Colorado Senate passes GOP bill aimed at curbing construction-defects litigation

State Sen. Owen Hill, R-Colorado Springs, discusses his Senate Bill 156, to require that condo associations use arbitration to settle disputes over construction defects before taking builders to court, at a rally on Monday, Feb. 27, 2017, at the state Capitol. (Photo by Ernest Luning/The Colorado Statesman)

State Sen. Owen Hill, R-Colorado Springs, discusses his Senate Bill 156, to require that condo associations use arbitration to settle disputes over construction defects before taking builders to court, at a rally on Monday, Feb. 27, 2017, at the state Capitol. (Photo by Ernest Luning/The Colorado Statesman)

The Colorado Senate gave bipartisan approval Tuesday to a Republican-sponsored bill to require owners and builders of condominiums to submit disputes over construction problems to arbitration or mediation before filing class-action lawsuits.

Five Democrats joined every Republican senator voting in favor of Senate Bill 156 on third reading, sending the bill on a 23-12 vote to the Democratic-controlled House, where its future is less certain.

The legislation, sponsored by state Sen. Owen Hill, R-Colorado Springs, and Assistant House Minority Leader Cole Wist, R-Centennial, and state Reps Lori Saine, R-Firestone, is one of several bills meant to encourage condominium construction statewide that are making their way through the chambers this session.

The bill also requires condo owners to get approval of a majority of the homeowners in the association before proceeding with a complaint, as well as tell the homeowners the project cost, duration and financial impact of filing a claim. It wouldn’t bar a single homeowner from pursing legal action against builders for alleged defective construction.

The Democrats supporting the bill in the Senate were state Sens. Rhonda Fields, D-Aurora; Cheri Jahn, D-Wheat Ridge; Dominick Moreno, D-Commerce City; Nancy Todd, D-Aurora; and Rachel Zenzinger, D-Arvada.

“Everyone from seniors to young professionals to firefighters, teachers and other public servants are struggling to find homes they can afford,” said Hill. “This bill helps provide hard-working Coloradans with the ability to build equity and take control of their financial future.”

One of the Democratic senators who supported the bill said it’s time for the state to enact a law along the lines of measures more than a dozen cities and a county have adopted in recent years.

“This is good policy for Colorado because without construction defects reform there is no path to attainable owner-occupied multi-family housing,” said Zenzinger. She added, “Communities around the state have already adopted these common sense measures, and it makes sense to adopt them statewide.”

But the head of Build Our Homes Right, a group of homeowners and legal advocates opposed to the bill, lamented the bill’s passage out of the Senate and said he’s counting on the House to block the legislation.

“Homeowners who are unfortunate enough to purchase a new home with construction defects should have equal access to the court system if needed, but SB 156 would effectively strip away our basic right to a jury trial,” said Denver condo owner Jonathan Harris. “It’s scandalous that developers want to shift the responsibility for their own mistakes onto innocent homeowners.”

“We look to the Colorado House to protect our rights to hold developers accountable for construction defects like leaking walls, doors and windows and structurally unsound supports for multi-level condos like in my development,” Harris said.

When Senate Bill 156 was awaiting its Senate committee hearing, House Speaker Crisanta Duran, D-Denver, told The Colorado Statesman she planned to monitor the bill and “see what shape it takes” by the time it reached the House. She noted that the bill was similar to legislation the Democrats have killed in recent sessions.

“As I’ve said from the start of this session, my goal is to seek solutions that address the issue of new condo development without jeopardizing the right of Coloradans to protect the largest investment most of them will ever make — their homes,” she said.

The 40-member Metro Mayors Caucus last month asked Duran to assign Hill’s bill to a House committee where it could receive a fair hearing.

The spokeswoman for the Community Associations Institute, an organization representing homeowners’ associations across the state, told The Statesman last week that the essential element of Hill’s bill was a nonstarter for her group.

“We do not support Senate Bill 156, which would require homeowners to enter into forced, binding arbitration and severely limit their access to the court system,” said Suzanne Leff. “We put homeowners and their communities first, seeking to protect them from defects, and cannot agree to give up their rights to a fair trial, as Senate Bill 156 requires.”

A Democratic-sponsored bill tackles some of the same issues as Senate Bill 156, although it wouldn’t require arbitration to resolve disputes. Senate Bill 157, sponsored by state Sen. Angela Williams, D-Denver, and state Rep. Jovan Melton, D-Aurora, would require homeowners’ association boards to notify all unit owners and obtain approval from a majority of owners before filing a lawsuit for more than $100,000. It would also limit the contact a developer or builder can have with owners while the HOA is seeking approval for a lawsuit. It’s set for a hearing before the Senate Business, Labor and Technology Committee on Monday, March 13.

Bipartisan legislation — sponsored by Duran and Senate President Kevin Grantham, R-Cañon City, along with state Sen. Angela Williams, D-Denver, and Assistant House Minority Leader Cole Wist, R-Centennial — Senate Bill 45, won approval from the Senate Business, Labor and Technology Committee a month ago and has been sent to the Senate Appropriations Committee, where it awaits a hearing date. The bill would affect how the costs of defending against litigation are allocated among builders and contractors.

ernest@coloradostatesman.com

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