Firm-Wide blog

New Bill Would Have Stifled Consumer Rights in Suits Against Builders – Part 1

By Burg Simpson
June 9, 2015
3 min read

Across the state, politicians and average Joes alike wonder if there is enough affordable housing to go around. As rents continue to climb, many worry that the American dream of homeownership is sliding out of view for many young Colorado families. Among the biggest concerns is the lack of new, reasonably priced condominiums, which for many new homeowners represent the easiest way to get their feet into their own homes.

Affordable housing shortage?
According to a chorus of construction industry insiders and politicians, the primary force holding back new construction is a Colorado law that provides homeowners sufficient time to sue builders for their shoddy work. Under the current law, within the first six years of substantial completion of a new home homeowners have two years from the manifestation of a defect to file lawsuits against construction professionals (architects, contractors, builders or builder vendors, engineers, and inspectors performing or furnishing the design, supervision, inspection, construction, or observation of the construction of any improvement to real property) for construction defects.

If the defects first appeared in the fifth or sixth year after substantial completion, homeowners two years to sue, meaning homes up to nearly eight years old can potentially be the subject of a construction defect lawsuit. After that point, all of the construction professionals involved in the design and building of a home enjoy protection from liability.

Builders seek to avoid liability for their mistakes.
If construction professionals and their lobbyists had gotten their way during the 2015 General Assembly session, the time within which single-family homeowners can go after construction professionals who deliver substandard dwellings would be slashed drastically. Indeed, a Senate Bill that made it nearly all the way through the state’s elected body (SB15-091 passed the Senate on party-line voting on April 10 but was postponed indefinitely by the House Committee on Finance on May 5) sought to cut the time limit down to three years (four years if defects first manifested in the third year after substantial completion), which would rank as one of the shortest periods in the nation.

In fact, many states provide consumers with 10 or even 12 years to file similar lawsuits. Three years seems particularly short in light of the fact that most homeowners sign 30-year mortgages. Imagine being stuck with mortgage payments for a home whose value steadily decreases as it falls apart!

Passing the savings on to homeowners?
Consumer advocates justifiably voiced strong opposition to this proposed legislation. Despite claims by the construction industry that they would pass on the savings they receive via reduced insurance premiums, no evidence of such cost savings to homeowners has ever been produced. Instead, consumer advocates suspect that this legislation would have only increased profits for builders, at the expense of Colorado residents, who would see little, if any, benefit if the legislation had gone through.

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