RQ Law Blog

Construction Defect Bill Introduced

On April 30, Senate Bill 220 was introduced into the Senate. The bill seeks modest reforms to Colorado statutes, particularly as they apply to claims by homeowner associations bringing claims for construction defects.

There are three basic provisions to the bill. First, it makes it more difficult for an HOA to remove a clause in its declarations which requires arbitration. Arbitration is generally perceived by developers as a better forum to address claims of construction deficiencies.

Another proposed change is to require the HOA Board to make more complete disclosures to the HOA members. The bill requires that costs need to be disclosed; members need to be informed of the 'negatives' of litigation [such as marketability, length of time to resolution, etc.]; and how the suit is to be funded is to be disclosed.

The last provision is that a majority of the total voting rights of the HOA need to approve the lawsuit, not just the Board.

The full bill can be found at http://www.leg.state.co.us/Clics/CLICS2014A/csl.nsf/fsbillcont3/61AC4083320CDCA587257C4A00717728?Open&file=220_01.pdf

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