Construction Defects Reform Bill could help Vail Valley condo construction
House Bill 1279
A “construction defects reform package” making its way through Colorado’s state legislature would require that, before the executive board of a unit owners’ association (HOA) in a common-interest community brings suit against a developer or builder on behalf of unit owners, the board must:
• Notify all unit owners and the developer or builder against whom the lawsuit is being considered;
• Call a meeting at which the executive board and the developer or builder will have an opportunity to present relevant facts and arguments; and
• Obtain the approval of a majority of the unit owners after giving them detailed disclosures about the lawsuit and its potential costs and benefits.
House Bill 1279 unanimously passed the Colorado House of Representatives. It could go to the Senate floor today.
DENVER — After years of setbacks and broken-down negotiations, state lawmakers on both sides of the aisle have something on which they all agree: Colorado’s Construction Defects Reform Bill, House Bill 1279, has unanimous support.
The bill passed Colorado’s House of Representatives, 64-0, last week and won approval from the Senate Business, Labor and Technology Committee on a 7-0 vote Monday. It could go to the full state Senate today.
Gov. John Hickenlooper has enthusiastically endorsed its passage.
The bill has bipartisan support in the state Senate. It’s sponsored by Minority Leader Lucia Guzman, D-Denver, and State Sen. Jack Tate, R-Centennial.
“This bill strikes a balance,” Guzman said. “We know Colorado needs more attainable housing options, but we simply have to protect the rights of homeowners. This bill succeeds in shielding honest businesses from bad actors, while protecting homeowners’ ability to seek damages for defective work.”
Too easy to sue
Under current law, a homowners’ association board can sue a builder without polling the membership. House Bill 17-1279 requires a majority of members in an HOA to approve in the affirmative before the HOA board can initiate legal proceedings against a general contractor or subcontractor.
The bill also requires HOA boards to distribute 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. No such notifications are currently required.
Metro Denver saw 3,246 apartments built in the first quarter of 2017; 11,000 are scheduled through the rest of the year, according to David Brennan, an attorney with local attorney Tom Ragonetti’s firm, Otten, Johnson, Robinson, Neff & Ragonetti.
Condominium construction is essentially nonexistent, he continued in his blog post on the firm’s website.
Builders have turned away from condos for fear of being sued for construction defects for at least six years after they finished their projects, since as that deadline approached, HOA boards often found themselves being courted to sue the builders, Brennan wrote. That litigation and the higher insurance costs that followed could add more than $15,000 to the cost of a condo.
House Bill 1279 is not a complete fix for the condominium construction issues, if such a fix even exists, but it is a good first step, Brennan wrote.
Staff Writer Randy Wyrick can be reached at 970-748-2935 and firstname.lastname@example.org.
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