Legal Question in Real Estate Law in California

Developers Home Warranty and Chapter 11

I recently purchased a new home May 2007 and it came with a 1 year home warranty. Just last November the developer had sold the company. Now this new owner is apparently filing Chapter 11. So now no warranty claims I have are going to be serviced until after the bankruptcy case goes through assuming they will even uphold the warranty's.

So now instead of waiting around for a large Second Story Deck header to be replaced under warranty due to splitting and warping. I am considering taking the owner to court in order to either fix and uphold the warranty or refund the amount included into the price of the home for the warranty in its entirety.

Do I have any recourse? Should I send a certified letter to the developer demanding the repairs or refund and letting him know I will pursue legal action?


Asked on 12/12/07, 1:11 pm

1 Answer from Attorneys
Roy Hoffman Law Offices of Roy A. Hoffman

Re: Developers Home Warranty and Chapter 11

If the person to whom the developer sold his company files Chapter 11, you cannot take any action to enforce anything against the new owner without first obtaining the Bankruptcy Court's permission. When a bankruptcy case is filed, the court issues an Automatic Stay pursuant to 11 U.S.C. section 362. That section provides that no action can be taken against the debtor to collect on a debt, which includes sending letters demanding payment and filing lawsuits.

However, you may have recourse against the original owner of the company for construction defects. Keep in mind, however, that you have a duty to "mitigate" your damages, meaning if you can do something to minimize the damages you might incur, you have a duty to do so.

You should probably take all of the documents you have relating to the house and the deck to an attorney whose practice emphasizes construction defect litigation and discuss you options.

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Answered on 12/12/07, 1:47 pm


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