Deal struck on lawsuits for defects in buildings

DENVER — After several years of working on it, legislators from both sides of the political aisle have come together on a bill dealing with construction defect lawsuits.

The issue, one that lawmakers have struggled with for more than a decade, has swung back and forth over the years, creating a situation that caused developers to build fewer multifamily homes, such as condominiums and apartment complexes, for fear of lawsuits over defects in construction.

The measure, HB1279, requires the approval of a majority of property owners in a homeowners’ association before an HOA board can file a lawsuit against a general contractor or subcontractor for work they did on the property.

Currently, a board can do so on its own without the approval of a majority of homeowners in the association.

The bill also requires boards to tell their members the expected costs of such a lawsuit, and to tell them that they may have trouble selling or refinancing their properties while a lawsuit is pending.

The thinking behind those provisions is to ensure that lawsuits that go forward are ones with the most merit, sponsors of the bill said.

“What this issue has resulted in is a 20-plus percent condo market becoming a 2-percent condo market,” said Rep. Cole Wist, R-Centennial, one of the sponsors of the bill. “First-time homebuyers are being prevented from their ability to begin their part of the American dream, which is home ownership, and so many of our seniors who are looking to step down into a condo community find that there is not sufficient inventory in our condo market for them to purchase.”

A compromise on the bill has been signed off on by homebuilders, HOAs, affordable housing advocates and others involved in the financing and building of multifamily homes.

At the beginning of this year’s session, both House Speaker Crisanta Duran, D-Denver, and Senate President Kevin Grantham, R-Canon City, said a deal was struck in addressing the issue.

That deal didn’t last.

But instead of giving up, Wist and Rep. Alec Garnett, D-Denver, along with others, spent many late hours trying to come together.

“When you aren’t doubting that the people who are sitting with you at the table have the same goal as you, it really allows you to focus on the policy rather than the politics,” Garnett said.

The bill is expected to see final approval in the House today, and will head to the Senate, where Sens. Jack Tate, R-Centennial, and Senate Minority Leader Lucia Guzman, D-Denver, will try to keep the coalition together to get the bill to the governor’s desk.

“This is a historic bill made at a historic moment,” said Rep. Lori Saine, R-Firestone. “Homeowners that reside in a common-interest community will for the first time have an opportunity to hear from both sides — plaintiffs attorneys and construction professionals — before engaging in a construction defects lawsuit, and a potential opportunity to hear an offer to remedy the defect from the homebuilder.

“Without HB1279, as few as two homeowners can bring a lawsuit, encumbering the rights of other homeowners to sell or refinance their homes, tantamount to financial house arrest without their consent,” she added.


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