Until now, a homeowner who found a code violation or other defect could sue as long as the home had been purchased within the last 10 years. The lawsuit could proceed even if the defect hadn't damaged the property or caused the owner to lose money.

The State Supreme Court ruling, handed down in San Francisco, changes all that. Now, a suit can be filed only if the defect already has caused real damage, either physically or financially.

Condominium and townhome builders have long been particularly critical of state law. Many have stopped building condos altogether, saying that even a minor technical flaw that wouldn't cause a buyer any harm opened them up to potentially bankrupting lawsuits.