The ongoing debate between home builders and trial lawyers has reached a new phase as House Bill 1272, aimed at addressing long-standing issues with condo construction defects, heads toward a committee hearing on Tuesday. An eight-page amendment has been introduced, which is drawing those most opposed to the measure to a more receptive position. This includes the homeowner-led Build Our Homes Right organization and at least three law firms involved in construction defect lawsuits.

Rep. Shannon Bird, D-Westminster, shared with Colorado Politics that she incorporated many suggestions from key opponents of the bill into the latest version.

Originally, HB 1272 required a third-party independent inspector to conduct periodic checks during construction. The inspector, who cannot be employed by or affiliated with the condo builder, would be paid by the builder, though typically, the insurer chooses the inspector. The builder would then be responsible for addressing and fixing any problems identified by the inspector. Proponents argue that this provision raises the quality standards and establishes a higher burden of proof for quality assurance.

The bill also requires homeowners (claimants) to mitigate any defects and specify how the defect will be rectified, along with the consequences if the claim is not satisfied. Builders must either offer a settlement or provide a "written response that identifies the standards that apply to the claim and explains why the defect does not require repair."

As part of the measure, the statute of limitations for filing construction defect claims would change to 10 years, unless the builder provides a warranty meeting the new law's requirements, in which case the statute of limitations would be reduced to six years. The bill also proposes increasing the threshold for homeowners' associations to pursue claims against developers, raising it from 50% to 65%.

Furthermore, the bill introduces a “rebuttable presumption” in lawsuits, meaning a property is presumed to have no construction defects if a state agency or local government has issued a certificate of occupancy.

In response to concerns from the bill's opponents, the proposed amendment expands on the inspector requirement, stipulating that inspectors must be licensed construction professionals or have expertise in building, electrical, energy conservation, fire, or mechanical codes.

Additionally, the amendment introduces a multifamily construction incentive program that provides warranties against defects or damages. This includes a one-year warranty for workmanship and materials, two years for plumbing, electrical, and materials, and six years for major structural changes inspected by a third-party inspector. Builders who participate in the program would be protected against claims unless the defects affect system functionality or safety.

The statute of limitations would also be adjusted in the amendment, shifting from 10 years to 8 years following "substantial completion" of improvements. The amendment also places more responsibility on homeowners or their agents to mitigate damages quickly and absolves claims if homeowners fail to follow the builder or manufacturer's recommendations or neglect "commonly accepted" home maintenance practices.

A competing bill, backed by trial lawyers, will also be reviewed by the committee on Tuesday. Sponsored by Assistant Majority Leader Rep. Jennifer Bacon, D-Denver, the bill is supported by progressive Democrats.

In contrast, HB 1272 has backing from a broader range of supporters, including both progressive and moderate Democrats, Republicans, and Governor Jared Polis. Senate President James Coleman, D-Denver, is also a sponsor of HB 1272.

On Monday, Bacon acknowledged that some changes to HB 1272 were similar to those proposed in her own measure, House Bill 1261. She also noted ongoing concerns regarding the statute of limitations, policies related to housing price points, and damage assessments.

Bacon commented on Polis' support for HB 1272, stating that both the governor and House Speaker had encouraged everyone involved to work together to consolidate as many provisions as possible into a single bill.

Originally reported by Marianne Goodland in Colorado Politics.