Government & Politics  May 24, 2017

Governor signs new construction-defects law

DENVER — Gov. John Hickenlooper on Tuesday signed a bill that changes the requirements needed before condominium owners can sue builders over alleged construction defects.

The new law requires that a majority of unit owners in a condominium homeowners association must vote to initiate legal proceedings, a change from the previous law that required only three unit owners in an HOA to initiate a lawsuit.

Builders have said for years that the ease with which they can be sued has thwarted the construction of condominiums, often the product that allows first-time buyers to become homeowners. The most-recent statistics show that only 3 percent of new housing stock has been condominiums, a drop from 20 percent of the mix from previous years.

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The law also requires HOA boards to distribute a report on the potential costs and benefits of the lawsuit before the vote, and all unit owners and the developer/builder against whom the lawsuit is being considered must be notified. It also requires that the HOA’s executive board must call a meeting where facts and evidence of the defects are presented, and where the developer/builder may offer a remedy.

Greg Miedema, executive officer of the Home Builders Association of Northern Colorado, said it’s too early to tell how homebuilders will react to the change in the law, but said it’s a step in the right direction.

“We’re hopeful that it will create a positive ripple,” when it comes to building condominiums, he said.

Lucia Guzman, D-Denver, a co-sponsor of the bill, said there is still work to be done to make housing more attainable and more affordable, but this new law should help.

“This bill strikes an important balance that shields honest homebuilders and protects the rights of homeowners,” said Guzman, who along with Jack Tate, R-Centennial, sponsored the bill in the Senate. In the House, it was sponsored by Alec Garnett, D-Denver; Cole Wist, R-Centennial; and Lori Sane, R-Dacono.

 

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