Key Takeaways

• California sellers must disclose known material defects through the Transfer Disclosure Statement under California Civil Code section 1102 and following sections, even in “as-is” sales — Civil Code section 1102.1 expressly forbids waiver.
• California’s Right to Repair Act, codified at Civil Code sections 895 through 945.5 (often called SB 800), governs construction defect claims against builders for original new residential construction and provides specific pre-litigation procedures.
• Statutes of limitations vary by claim type: California Code of Civil Procedure section 337.15 provides a 10-year repose for latent construction defects; section 337.1 provides 4 years for patent defects; fraud claims run 3 years from discovery under section 338(d).
• Unpermitted work creates layered exposure — disclosure liability for the seller, building department remediation requirements, possible insurance denial, and complications on future resale or refinance.
• California’s standard residential purchase contract typically includes a mediation requirement before attorney’s fees can be recovered, making early mediation strategically important.

Hidden Electrical, Plumbing, or Structural Defects After Buying a Home in California

California buyers regularly discover problems after closing that the seller knew about — or should have known about. Knob-and-tube wiring concealed by recent drywall. Cast iron sewer lines replaced halfway and patched at the connection. A foundation crack covered by a freshly painted wall. An entire bedroom that turns out to have been built without a permit.

The legal question is what California law allows you to do about it. This article walks through the available theories, the deadlines that apply, and how to evaluate whether your situation supports recovery.

Discovered defects the seller should have disclosed?

Bay Legal, PC investigates California seller non-disclosure and construction defect claims. Call (650) 668-8000 or schedule a consultation at baylegal.com/contact.

What sellers must disclose, even “as-is”

California’s TDS regime under Civil Code sections 1102 through 1102.18 applies to virtually all sales of one-to-four-unit residential property. Civil Code section 1102.1 makes the TDS non-waivable, and California courts have consistently held that “as-is” clauses do not eliminate the seller’s duty to disclose known material defects.

The TDS specifically asks about — among other things:

• Defects or malfunctions in major systems (electrical, plumbing, heating, air conditioning).
• Roofing condition and known leaks.
• Foundation issues, settling, or movement.
• Water damage and prior flooding.
• Insulation, walls, ceilings, floors.
• Modifications or additions made without required permits.
• Easements, encroachments, or boundary disputes.
• Soil problems, drainage, or grading issues.
• Mold.
• Litigation or claims affecting the property.

A seller who answers these questions falsely — or who fails to answer them when they have actual knowledge — is exposed to non-disclosure and fraud liability. The TDS is the buyer’s first line of evidence in non-disclosure cases.

“As-is” does not mean “sold without disclosure”

Many California sellers (and some buyers) misunderstand “as-is.” The clause generally means the buyer takes the property in its current visible condition. It does NOT mean:

• The seller can hide known defects.
• The seller can refuse to complete the TDS.
• The seller is immune from fraud or non-disclosure liability for concealed problems.
• The buyer is barred from inspections or due diligence.

California courts have repeatedly held that the statutory TDS regime overrides “as-is” provisions. The Lingsch v. Savage (1963) 213 Cal.App.2d 729 line of cases established that a seller has a duty to disclose material facts known to the seller and not reasonably discoverable by the buyer — a duty that survives any “as-is” provision in the purchase contract.

“Caveat emptor” is largely dead in California residential sales. The 19th-century rule that buyers bear the risk of all defects has been substantially replaced in California by the statutory disclosure regime and fraud-protective case law. Sellers who think “as-is” gives them a free pass on disclosure are setting themselves up for litigation.

Unpermitted work after closing

Discovering unpermitted work — an addition, a converted garage, an unpermitted bathroom — after closing creates layered problems:

Disclosure exposure

The TDS asks specifically about modifications made without required permits. A seller who knew about unpermitted work and did not disclose it generally faces fraud and non-disclosure liability under California Civil Code sections 1709, 1710, and the TDS framework.

Building department exposure

Municipal building departments can require unpermitted work to be brought into compliance — sometimes through a “legalization” or retroactive permit process, sometimes through requiring the work to be removed. The cost depends on the work, the municipality, and how the structure was built.

Insurance exposure

Many California property insurers exclude coverage for unpermitted improvements or for damage caused by unpermitted work. A buyer who discovers unpermitted work after closing should review their policy carefully.

Future resale exposure

Unpermitted work creates ongoing disclosure obligations for the buyer if they later sell. Lenders, inspectors, and future buyers may discover what was missed at the initial purchase, and the buyer (now seller) may face the same issues.

Construction defect claims: the Right to Repair Act

For original new residential construction, California’s Right to Repair Act at Civil Code sections 895 through 945.5 (often called SB 800) governs construction defect claims against builders. The Act:

• Establishes specific building standards at Civil Code section 896 covering structural, plumbing, electrical, fire protection, and other systems.
• Imposes a pre-litigation procedure (Civil Code sections 910 through 938) requiring the homeowner to give the builder notice and opportunity to inspect and repair before suit.
• Sets component-specific statutes of limitations within the Act.
• Provides for fee shifting in some circumstances.

The Right to Repair Act generally applies to new construction sold by the original builder. Buyers of resale homes typically have claims against the seller (under the TDS framework) rather than under SB 800 — but the construction defect framework can still apply to specific components built within the Act’s timelines.

