Second Regular Session
Seventy-fourth General Assembly
STATE OF COLORADO
INTRODUCED
LLS NO. 24-0290.02 Jery Payne x2157
SENATE BILL 24-106
Senate Committees House Committees
Local Government & Housing
A BILL FOR AN ACT
C
ONCERNING LEGAL ACTIONS BA SED ON CLAIMED DEFECTS IN101
CONSTRUCTION PROJECTS .102
Bill Summary
(Note: This summary applies to this bill as introduced and does
not reflect any amendments that may be subsequently adopted. If this bill
passes third reading in the house of introduction, a bill summary that
applies to the reengrossed version of this bill will be available at
http://leg.colorado.gov
.)
In the "Construction Defect Action Reform Act" (act), Colorado
law establishes procedures for bringing a lawsuit for a construction defect
(claim). Section 2 of the bill clarifies that a person that has had a claim
brought on the person's behalf is also considered a claimant, and
therefore, the act applies to the person for whom the claim is brought.
Sections 3 and 6 create a right for a construction professional to
SENATE SPONSORSHIP
Zenzinger and Coleman, Buckner, Gardner, Ginal, Kirkmeyer, Liston, Mullica, Pelton R.,
Roberts, Simpson, Will
HOUSE SPONSORSHIP
Bird, Bradfield, Clifford, Frizell, Lindstedt, Lynch, Pugliese, Snyder, Taggart, Wilson,
Winter T.
Shading denotes HOUSE amendment. Double underlining denotes SENATE amendment.
Capital letters or bold & italic numbers indicate new material to be added to existing law.
Dashes through the words or numbers indicate deletions from existing law. remedy a claim made against the construction professional by doing
remedial work or hiring another construction professional to perform the
work. The following applies to the remedy:
! The construction professional must notify the claimant and
diligently make sure the remedial work is performed; and
! Upon completion, the claimant is deemed to have settled
and released the claim, and the claimant is limited to claims
regarding improper performance of the remedial work.
Currently, a claim may be held in abeyance if the parties have
agreed to mediation. Section 3 also adds other forms of alternative
dispute resolution for which the claim would be held in abeyance.
Alternative dispute resolution is binding. If a settlement offer of a
payment is made and accepted in a claim, the payment constitutes a
settlement of the claim and the cause of action is deemed to have been
released, and an offer of settlement is not admissible in any subsequent
action or legal proceeding unless the proceeding is to enforce the
settlement.
To bring a claim or related action, section 4 requires a unit owners'
association (association) to obtain the written consent of at least
two-thirds of the actual owners of the units in the common interest
community. The consent must contain the currently required notices, must
be signed by each consenting owner, and must have certain attestations.
Under the act, a claimant is barred from seeking damages for
failing to comply with building codes or industry standards unless the
failure results in:
! Actual damage to real or personal property;
! Actual loss of the use of real or personal property;
! Bodily injury or wrongful death; or
! A risk of bodily injury or death to, or a threat to the life,
health, or safety of, the occupants.
Section 5 requires the actual property damage to be the result of a
building code violation and requires the risk of injury or death or the
threat to life, health, or safety to be imminent and unreasonable.
Under current law, an association may institute, defend, or
intervene in litigation or administrative proceedings in its own name on
behalf of itself or 2 or more unit owners on matters affecting a common
interest community. For a construction defect matter to affect a common
interest community, section 7 requires that the matter concern real estate
that is owned by the association or by all members of the association.
Section 7 also establishes that, when an association makes a claim
or takes legal action on behalf of unit owners when the matter does not
concern real estate owned by the association:
! The association and each claim are subject to each defense,
limitation, claim procedure, and alternative dispute
resolution procedure that each unit owner would be subject
SB24-106
-2- to if the unit owner had brought the claim; and
! The association has a fiduciary duty to act in the best
interest of each unit owner.
