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Step towards construction defect litigation reform taken with Colorado governor’s signature

Author: Peter Marcus - May 23, 2017 - Updated: May 23, 2017

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Gov. John Hickenlooper on Tuesday signed legislation marking the most significant progress on construction defect litigation reform since the debate began at least four years ago.

One of the thorniest issues in the legislature, the bill signing also signaled one of the assembly’s greatest achievements this year, striking a deal that begins to get to reform.

The legislation requires a majority of homeowners in an association to approve a lawsuit and provide disclosure to homeowners of a proposed suit.

“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,” said Rep. Alec Garnett, D-Denver, who led many of the talks and helped build a grand bargain.

In previous years, talks on the issue have broken down. Negotiations were precarious through much of the process this year as well. But in April, a compromise was reached, which lawmakers rolled out with all the pomp and circumstance of a press conference.

Hickenlooper signed the bill Tuesday afternoon at the Capitol, after it received a unanimous vote in the legislature.

The conversation involved a wide berth of stakeholders, including developers, the business community, homeowners and local elected officials.

“We are pleased that we were able to find a compromise aimed at encouraging more condo development while protecting consumers, but keep in mind that this is the first step in a long process and it is not a silver bullet,” said Kathie Barstnar, co-chair of the Homeownership Opportunity Alliance, which led talks for developers, business interests and local officials.

At one point this year, conversations became so complicated that sponsors of the measure essentially declared an impasse. The effort was partly held up by a few short words in the legislation, which addresses a pause in the time homeowners have to file a lawsuit under a statute of limitations.

The clock would pause up to a 90-day voting and disclosure period as a homeowners’ association decides whether to file a lawsuit.

The bill – as with all construction defect measures – aims at spurring housing development by relaxing concerns from developers over expensive lawsuits. Hickenlooper said the victory is almost psychological for homebuilders.

In addition to Garnett, House Bill 1279 was also sponsored by Rep. Lori Saine, R-Firestone. In the Senate it was sponsored by Democratic Leader Lucia Guzman of Denver and Sen. Jack Tate of Centennial.

“Innovation, teamwork and bipartisanship are alive and well at the Capitol and were essential to the passage of House Bill 1279,” said House Assistant Republican Leader Cole Wist of Centennial, who also played a major role in negotiations. “While this bill will not cure all of our state’s problems with respect to runaway construction litigation, it is a huge step in the right direction.”

Even homeowners, who had feared they might lose access to their day in court to fight shoddy development, applauded passage of the legislation.

“With the governor’s signature on House Bill 1279, homeowners can breathe a sigh of relief that the ongoing fight over construction defect law has finally come to an end,” said  Jonathan Harris, with Build Our Homes Right.

Other efforts this year, however, did not cross the finish line, including a piece of legislation that legislative leaders – including House Speaker Crisanta Duran, D-Denver, and Senate President Kevin Grantham, R-Canon City, had sponsored this year.

The measure, Senate Bill 45, would have aimed at equitably dividing litigation defense costs. The idea was to lower insurance rates, which would decrease costs for developers. The concept was highlighted in opening day speeches in the legislature.

But it was opposed by the very groups it was intended to help, including developers, and the bill died.

Still, lawmakers can say they are walking away with a win by pushing House Bill 1279 across the finish line.

“I am pleased that in one of the most productive sessions I have had the pleasure of working in, we finally made a breakthrough on the construction defects issue,” Guzman said. “This bill strikes an important balance that shields honest homebuilders and protects the rights of homeowners.”

Peter Marcus

Peter Marcus

Peter Marcus is senior statehouse reporter for Colorado Politics. He covers the legislature and previously covered politics, the governor’s office, the legislature and Congress for The Durango Herald. He joined The Herald in 2014 from The Colorado Statesman, a Denver-based political weekly. The Washington Post twice named Marcus one of the nation’s top state-based political and legislative reporters.