DENVER — Colorado lawmakers this week will consider arguments on two bills regarding construction defects. The competing bills would accomplish different outcomes for homeowners and builders.
Senate Bill 24-106 would create a right for a construction professional to remedy a claim made against them by doing remedial work or hiring another construction professional to perform the work. Supporters say it will streamline litigation and lead to the creation of more affordable housing in the state. But opponents say it weakens consumer protections.
The bill was heard in committee on Tuesday. Sponsors argued a spike in lawsuits related to construction defects has now scared away most builders.
“Condominium construction in Colorado has dwindled to virtually nothing,” said bill sponsor State Sen. Rachel Zenzinger, D-Arvada.
Zenzinger said SB24-106 would spur new development while balancing homeowner protections. The legislation targets lawsuits, specifically.
“We don’t always have to run to court in order to solve our problems,” she said.
The bill outlines three remediation potentials:
- Builders can offer to settle with homeowners outside of court.
- Builders can offer to fix the problem.
- Homeowners can choose a third party at the builder's expense to come in and fix the issue.
“Why are we choosing the most expensive option and an option that takes years and years to resolve as opposed to a pathway where we can get the problem solved quicker and in a more cost-effective manner?” Zenzinger said.
But opponents say the bill severely weakens homeowner protections, especially by requiring two-thirds of condo complex owners to sign onto any lawsuit. Right now, the law states just 50% are required to sign on.
“You would need 67%,” said Jonathan Harris, who lives in a condo in Five Points. “I can’t imagine trying to get 67% of all the homeowners together to ask them if they want to file a lawsuit. In our building, the builder still owns 50%, so it would be impossible.”
Harris and his neighbors sued their builder for construction defects a few years ago and settled out of court.
“We didn’t get nearly what it cost to fix the problems,” Harris said.
“It has nothing to do with construction defect laws,” said Jeff Nehls, who also testified against the bill.
Nehls and his team at Pacey Nehls Economics in Boulder recently conducted a study that shows there is no data to support the claim that construction defect lawsuits have led to a lack of builders or affordable housing in Colorado.
“They’re still here,” Nehls said. “They’re still making billions of dollars in profits, and they reveal in their financial statements that they’re not worried about the impact of construction defect litigation on their bottom line.”
Nehls said his study revealed that all across the country, builders are shifting from building for-sale multi-family housing to building for-rent multi-family housing.
“The economics have shifted. And the investors in those can have perpetual income from those units,” Nehls said.
Harris said he’s fighting for future homeowners.
“We want people to build things right the first time,” Harris said.
The other bill under consideration is House Bill 24-1230. Supporters say the bill modifies consumer protections for residential property owners related to construction defects. Part of that is a provision that increases the reporting period for construction defects from six years to 10 years for homeowners. Opponents say the bill will further exacerbate the affordability crisis by deterring new condo construction even more.
The bill also voids any contractual provision that limits a property owner’s right to bring or join a lawsuit against a construction professional as well as HOA governing documents that conflict with the bill’s provisions.
Lawmakers will hear arguments on HB24-1230 on Wednesday.
