By: Richard H. Glucksman and Jon A. Turigliatto
February 5, 2015
As part of our on-going mission to monitor and track legislatures, legal decisions and developments throughout the United States that impact our clients, we share the following brief discussion of potential tort reform legislation presented in Colorado regarding construction claims by Homeowner Associations for condominiums.
Lawmakers in Colorado formally introduced SB 220, a proposed measure requiring:
Condo owners to submit to alternative-dispute resolution, such as mediation or arbitration, for any construction defect claim that occurred when the homeowner association required alternative-dispute resolution, even if the requirement no longer exists at the time the claim is brought;
Notice be given prior to the purchase and sale of a condominium that the homeowner association’s may require binding arbitration of certain disputes; and
The association’s board to obtain the written consent of a majority of the condo owners before a construction defect lawsuit is filed on behalf of the homeowner association (emphasis added).
Currently, in Colorado, homeowner association boards are only required to obtain two condominium owners’ consent to file a construction defect lawsuit against a developer. SB 220 would real significantly increased this requirement by requiring that the association board must obtain the written consent of a majority of the condominium owners before filing a construction defect lawsuit. This helpful requirement would have had the practical impact of reducing the number of lawsuits filed and decrease the threat of frivolous lawsuits against developers. Furthermore, it would require more construction defect claims to be resolved out of court, further discouraging homeowner associations from bringing meritless claims against developers.
SB 220 passed the State Affairs Committee by a vote of 3 to 2; however, the State Judicial Committee did not meet in time for the State House and Senate to vote on it before the legislative session ended.
At a recent Denver Metro Chamber of Commerce annual State of the City event, the proposed legislation was discussed along other items. The Colorado State Senator who had proposed the legislation stated he planned to have a meeting with stakeholders and to bring new legislation early in the 2015 session.
We will see how this develops.
Here the State Legislature is attempting wisely and constructively to achieve meaningful tort reform.