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Amended construction defects bill passes Colorado Senate but still lacks homeowner group’s support

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Sara Wilson

(Colorado Newsline) The Colorado Senate passed a watered down version of a contentious bill Thursday that sponsors hope will reduce insurance costs for condominium construction in the state and spur the development of that type of housing.

Senate Bill 24-106 passed on a 25-8 vote on third reading, after a substantial amendment process on the chamber floor that removed some of the most consequential provisions in the original bill. All eight votes against the measure came from Democrats. Senate President Steve Fenberg, a Boulder Democrat, and Majority Leader Robert Rodriguez, a Denver Democrat, both voted against the bill.

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The bill had a lengthy journey to its first full-chamber vote. Its committee vote was delayed by a few weeks to allow sponsors to workshop amendments, and it was then repeatedly postponed on the Senate floor.

It has a little less than a month to undergo the same process in the House before the end of the legislative session.

As introduced, the bill would have modified the state’s Construction Defect Action Reform Act, which outlines the process for when and how homeowners can sue builders for a construction defect claim.

SB-106 would have added a right-to-repair path to resolve faulty construction issues outside of the costly litigation process and would have defined when a lawsuit is appropriate, therefore limiting the instances a homeowner might sue their developer. Homeowners would have the option to have the builder or a third party perform the corrective work under the right-to-repair process.

The thinking is that by reducing defect litigation, insurance for construction on entry-level, more affordable homes like condominiums will decrease and more developers would come to Colorado. The end result would be more attainable housing stock.

On the Senate floor, bill sponsors offered an amendment to essentially rewrite the bill, removing the language around right-to-repair.

“We have decided that in being responsive to the concerns that were brought up from stakeholder conversations we’ve had, that removing this section of the bill would essentially maintain the status quo,” bill sponsor Senator Rachel Zenzinger, an Arvada Democrat, said Wednesday on the Senate floor.

“Several of the stakeholders in this process argued that these sections created potential problems for homeowners, in particular after the initial repairs are made. While we disagreed with that contention, we felt that it was appropriate at this time to eliminate those sections,” she said.

Senator James Coleman, a Denver Democrat, also ran the bill.

Homeowner opposition

The amended bill retains a requirement that 60 percent of a homeowners’ association consent before they move forward with a defects lawsuit. It also keeps the requirement that a claim would only be permitted if the defect goes against building codes or industry standards and prevents the intended function of the building component, creates actual damage or loss to the property, results in injury or risks “verifiable danger” to the building occupants.

Bad construction that results in risk of injury is ripe for a claim, for example, but use of the wrong type of screw is not.

The amendment struck language that permits an “imminent and unreasonable” threat to health, life or safety as a reason for a claim, instead replacing it with the verifiable danger language. Sponsors said that is a reference to an existing Texas construction defect statute, but opponents worry homeowners would be forced to wait until a component completely fails before bringing a claim.

Wednesday, bill opponents including Democratic Representatives Lisa Cutter of Littleton, Julie Gonzales of Denver and Sonya Jaquez Lewis of Longmont offered over 20 amendments to try and further narrow the bill. A few minor amendments passed, including one to add language to the legislative declaration ahead of the bill text.

“For the folks who think we ought to prioritize the developers over the homeowners — that’s not a calculation that I would make, and it’s not one that I think anyone in this chamber would make. The question is how do we balance the two interests?” Gonzales said, arguing that lawmakers should do more to protect homeowners in one of the largest investments they will make.

The amended version of the bill still does not have support from a homeowner coalition that has been vocally opposed to it from the start.

“We appreciate the work sponsors and proponents have done to eliminate some of the problems with the bill but it still restricts everyday homeowners’ rights to hold builders responsible for shoddy construction,” Jonathan Harris, a Denver homeowner and chair of Build Our Homes Right, said in a statement. “The bottom line is homeowners will be in worse shape than they are today in terms of defining claim-worthy risks, upholding contract and warranty provisions and more.”

The bill will be carried by Representative Shannon Bird, a Westminster Democrat, in the House.

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