Residential contractors should begin to evaluate their contractual risk-transfer tools, their litigation strategies and their analysis utilized for wrap-up coverages in light of a new bill signed into law in California.

In September 2008, California Governor Arnold Schwarzenegger signed Assembly Bill 2738, which creates significant changes to the contractual risk-transfer of owners/builders and their subcontractors who are involved in residential construction projects. The bill contains the following main factors:

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