RIGHT TO REPAIR ACT PERMITS BUILDER TO OBTAIN FULL RELEASE IN EXCHANGE FOR CASH SETTLEMENT OF CLAIMS
The California appellate court has provided guidance to homebuilders, homeowners and counsel concerning the scope of release which may be obtained concerning settlement of a “Right to Repair Act” claim. In Belasco v. Wells (2015 WL 661273), the plaintiff bought a home from the defendant builder in 2004. In 2006, the plaintiff filed a complaint with the Contractors State License Board against the builder for the claimed defects. The parties settled the same year. The builder agreed to pay the plaintiff $25,000.00 and the plaintiff executed a release which included a waiver of Civil Code Section 1542. The plaintiff filed an action against the builder and the surety in 2012, alleging defects discovered the previous year.
The trial court granted summary judgment in favor of the builder and the surety on the ground that the release barred any further claims in connection with the construction of the property. The plaintiff appealed on multiple grounds, but primarily that the release was not a “reasonable release” under the Right to Repair Act. Civil Code Section 929 allows a builder to make a cash offer to a homeowner in lieu of a repair offer following a Right to Repair Act claim. The statute further provides that the builder may obtain a “reasonable release” in exchange for the cash payment. The court noted the difference between repair offers, which cannot be the basis of a release of liability, and cash offers, which can be accompanied by a reasonable release. The court concluded that the release was a reasonable one under Civil Code Section 929. The plaintiff, who was an attorney and represented by counsel, understood the nature and extent of the release and waiver. The statute permitted him to reject the cash offer and proceed with litigation, but he chose to accept the offer and was thereby bound by the terms of the release.