Be it enacted by the General Assembly of the State of Colorado:1
SECTION 1. Legislative declaration. (1) The general assembly2
finds that:3
(a) Access to affordable, quality housing is foundational to4
personal and financial stability and provides safety and life sustaining5
shelter, but it is also a vehicle for reducing childhood poverty and6
increasing economic mobility and intergenerational wealth;7
(b) Colorado has a challenge insofar as, according to the state8
demographer, it has the sixth most expensive housing market in the9
nation;10
(c) Our state's housing supply has not kept pace with our11
population growth. Between 2010 and 2020, the state added 126,00012
fewer housing units than in the prior decade, and as of 2022, Colorado13
has an unmet housing need of between 65,000 and 100,000 units.14
(d) To address this challenge, Colorado must not only increase the15
number of homes that are available for purchase or rent, but it must also16
ensure that the increased supply is a diverse combination of rental and17
home ownership opportunities that will meet the needs, preferences, and18
varied income levels of the people in our state;19
(e) Multifamily for-sale housing is a critical component of this20
solution because it helps close the affordability gap and adds a needed21
element to the diverse mix of housing options the state can offer22
Coloradans, and historically condominiums have been the most affordable23
housing choice for owner-occupied housing;24
SB24-106-3- (f) Notwithstanding the fact that Colorado's population today is1
20% greater than what it was in 2008, condominium construction in the2
front range has slowed dramatically and is now 76% lower than it was in3
the years between 2002 and 2008, and between 2007 and 2022, the4
number of entities developing condominiums decreased by 84%;5
(g) Despite the downturn in construction, consumer demand for6
condominiums remains strong in Colorado;7
(h) There were 2.4 resold condominiums for every new8
condominium sale in 2005, but in 2022, there were 30 condominium9
resales for every new sale, and this is especially true for affordably priced10
condominiums;11
(i) At the same time that fewer mid-priced condominiums are12
being built, they are also becoming increasingly more expensive to13
construct, and that cost is passed on to the consumer in the form of higher14
sales prices;15
(j) In 2005, the majority of new and existing condominium units16
were priced under $300,000 because of an adequate supply, but by 2023,17
only 2% of new condominiums built were priced under $300,000, and due18
to the severe lack of supply, currently only one-third of resale19
condominiums are available for a price under $300,000;20
(k) While costs of labor and materials costs are increasing for all21
types of home construction, the cost increases associated with22
condominium construction have outpaced those associated with23
single-family home construction, and this is particularly evident as it24
relates to the cost for contractors' liability insurance;25
(l) In Colorado, the high costs and frequency of construction26
liability litigation related to condominium development have driven27
SB24-106
-4- insurance companies to raise insurance rates for developers;1
(m) In recent years, insurance costs for condominiums surged to2
5.5% of a project's hard costs, which was more than 233% higher than the3
insurance costs of multifamily rental home projects; and4
(n) Colorado needs balanced public policy that decreases5
insurance costs by reducing the magnitude and frequency of defect6
claims, ensures that every homeowner has the right to pursue timely and7
effective remedies for defective construction, and ensures that such8
remedies are fair to the home buyer but do not prevent the construction9
