DENVER (CBS4) – There’s been a breakthrough on changing the law on construction defects in Colorado.

The state House passed a bill on Monday 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 that passed the House could help thaw the frozen market.

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.

(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 really was the willingness of Democrats and Republicans to say, ‘We’re going to do something this year no matter what,'” Garnett said. “That was able to get this through the House and onto the Senate with this much bipartisan support.”

“We decided to link arms at the very beginning and just keep marching forward no matter what,” Saine said.

The bill now heads to the Senate where it is also expected to pass. It’s one of six construction defects bills this session but half of them have failed.

Another pending bill would allow a judge up front to assign damages proportionally among those liable so the contractor most responsible pays the most.


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