By Alison Rice. The timing seems a little suspicious to Brendan ONeill, executive vice president and CFO at Beazer Homes in Northern California. During the past eight years, Beazer has built 80 communities in the region without legal trouble. "I dont think weve ever had a group lawsuit," he says. "We pride ourselves on the fact that we dont get sued."

But the public builder has recently seen a dramatic uptick in legal activity. Since the Jan. 1 implementation of SB 800, a California law requiring builders to be provided with the chance to fix any construction defects on new homes before being sued, past Beazer buyers have been inundated with legal solicitations. Twelve of the builders developments have received letters from lawyers suggesting that the homes Beazer built may have defects worth suing over, and one solicitation has resulted in a group lawsuit. The kicker: When Beazer pulled the files for homeowners participating in that group lawsuit, there wasnt a single outstanding warranty claim.

"The construction defect litigation going on is just an abuse of the system," says ONeill, who also serves as president of the Sacramento-based BIA of Superior California. He says homeowners (who arent legally required to spend any money they receive on actually fixing their house) may not fully appreciate the potential consequences of getting involved in such a suit. "They dont realize theyve opened up a Pandoras box on disclosure," he says. "Once you have a construction defect lawsuit on your house, you have to disclose it. And if you dont fix it, you cant sell it."

Right to repair: Ten states have recently passed laws that give builders a chance to address construction defects before being sued. Three other states (Michigan, Nevada, and Texas) have similar procedures to resolve construction defect issues.
State Law Passed
Colorado HB 1161 2003
Idaho HB 133 2003
Indiana SB 451 2003
Kansas HB 2294 2003
Kentucky HB 289 2003
Montana SB 389 2003
W. Virginia SB 440 2003
California SB 800 2002
Arizona HB 2620 2002
Washington HB 6409 2002