of affordable multifamily for-sale housing options.10
(2) The general assembly declares that this act will help bring11
down the building costs of affordably priced homes and create more12
opportunities to build wealth for Coloradans through home ownership.13
SECTION 2. In Colorado Revised Statutes, 13-20-802.5, amend14
(3); and add (6) as follows:15
13-20-802.5. Definitions. As used in this part 8, unless the16
context otherwise requires:17
(3) (a) "Claimant" means a person other than the attorney general18
or the district attorneys of the several judicial districts of the state who19
THAT:20
(I) Asserts,
AS THE OWNER OF THE AFFECTED PROPERTY OR AS A21
PERSON THAT HAS STATUTORY STANDING TO BRING A CLAIM ON BEHALF22
OF ANOTHER, a claim against a construction professional; that
AND23
(II) Alleges a defect in the construction of an improvement to real24
property.25
(b) "C
LAIMANT" INCLUDES A PERSON THAT HAS HAD A CLAIM26
BROUGHT ON THE PERSON 'S BEHALF UNDER A STATUTE GRANTING27
SB24-106
-5- STANDING TO ANOTHER PERSON TO BRING THE CLAIM ON THE PERSON 'S1
BEHALF.2
(6) "R
IGHT TO REMEDY" MEANS THE RIGHT, DESCRIBED IN SECTION3
13-20-809
(2), TO CURE A CLAIM, DESCRIBED IN SECTION 13-20-809 (1)(a).4
SECTION 3. In Colorado Revised Statutes, 13-20-803.5, amend5
(3), (5), (6), and (7) as follows:6
13-20-803.5. Notice of claim process. (3) (a) Within thirty days7
following the completion of the inspection process conducted pursuant to8
subsection (2) of this section, or within forty-five days following the9
completion of the inspection process in the case of a commercial10
property, a construction professional may,
BUT DOES NOT HAVE A DUTY11
TO, send or deliver to the claimant, by certified mail, return receipt12
requested, or
BY personal service:13
(I) An offer to settle the claim by payment of a sum certain or by14
agreeing to remedy the claimed defect described in the notice of claim;15
OR16
(II) A
NOTICE THAT THE CONSTRUCTION PROFESSIONAL IS17
INVOKING THE RIGHT TO REMEDY .18
(b) A written offer to remedy the construction defect shall
MUST19
include a report of the scope of the inspection, the findings and results of20
the inspection, a description of the additional construction work necessary21
to remedy the defect described in the notice of claim and all damage to22
the improvement to real property caused by the defect, and a timetable for23
the completion of the remedial construction work.24
(5) (a) A claimant who accepts a construction professional's offer25
to remedy or settle by payment of a sum certain a construction defect26
claim shall do so by sending the construction professional a written notice27
SB24-106
-6- of acceptance no later than fifteen days after receipt of the offer. If an1
offer to settle is accepted, then the monetary settlement shall be paid in2
accordance with the offer.3
(b) If an offer to remedy is accepted by the claimant, the4
CONSTRUCTION PROFESSIONAL SHALL COMPLETE OR CAUSE TO BE5
COMPLETED THE remedial construction work shall be completed
in6
accordance with the timetable set forth in the offer unless the delay is7
caused by events beyond the reasonable control of the construction8
professional.9
(c) I
F THE RIGHT TO REMEDY IS INVOKED , THE CONSTRUCTION10
PROFESSIONAL SHALL CAUSE THE REMEDIAL WORK TO BE COMMENCED11
AND DILIGENTLY PURSUED TO COMPLETION . UPON COMPLETION:12
(I) T
HE CLAIMANT IS DEEMED TO HAVE SETTLED , COMPROMISED,13
AND RELEASED THE CLAIM; AND14
(II) T
HE CLAIMANT IS LIMITED TO CLAIMS REGARDING IMPROPER15
PERFORMANCE OF THE REMEDIAL WORK .16
(6) (a) If no offer is made by the construction professional, or
if17
the claimant rejects an offer,
OR IF THE CONSTRUCTION PROFESSIONAL18
DOES NOT INVOKE THE RIGHT TO REMEDY , the claimant may bring an19
