builder's written request. The discussions
are privileged communications and are not admissible in
evidence in any civil action, unless the association and
builder agree otherwise.
The meeting must be for the purpose of and cover all
of the following:
(a) The nature and extent of the claimed defects.
(b) Proposed methods of repair, to the extent there is
sufficient information.
(c) Proposals for submitting the dispute to alternative
dispute resolution.
(d) Requests from the builder to inspect the project and
conduct testing.
7. Notice to Insurers
If the builder requests a meeting with the board of directors,
then the builder must deliver the association's notice
to any insurers that have issued policies to the builder.
The notice will impose a duty and an obligation upon the
insurer.
(a) The duty imposed on the insurer is to defend the builder/insured
or indemnify the insured for losses identified in the
association's notice.
(b) The obligation is imposed on the insurer when the
insurer receives the builder's notice. The obligation
depends on the terms of the policy and whether the insurer
has been served with a summons and complaint for damages.
8. Testing by Builder
If the association conducted any testing prior to when
written notice was sent, then the builder must be allowed
to test those same areas. Testing in these areas must
be completed within 15 days from the date when the areas
have been made available to test, unless the association
and builder agree to a longer date. If the builder does
not complete testing with in the 15 days, the association
does not have to make that property available for testing.
The builder is to pay for all costs for testing requested
by the builder and is to restore all property tested to
the condition is was prior to testing.
9. Builder's Settlement Offer and Request for Second
Meeting with Board of Directors
The builder is to submit the following to the association
within 30 of testing, or if no testing conducted, 30 days
after the first meeting:
(a) A written request to meet with the board to discuss
a settlement offer
(b) A settlement offer that gives the reasons for the
terms of the offer.
(c) A statement that the builder has sufficient funds
to meet the terms of the offer.
(d) A summary of testing results that were conducted to
determine the defects, if testing had been conducted If
the builder fails to meet the above criteria, then the
association does not have to satisfy any obligations under
#10-Second Meeting with Board of Directors
10. Second Meeting with Board of Directors
The board of directors is to meet with the builder 10
days after the settlement offer above has been received
to discuss the terms.
11. Modifying Calderon Time Periods
At any time after the original notice is delivered to
the builder, the association and builder may agree in
writing to modify any other obligations in the Calderon
Process.
12. Steps Upon Rejection of Offer Following Second Meeting
If the board of directors rejects the settlement offer,
then the board must hold an open meeting with each member
of the association. The open meeting must be held no less
than 15 days before actions are taken against the builder.
The board of directors must give written notice to each
member no less than 15 days before the meeting specifying
the following:
(a) A meeting will take place to discuss problems that
may lead to filing a civil action and the time and place
of the meeting.
(b) The options that are available, including:
(1) Filing of a civil action,
(2) Statement of the various alternatives.
(3) Whether payments are to be made from the use of reserve
accounts, the imposition of regular assessments, or emergency
assessment increases
(c) The builder's settlement offer, including the explanations
for the offer.
(d) The preliminary list of defects provided by the association
to the builder, a list of any other documents the association
gave to the builder, and information about when and where
association members may inspect those documents.
13. Procedure if Association is Relieved of Second Meeting
Requirement
If an association is relieved of its Calderon Process
obligations because the builder has failed to meet its
obligations, then the association may file an action for
damages against the builder.
The action may be filed 30 days after sending written
notice to each association member specifying all of the
following:
(a) The preliminary defects list and any other documents
the association gave to the builder, and information about
when and where association members may inspect the documents.
(b) Any available options that are available to address
the problems.
(c) A statement allowing for a special meeting to take
place:
(1) If 5% of association members request a meeting,
then a meeting shall be held within 15 days of the date
notice is mailed or delivered to the members or
(2) If governing documents of the association call for
a different method to call special meetings, then the
statement shall inform members of that procedure.
14. Judicial Relief for Failure to Comply with Calderon
Process
Judicial relief can only be sought by asserting a procedural
deficiency action. This action must be filed with the
court no later than 90 days after the builder's answer
to the association's complaint has been served. The court
will then schedule a hearing within 21 days to determine
whether the association or builder has substantially complied
with the Calderon Process.
If the court finds that the association did not substantially
comply with the Calderon Process, then the court will
give the association 90 days to establish substantial
compliance. Then, if the court determines that the association
did not substantially comply with the process, the court
may dismiss the action without prejudice, or another remedy
may be fashioned. The court may not dismiss the case without
prejudice, and may take the builder's actions into consideration
when fashioning a remedy.
If a court finds the builder did not pay its share of
any costs, then the court shall order the builder to reimburse
those costs within 30 days, with interest, and the court
may award additional costs or penalties.
For more legislation information, see the California Legislation Web Site at http://www.leginfo.ca.gov.
© Copyright 2008 The Miller Law Firm. All rights Reserved.
If you experience problems or have questions, contact us at Info@ConstructionDefects.com.
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