Con­struc­tion-de­fects re­form bills will ben­e­fit builders and own­ers.

The Denver Post - - NEWS -

This could be the year that Colorado stops talk­ing about con­struc­tion de­fects tort re­form — the prob­lem of too many friv­o­lous law­suits be­ing filed against builders for flaws in con­struc­tion — and move on to other press­ing is­sues in the state.

Law­mak­ers are tan­ta­liz­ingly close to pass­ing two bills that rep­re­sent con­sid­er­able com­pro­mise on the is­sue. House Bill 1279 and Se­nate Bill 45 could curb preda­tory law­suits that have cropped up un­der Colorado laws. The sys­tem is so bro­ken that de­vel­op­ers have al­most stopped build­ing mul­tifam­ily units that are for sale and in­stead are build­ing apart­ments or other rental units to avoid costly lit­i­ga­tion and costly li­a­bil­ity in­sur­ance.

We’ve al­ready urged law­mak­ers to ap­prove SB 45 which would al­low a judge to pro­por­tion­ally as­sign re­spon­si­bil­ity for de­fense costs and po­ten­tial awards based on actual re­spon­si­bil­ity for the flaw. Be­lieve it or not, that doesn’t hap­pen now. If the de­fect is leaky win­dows, the painter and land­scape ar­chi­tect share the same re­spon­si­bil­ity for court costs as the gen­eral con­trac­tor and the win­dow in­staller. It’s com­pletely non­sen­si­cal.

SB 45 has been await­ing a sec­ond com­mit­tee hear­ing in the Se­nate for sev­eral weeks now, de­spite bi­par­ti­san sup­port from Se­nate Pres­i­dent Kevin Gran­tham and House Speaker Crisanta Du­ran. We cer­tainly hope that de­lay doesn’t spell trou­ble for a good so­lu­tion to one small prob­lem

In a sim­i­lar vein, it’s hard to find a prob­lem with HB 1279.

Even the staunch­est ad­vo­cate of home­own­ers’ rights to sue could see logic in re­quir­ing a ma­jor­ity vote of those who own units in the build­ing to ap­prove a class ac­tion law­suit be­fore a home­own­ers as­so­ci­a­tion files one.

Gain­ing such a coali­tion not only pro­tects builders from friv­o­lous law­suits, but also pro­tects condo own­ers from the pos­si­bil­ity a class ac­tion law­suit gets filed, takes a year to set­tle and en­cum­bers the prop­erty in a le­gal limbo that makes sell­ing or re­fi­nanc­ing dif­fi­cult.

Rep. Lori Saine, a Repub­li­can co-au­thor of HB 1279, calls that sit­u­a­tion “fi­nan­cial house ar­rest.”

The bill re­quires a sim­ple ma­jor­ity of unit own­ers to vote in fa­vor of tak­ing le­gal ac­tion against a builder, in­stead of just a ma­jor­ity of mem­bers of the HOA. It also pro­vides guide­lines of dis­clo­sures on be­half of the home­own­ers as­so­ci­a­tion seek­ing to file suit and al­lows the builder to ad­dress the HOA be­fore a vote is taken. That pre­sen­ta­tion can in­clude an of­fer to fix the prob­lem in­stead of go­ing to court.

But un­like other, more dras­tic bills, this one does not re­quire that builders first get a right to rem­edy the prob­lem, and it also doesn’t re­quire that the is­sue go to me­di­a­tion be­fore hit­ting the courts.

Fur­ther­more, the bill would pro­tect home­own­ers from ne­far­i­ous builders who in­ten­tion­ally hold a ma­jor­ity of units for them­selves to block lit­i­ga­tion or write into HOA rules that the de­vel­oper holds a ma­jor­ity vote on the board un­til seven years (the statute of lim­i­ta­tions for de­fects claims) have passed.

What a smart mid­dle ground Saine and Rep. Alec Gar­nett, a Demo­crat, seem to have struck on this bill.

Ad­di­tion­ally, even if the ma­jor­ity of unit own­ers refuse to file a law­suit, noth­ing pro­hibits an in­di­vid­ual unit owner from pur­su­ing their own law­suit.

These two bills could do much to thaw Colorado’s frozen mar­ket for multi-fam­ily units, and could also help lower the cost of con­struc­tion and thus the cost of con­dos.

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