Senate Bill 15-177, a bill introduced to reform Colorado’s construction defect litigation process, was defeated in a House of Representatives Committee on April 28, 2015 without being presented for a full vote in the House. The State, Veterans and Military Affairs Committee voted 6-5 on party lines to postpone action on the Bill indefinitely. The Bill passed the Republican controlled Senate in March.
SB-177 sought to reform the construction defect litigation process and encourage development of condominium housing by: (1) preventing homeowners’ associations from changing or removing construction defect arbitration provisions in the declaration for the common interest community, (2) requiring pre-litigation notice to all homeowners in the association, and (3) permitting litigation only after a majority of the homeowners provided written consent.
Local municipalities are expected to continue to address construction defect litigation concerns on their own. Lakewood and Lone Tree adopted ordinances addressing many of the same issues as the defeated Bill. Littleton is considering a similar ordinance. Sherman and Howard will continue to monitor passage of construction defect related ordinances by cities in Colorado.
Despite SB-177’s defeat, there are things developers and general contractors can do to attempt to maximize the likelihood any construction defect claims will be decided in arbitration and not by a jury trial. Sherman and Howard’s construction and real estate lawyers have worked with developers and general contractors to include the strongest possible arbitration language in condominium declarations and purchase contracts.
Another construction defect related bill was introduced in the House on April 27, 2015. House Bill 15-1385 would establish a voluntary quality control certification process for condominium developments. This review process would be administered by the Colorado Division of Housing which would establish regulations for the process. The voluntary review would be paid for by the project’s developer and would be conducted by an independent contractor. The legislation requires the developer to disclose to buyers whether a review was conducted and the results. HB-1385 has no Senate sponsor, suggesting it will suffer a fate similar to SB 177 given the short amount of time remaining in this year’s legislative session.
