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State Senators Debate Construction Defects Bill

DENVER (CBS4) - State senators will debate a construction defects bill on Wednesday that has already passed the state House.

The state House passed the bill last month that some lawmakers say will help jump start Colorado's sleepy condominium market as reform has eluded lawmakers for years.

As a result, developers are building rental units instead of condos to avoid costly class action lawsuits by homeowners associations. The bill before the Senate could help thaw the frozen market.

Denver Affordable Housing
A housing complex under construction in Denver (credit: CBS)

Under the bill, condo owners would now decide whether they want to be a part of a class action lawsuit instead of their homeowners association deciding for them.

"It's a monumental step forward," said Rep. Alec Garnett, D-Denver.

Garnett; Rep. Lori Saine, R-Firestone; and Rep. Cole Wist, R-Centennial are sponsors of the bill that would give builders the right to talk to owners directly about possible remedies before they file suit. It would require a majority of owners -- not HOA board members -- to vote in favor of legal action.

"So that way they won't be in financial house arrest and be shocked to find out that their HOA has entered into a lawsuit and they can't refinance or sell their home," Saine said.

Housing Home Construction Building Generic
(credit: CBS)

Builders say the ease of frivolous class actions are one reason they've stopped building condos and townhomes.

In 2005, condos were 20 percent of the new housing market in Colorado. They're currently 2 percent.

Unlike previous bills, this one doesn't require mediation before litigation or that builders get a chance to fix things first. Individual condo owners can still go it alone.

The compromise passed the House unanimously. It is expected to pass the Senate as well.



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