(Colorado Newsline) Two bills aimed at reforming Colorado’s construction defect law advanced through the Legislature this week, one to spur more condo development by lowering insurance costs and another to give homeowners more protection against shoddy construction.

They both have to do with the state’s Construction Defect Action Reform Act, which sets up a process for homeowners to sue builders if they discover issues with the build, but they center on different parties in the defect remedy process.

The House gave preliminary approval to House Bill 24-1230 on Friday. The bill would extend the timeline a person can bring a construction defect lawsuit, known as a statute of repose, from six to 10 years.

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The bill would also allow similarly situated homeowners, such as homeowners on the same street with houses experiencing the same structural problems, to bring a claim together even if they aren’t in a formal homeowner association.

“What we want to do with this bill is encourage the industry to simply honor their warranties from the beginning. Let’s keep these cases out of court. Let’s run them through the warranty process they’re supposed to,” bill sponsor Rep. Jennifer Parenti, an Erie Democrat, said. The bill is also sponsored by Assistant Majority Leader Jennifer Bacon, a Denver Democrat.

Only four states have shorter statutes of repose than Colorado.

Republicans are opposed to the bill, largely because builders are against it and the risk it could reduce construction. Additionally, they take issue with a provision that would require builders to pay to homeowners a 6% prejudgement interest on claims.

“That’s an additional cost on the folks that are building housing, that are trying to put up new affordable housing for people to live. As we’ve seen over and over again, when red tape goes up, when liability goes up, when regulation goes up, the thing being subject to it goes down in supply,” Rep. Gabe Evans, a Fort Lupton Republican, said.

Bacon contended that the bill attempts to find a middle ground between homeowners wanting an endless statute of repose and builders wanting total protection from lawsuits.

“We have people that want to build these homes, but all we’re asking is that they can be reasonably held accountable if they don’t build them right,” she said.

The bill needs a final vote in the House before it moves forward to the Senate. That will likely happen early next week.

‘Right to remedy’

Senate Bill 24-106 is simultaneously moving through the Legislature, and it succeeded in its first committee on Thursday, after a two week delay between witness testimony and the committee vote.

It is focused less on the larger housing market and more on increasing condo stock, an often more attainable housing option for younger and lower income people versus a detached single-family home.

Supporters, most of which are builders and municipal governments, say the bill is integral to the state’s affordable housing goals by decreasing the frequency of court claims and therefore lowering insurance costs associated with condominium construction.

Builders say that insurance can raise the individual price of a condo by tens of thousands of dollars. Insurance costs for condos are now 5.5% of a project’s hard costs, more than triple those of a multifamily rental construction project, according to research from the Common Sense Institute. That is a disincentive to condo construction.

“We have a lack of construction when it comes to condos, which are an affordable option for people. How do we reignite that housing option?” bill sponsor Sen. Rachel Zenzinger, an Arvada Democrat, said in her closing comments on Thursday. “If the problem that is standing in the way of that is unaffordable construction insurance — even if you don’t believe that’s part of the problem — it doesn’t hurt to try and solve for it.”

We have a lack of construction when it comes to condos, which are an affordable option for people. How do we reignite that housing option?

– Sen. Rachel Zenzinger

Sen. James Coleman, a Denver Democrat, is also running the bill.

The bill would add another right-to-remedy path for homeowners who find a defect in their new build. Instead of heading to court — the most expensive option — homeowners would have an option for the builder or a third party to perform the corrective construction work. It would also limit lawsuits to be filed only if there are actual or imminent damages to the property or health of the occupants, rather than just technical building code violations.

“We’re trying to keep those out of court, because we feel like those can be fixed without having to go to court,” Zenzinger said. “So let’s try to fix it through right-to-remedy. Let’s try to fix it through mediation. Let’s try to fix it through arbitration.”

Homeowners would still be able to sue builders if they feel compelled to.

On Thursday, sponsors tried to add an amendment that would have more clearly spelled out the type of “imminent and unreasonable” damages necessary for a lawsuit, such as falling stucco, an issue that could cause mold or a problem with the building’s structural integrity.

Improperly installed roof flashing, for example, would not justify a claim because the issue isn’t damaging the property or impacting the roof’s performance.

Sen. Faith Winter, a Westminster Democrat, worried that there are times claims should be brought against builders that would fall outside of the amendment’s specific definition.

“I think it’s the wrong standard. I just think that this makes it far more restrictive on when folks can be protected and when they can’t,” she said.

Sponsors tabled the amendment but the debate over definitions is likely to continue throughout the legislative process.

Sen. Tony Exum, a Colorado Springs Democrat, joined with the committee’s three Republicans to approve the bill.

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