A state system that allows homeowners and homeowner associations (HOAs) to sue builders for construction defects is slowing down the production of condos and townhomes in California, according to Stephen Russell, president & CEO of the San Diego Housing Federation.

It’s called construction defect liability, and it gives homeowners and HOAs up to 10 years after construction to file claims over building flaws. While it’s intended to protect buyers, Russell says it has had the unintended consequence of discouraging developers from building for-sale multifamily housing.

Because of the legal risk, insurance lenders typically require developers to get construction defect insurance upfront, with the full premium paid in advance, making it more expensive to build condos and townhomes. Beyond tha

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