DENVER – A measure aimed at boosting affordable housing by reforming costly lawsuits against builder died Monday in a Senate Committee on a 5-2 vote.
Senate Bill 157, , part of a four-bill package to help make homes more affordable,would have required homeowners associations to provide notice of the defects claim to unit owners and provide 180 days for owners to provide a vote as to whether or not they wanted to pursue litigation.
Included in this notice would be the nature of the defects for a lawsuit and the potential ramifications of litigation, which can include potential attorney fees, a decrease in property value and increased difficulty of refinancing during litigation.
In order to sue, the association would have been required to obtain a majority vote from owners but certain circumstances would have limited an owner’s ability to weigh in. The ability to sue could be limited being affiliated with a contractor who would be involved in potential litigation or being active duty military deployed and unable to vote.
Bill sponsor, Sen. Angela Williams, D-Denver, said the measure was not an end-all answer for problems with construction defects litigation, which is seen as the primary factor keeping contractors from building affordable multifamily housing, but they are a needed step because local ordinances are failing to address the problem.
“Local ordinances are not working. Action at the state level seems like an appropriate step, and many organizations or groups are asking for that,” Williams said.
For proponents, working to lower the economic costs of lawsuits was important, but they agreed the measure was just one part of the puzzle.
“Requiring majority owner consent alone is not a complete overhaul of the current litigation climate in Colorado, but it is a meaningful way to reduce lawsuits and therefore promote the development of new for sale multifamily projects,” said Michael Winn, government affairs coordinator for American Institute of Architects.
Opponents, including representative of contracting companies, disagreed the measure would incentivize companies to re-enter the condominium market.
Concerns also exist over the failure to provide alternatives to litigation, such mediation and arbitration, an attack on local control.
Ultimately, the majority of committee members sided with opponents of the bill.
“I’m a no vote today mostly because I think the problem we’re trying to address is getting buildings started again, and so when I hear compelling testimony from the people who do the building saying that this isn’t going to help them start building I put a lot of weight on that,” said Sen. Jim Smallwood, R-Parker.