Construction defect statutes of limitations

The basic deadlines in California construction defect law:

• Patent defects (visible upon reasonable inspection): four years under California Code of Civil Procedure section 337.1.
• Latent defects (not visible upon reasonable inspection): ten years from substantial completion under Code of Civil Procedure section 337.15.
• Fraud or concealment: three years from discovery under Code of Civil Procedure section 338(d).
• Component-specific deadlines under Civil Code section 896 — for example, plumbing systems have a four-year deadline; painting five years; cabinets/mirrors/finish one year fit-and-finish warranty; catchall ten years.

These deadlines interact in complicated ways. The McMillin Albany LLC v. Superior Court (2018) 4 Cal.5th 241 decision made clear that the Right to Repair Act provides the exclusive remedy for many residential construction defects within its scope, with specific procedural prerequisites.

Statutes of limitations in California construction defect cases interact in complex ways — the right deadline depends on the type of defect, the nature of the property, and when the defect was discovered. Talk to a California real estate attorney early; misidentifying the applicable deadline can end an otherwise strong claim.

Worried about which deadline applies to your defect claim?

Bay Legal, PC scopes California construction defect and seller non-disclosure claims and identifies the right combination of theories. Call (650) 668-8000 or schedule a consultation at baylegal.com/contact.

Mediation before litigation

The California Association of Realtors Residential Purchase Agreement includes a mediation provision (typically paragraph 22 of the current form). A party who refuses to mediate before filing suit can lose the right to recover attorney’s fees, even on a winning case.

Construction defect cases under the Right to Repair Act have their own pre-litigation procedure under Civil Code sections 910 through 938. The homeowner must serve the builder with notice of the defect, give the builder an opportunity to inspect, and follow specific protocols before filing suit. Failure to follow the SB 800 procedure can result in dismissal of the claim.

Damages: cost of repair or diminution in value

California typically measures damages in residential defect cases by the lesser of the cost of repair or the diminution in value. The Heninger v. Dunn (1980) 101 Cal.App.3d 858 framework recognizes cost-of-repair damages where the property has particular personal value to the owner, even when the diminution in value would be lower.

Available damages can include:

• Cost to repair or replace the defective component.
• Diminution in value of the property.
• Consequential damages — temporary housing, additional financing costs, lost use.
• Reasonable cost of investigating the claim.
• Where the conduct was fraudulent, punitive damages under California Civil Code section 3294.

Practical steps after discovering hidden defects

If you have just discovered material defects in a recently purchased California home:

• Stop further demolition or remediation that might destroy evidence.
• Document the defects — photographs, video, samples where appropriate.
• Locate the original TDS, NHD, inspection reports, and purchase contract.
• Identify what the seller said (or did not say) about the affected components.
• Order professional inspections — general, structural, electrical, plumbing, environmental as appropriate.
• Preserve communications with the seller, agents, and any prior inspectors.
• Send a written notice of claim to the seller through the contract-specified channel.
• Consult a California real estate attorney to evaluate theories, deadlines, and recovery strategy.
• Comply with any mediation prerequisite before filing suit.

Need a real assessment of your defect claim?

Bay Legal, PC evaluates California seller non-disclosure and construction defect cases. Call (650) 668-8000 or schedule a consultation at baylegal.com/contact.

Frequently Asked Questions

What defects must California sellers disclose even when selling as-is?

All known material defects required by the Transfer Disclosure Statement under Civil Code section 1102 and following sections. Civil Code section 1102.1 makes the TDS non-waivable, and “as-is” clauses do not eliminate the seller’s duty to disclose known material problems. The TDS specifically asks about defects in major systems, foundation issues, water damage, unpermitted work, and other matters that affect a reasonable buyer’s decision.

What are your legal options if you discover unpermitted work after closing?

Depending on the facts: fraud and non-disclosure claims against the seller (the TDS specifically asks about unpermitted work), demand for credit or repair from the seller, building department legalization or remediation, and insurance claims if coverage is affected. Statute of limitations is typically three years from discovery under Code of Civil Procedure section 338(d).

Does an as-is clause waive your right to sue for hidden defects in California?

No. California Civil Code section 1102.1 makes the statutory disclosure regime non-waivable. “As-is” generally means the buyer takes visible conditions as they are, but it does NOT eliminate liability for known defects the seller concealed or for fraud. California courts consistently enforce disclosure obligations notwithstanding “as-is” language.

How does mediation or arbitration work for construction defect claims?

Most California residential purchase contracts include a mediation prerequisite to recovering attorney’s fees. Construction defect claims under SB 800 have their own pre-litigation procedure under Civil Code sections 910 through 938, requiring notice to the builder and opportunity to repair. Failure to follow these procedures can affect both fees and the underlying claim.

What is the statute of limitations for construction defects in California?

It depends on the defect type: 4 years for patent defects (Code of Civil Procedure section 337.1), 10 years for latent defects (section 337.15), 3 years for fraud from discovery (section 338(d)), and component-specific deadlines under Civil Code section 896 for new residential construction. Talk to an attorney early — the right deadline can be hard to identify.

Disclaimer

This article is for general informational purposes only and does not constitute legal, tax, or financial advice. Reading this article and contacting Bay Legal, PC does not create an attorney-client relationship. The information here is specific to California law, which changes over time, and your situation may involve facts that change the analysis. If you have a real estate question that matters to you, speak with a licensed California attorney about your specific circumstances.