Of all the factors contributing to Colorado’s housing affordability crunch, one that garners the most bipartisan agreement is the need to reform the state’s construction defects laws. But a pair bills working their way through the legislative highlight the historical near-impossibility of passing anything of substance. They also show fault line within the governing Democrat coalition that Republicans might be able to exploit to their advantage.
Even as recently as 2015, the then liberal, but not quite uniformly progressive, Denver City Council passed a construction defects ordinance designed to prevent frivolous lawsuits or lawsuits without an actual victim. it specifically ruled out strict liability as a cause of action, and prevented civil suits merely for violating the code. Moreover, code compliant improvements cannot be considered defective.
Since then, as housing prices and rents have turned Colorado into one of the country’s least-affordable housing markets, builders and buyers have been waiting for the state to offer similar relief. So far, they have been waiting in vain. Here’s what’s on tap this year.
Dueling defects bills
House Bill 25-1272 would make some reasonable changes to the construction defects law for so-called middle-market housing, multifamily attached housing of at least two units that is selling below the maximum loan limits for its county. The law would assume that a building that passed county inspection was free of defects unless proven otherwise and would require those filing a complaint to attempt to remedy the defect. For homeowners’ associations, it would raise the vote threshold for filing a complaint from 50% of residents to 65%.
In short, the bill is designed to limit the number of frivolous suits, and to provide legal protection for developers who follow the appropriate regulations during construction and inspection.
The proposal has garnered the support of Democrats, as well as a considerable number of Republicans as the best hope for meaningful reform.
Contrast that with House Bill 25-1261, proposed by three of the more progressive members of the legislature, which would actually place yet more burdens on developers and make it even easier to bring construction defect complaints, especially by community associations. So far, its sponsorship is limited to left-wing Democrats.
Democrats divided
By their lobbyists you shall know them. Historically, trial lawyers have opposed reforms, while specific local governments and builders have supported them (although only rarely and recently have they been able to move the Denver Regional Council of Governments to support). In this case, the trial lawyers and a group that appears connected to them, “Build Our Homes Right,” support HB 1261 and oppose HB 1272.
This time around though, many more groups have instructed their lobbyists to position themselves as “Amending” HB 1272 rather than opposing it outright, as they have on past bills. For example the trial lawyers still oppose, but individual firms (such as Burg Simpson) have moved from opposition to negotiation.
This indicates a shifting political climate on the issue, one where merely progressive Democrats may be willing to court Republican support in order to isolate the socialists in their party, which also gives Republicans some leverage to obtain concessions of their own.
Both bills are scheduled to be heard in the House Transportation, Housing & Local Government Committee on March 18.
Joshua Sharf is a Denver resident and regular contributor to Complete Colorado.
