Construction Defect Legislation on its Way for Governor’s Signature

Last month we reported on a press conference presented by Governor Hickenlooper and several legislators where the Governor announced consensus had been reached on the construction defect bill, HB17-1279.  Both the House and Senate passed the bill by overwhelming margins.  The Governor is expected to sign the bill on May 23, 2017.

For those involved in the construction defect legislation efforts, achieving a bill that could pass both the House and Senate has been a long and at times contentious process.  However, after years of debate, a compromise acceptable to the various stakeholders and legislators was achieved.  The legislation still allows consumers to have remedies for defective construction. However, it satisfies some of the concerns raised by developers and builders.

One of the objections developers and builders had with the existing legislative scheme was that unless declarations had voting requirements to pursue construction defects, state law allowed boards to make this decision.  Under the new legislation, owners will be informed through written disclosures about the effects of proceeding or not with a construction defect action. This allows owners to evaluate costs and benefits.  An association meeting must be held and the builder/developer may attend that meeting and distribute written materials regarding their position.

The association must obtain approval of a majority of the owners within 90 days of the start of the voting period before they can proceed with a construction defect action.  There are limited exceptions to the rule including development parties and their affiliates that own units in the community will be excluded from the total vote required, as will non-responsive lenders and potentially, non-responsive owners.