Guv Signs Construction Defects Accord

(May 23) – Closing a chapter that has bedeviled the Colorado legislature for years, Gov. John Hickenlooper signed a fully bipartisan bill this afternoon that adjusts the threshold for lawsuits over construction defects.

The new law, a signature achievement of the 2017 Colorado legislative session, was hammered together by Assistant Majority Leader Alec Garnett, D-Denver. He sponsored HB17-1279 with Rep. Lori Saine, R-Dacono. The Senate sponsors were Minority Leader Lucia Guzman, D-Denver, and Jack Tate, R-Centennial. Assistant House Minority Leader Cole Wist, R-Centennial, also figured heavily in the long hours of negotiations over the bill.

“This new law establishes a fair and balanced process for settlement of construction defects claims without infringing on Coloradans’ ability to protect what for most of them is their single biggest investment — their homes,” Rep. Garnett said.

Construction of multi-unit real estate in Colorado is heavily skewed toward the building of apartments. Real estate developers have claimed the threat of lawsuits over construction defects is a disincentive to building condominiums, while property owners have opposed any infringement of their right to protect their investment. Those competing priorities have spawned numerous legislative battles in recent years.

The climate changed this legislative session, when Speaker Crisanta Duran and Senate President Kevin Grantham publicly committed at the start of the session to make progress on the construction defects issue. The two leaders’ early statements and actions on defects created an opening for action on a core issue – the process by which homeowners associations decide to bring construction defects litigation.

HB17-1279 requires the approval of a majority of members of an HOA before the HOA board can initiate legal proceedings against a general contractor or subcontractor. Previously, litigation could be initiated by an HOA board without polling the membership.

The new law, which passed the General Assembly by a combined vote of 97-0, also requires HOA boards to distribute to members a report on the expected costs of proposed litigation and to notify members that their ability to sell their property may be impaired for the duration of a lawsuit.

HB17-1279 goes into effect immediately.

“This new law finally puts to rest an issue that has been a bone of contention in the Colorado General Assembly for many years,” Speaker Duran said. “Our goal is to restore some balance to the Colorado real estate market and make housing more available, easing a crunch that has made home ownership unattainable for too many Coloradans while also protecting consumers’ right to redress when there’s faulty construction.”

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