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Colorado Construction defects litigation reform heads to the governor's desk

May 5, 2017 Updated: May 5, 2017 at 8:46 am
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The long fight is over to slow down lawsuits over construction defects in Colorado, which lawmakers were told is the main reason builders aren't interested in providing affordable condos in an expensive market.

Legislators have argued for four sessions over whether the cost of insurance and litigation are really the roadblock, or whether builders are trying to skirt responsibility for shoddy work.

The bipartisan House Bill 1279 requires a modest step of getting a majority of residents to approve a lawsuit against a builder, instead of the homeowner's association board. It also requires a meeting in which the builder can present his side and possibly offer to remedy the problems.

Before they vote on whether to sue, residents would hear about the cost of the litigation and the impact it could have on selling or refinancing their property.

The push for an agreeable solution - there were four other bills on construction defects since the session started in January - was driven by the need for affordable housing. Condos have been cited as affordable places for people to land.

The share of condos in the Denver market have slid from 20 percent condo market to 2 percent since 2005, according to the Colorado Homeownership Opportunity Alliance, a group of builders, trade associations and others that supported construction litigation reform.

The median price for a condo in metro Denver last month was $260,000 compared to $400,000 for a house, according to the Colorado Association of Realtors.

The bill was sponsored by Reps. Alec Garnett, D-Denver, and Lori Saine, R-Dacono, with Sens Lucia Guzman, D-Denver, and Jack Tate, R-Centennial.

It passed the Senate on a 33-0 vote Thursday, and the House 64-0 on April 24.

Tate called the legislation "an important step in the right direction."

"First, it acknowledges that there is a problem," he said. "Secondly, this is a positive corrective measure to addressing the problem we have when it comes to construction litigation issues."

He said the bill doesn't change the existing complicated construction laws, but it does ensure informed consent before lawsuits are filed.

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