Senate committee gives unanimous OK to bipartisan construction litigation reform bill
Author: Ernest Luning - May 1, 2017 - Updated: May 2, 2017
Bipartisan legislation to make it more difficult for homeowners’ associations to sue condominium developers for defective construction is one step closer to becoming law after winning unanimous approval from a Senate committee Monday on its first vote in the upper chamber.
House Bill 1279, sponsored in the Senate by Minority Leader Lucia Guzman, D-Denver, and state Sen. Jack Tate, R-Centennial, was the subject of intense negotiations throughout most of April while the two sides — homebuilders and the business community on one side and homeowners associations and trial lawyers on the other — worked with lawmakers to hammer out a deal.
After lawmakers had delayed its committee hearing in the House for several weeks, Gov. John Hickenlooper joined House sponsors Assistant Majority Leader Alec Garnett, D-Denver, Minority Whip Lori Saine, R-Dacono, and key co-sponsor Assistant Minority Leader Cole Wist, R-Centennial, to declare a compromise had been reached. They hailed the resulting legislation as a key step toward fulfilling promises officials made at the beginning of the session to tackle the issue.
The bill has been described as a breakthrough backers hope will help spur condo construction after years of that market segment grinding to a near standstill statewide. Condo developers say it’s been far too easy for homeowners’ associations to launch multi-million dollar class-action lawsuits, driving up costs and making it prohibitive to build projects.
After Guzman and Tate presented the legislation before the Senate Business, Labor and Technology Committee, members voted 7-0 to wave it ahead to the Senate floor, where it’s expected to pass with ease. The House passed the bill unanimously a week ago.
“This bill strikes a balance,” Guzman said in a statement. “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. I am pleased to have worked with my colleagues to make progress on an issue that has plagued Colorado since I first entered the Senate, and I look forward to this productive conversation continuing before the full Senate.”
The bill requires a majority of condo unit owners to vote in favor of filing a complaint for flawed construction — but only after a condo project’s homeowners’ board has distributed a report on the expected costs of proposed litigation and a notice that a lawsuit can make it hard to sell units until the complaint has been resolved. Condo owners will have 90 days to provide notice and conduct an election.
“It’s transparent, it’s fair, it allows both sides to present a case,” Garnett said at a Capitol news conference celebrating the compromise. He added that establishing “informed consent” creates a different climate for developers who have shied away from condo projects in Colorado even as affordable housing has become less and less available statewide in recent years.
The spokesman for a coalition of condo owners and lawyers who represent them cheered Monday’s vote.
“Build Our Homes Right and our advocates have been working hard to hammer out this reasonable construction defect compromise, one that both protects the basic legal rights of homeowners unlucky enough to buy a defective home and addresses developers’ concerns, as well,” said Jonathan Harris, the group’s chair. “We’ve said we can live with this bill and remain cautiously optimistic that passing this bill will put this issue to bed, once and for all.”