Bipartisan Accord on Construction Defects

(March 17) – After months of negotiations, a fully bipartisan bill to provide more notice to homeowners in potential construction defects lawsuits and adjusting the threshold for initiating such actions was introduced in the House tonight.

“This bill will establish a fair and balanced process for all homeowners and will establish confidence in the marketplace for developers to break ground,” said Assistant Majority Leader Alec Garnett, D-Denver, who is sponsoring HB17-1279 with Rep. Lori Saine, R-Dacono. The Senate sponsors are Minority Leader Lucia Guzman, D-Denver, and Jack Tate, R-Centennial.

The bill delivers on commitments by Speaker Crisanta Duran and Senate President Kevin Grantham to make progress on the challenging construction defects issue. The 2017 legislative session began with Speaker Duran and President Grantham sponsoring SB17-045, introduced on the opening day of the

session and still awaiting action in the Senate. That bill tackles one facet of the problem — the costly and litigious process of apportioning liability among general contractors and subcontractors after construction defects lawsuits are filed.

Today’s bill addresses the time period prior to a lawsuit being filed by a homeowners’ association to address a defect. HB17-1279 requires the approval of a majority of members of an HOA before it can initiate legal proceedings against a general contractor or subcontractor. Under current law, legal proceedings can be initiated by an HOA board without polling the homeowners.

The new bill also requires the distribution to homeowners of disclosures on the expected costs of proposed litigation and notifications that their ability to sell their property may be impaired for the duration of a lawsuit.

The bill does not address binding arbitration as a substitute for litigation, and preserves homeowners’ access to the judicial system.

Speaker Duran assigned HB17-1279 to the House State, Veterans & Military Affairs Committee.

“I hope this bill, along with Senate Bill 45 and the Colorado Supreme Court’s impending Vallagio ruling, will finally put to rest an issue that has been a bone of contention in the Colorado General Assembly for many years,” she said. “Our goal is to restore some balance to the Colorado real estate market and make housing more available.”

“From the start, Democrats have made it clear we are committed to legislation that would encourage the construction of attainable housing without taking away homeowners’ rights,” Sen. Guzman said. “By balancing homeowners’ ability to seek damages for defective work with provisions to shield honest businesses from bad actors, I believe this bill will tackle a major issue in the construction defects debate.”

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