action against the construction professional for the construction defect20
claim described in the notice of claim unless the parties have21
contractually agreed to a mediation procedure
USE A BINDING22
ALTERNATIVE DISPUTE RESOLUTION PROCESS , in which case the mediation23
procedure shall be satisfied prior to bringing an action BINDING24
ALTERNATIVE DISPUTE RESOLUTION PROCESS MUST DETERMINE THE25
DISPOSITION OF THE CLAIM.26
(b) I
F AN OFFER MADE PURSUANT TO SUBSECTION (3)(a)(I) OF THIS27
SB24-106
-7- SECTION IS ACCEPTED BY THE CLAIMANT , THE PAYMENT CONSTITUTES A1
SETTLEMENT OF THE CLAIM AND THE CLAIMANT IS DEEMED TO HAVE2
RELEASED THE CLAIM AND THE CAUSE OF ACTION . AN OFFER OF3
SETTLEMENT IS NOT ADMISSIBLE IN ANY SUBSEQUENT ACTION OR LEGAL4
PROCEEDING UNLESS THE SUBSEQUENT ACTION OR LEGAL PROCEEDING IS5
BROUGHT TO ENFORCE THE SETTLEMENT .6
(7) If an offer by a construction professional is made and7
accepted, and if thereafter the construction professional does not comply8
with its offer to remedy or settle a claim for a construction defect, The9
claimant may file an action against the construction professional for10
claims arising out of the defect or damage described in the notice of claim11
without further notice
IF:12
(a) A
N OFFER BY A CONSTRUCTION PROFESSIONAL IS MADE AND13
ACCEPTED AND THE CONSTRUCTION PROFESSIONAL DOES NOT COMPLY14
WITH THE OFFER TO REMEDY OR SETTLE A CLAIM FOR A CONSTRUCTION15
DEFECT;16
(b) A
CONSTRUCTION PROFESSIONAL INVOKES THE RIGHT TO17
REMEDY AND DOES NOT COMPLETE THE REMEDIAL WORK FOR REASONS18
OTHER THAN THE CLAIMANT 'S FAILURE TO COOPERATE OR DELAYS19
OUTSIDE OF THE CONSTRUCTION PROFESSIONAL 'S CONTROL; OR20
(c) T
HE PARTIES HAVE EITHER:21
(I) N
OT CONTRACTUALLY AGREED TO USE AN ALTERNATIVE22
DISPUTE RESOLUTION PROCESS; OR23
(II) S
ATISFIED THE ALTERNATIVE DISPUTE RESOLUTION PROCESS .24
SECTION 4. In Colorado Revised Statutes, add 13-20-803.7 as25
follows:26
13-20-803.7. Homeowners' association actions. T
O BRING A27
SB24-106
-8- CONSTRUCTION DEFECT CLAIM OR RELATED ACTION , A HOMEOWNERS'1
ASSOCIATION MUST OBTAIN THE WRITTEN CONSENT OF AT LEAST2
TWO-THIRDS OF THE ACTUAL OWNERS OF THE UNITS . THE WRITTEN3
CONSENT MUST CONTAIN SUBSTANTIALLY THE SAME NOTICE REQUIRED IN4
SECTION 38-33.3-303.5, MUST BE SIGNED BY EACH CONSENTING UNIT5
OWNER, AND MUST INCLUDE AN AFFIDAVIT FROM EACH UNIT OWNER6
VERIFYING THAT EACH CLAIMED DEFECT EXISTS IN THE UNIT OWNER 'S7
HOME AND ACKNOWLEDGING THAT THE UNIT OWNER HAS BEEN INFORMED8
OF THE UNIT OWNER'S DUTY TO DISCLOSE OBLIGATIONS UNDER COLORADO9
LAW.10
SECTION 5. In Colorado Revised Statutes, 13-20-804, amend11
(1) introductory portion, (1)(a), and (1)(d) as follows:12
13-20-804. Restriction on construction defect negligence13
claims. (1) No negligence claim seeking damages for a construction14
defect may be asserted in A CLAIMANT IS BARRED FROM BRINGING OR15
MAINTAINING A CONSTRUCTION DEFECT CLAIM AS an action if such THE16
claim arises from the failure to construct an improvement to real property17
in substantial compliance with an applicable building code or industry18
standard; except that such THE claim may be asserted if such THE failure19
results in CAUSES one or more of the following:20
(a) Actual damage to real or personal property
CAUSED BY THE21
VIOLATION OF A CODE ADOPTED UNDER ARTICLE 115 OR 155 OF TITLE 12,22
PART 2 OF ARTICLE 28 OF TITLE 30, OR PART 6 OF ARTICLE 15 OF TITLE 31;23
(d) A
AN IMMINENT AND UNREASONABLE risk of bodily injury or24
death to, or a AN IMMINENT AND UNREASONABLE threat to the life, health,25
or safety of, the occupants of the residential real property.26
SECTION 6. In Colorado Revised Statutes, add 13-20-809 and27
SB24-106
-9- 13-20-810 as follows:1
13-20-809. Right to remedy. (1) (a) A
FTER RECEIVING A NOTICE2
OF CLAIM IN ACCORDANCE WITH SECTION 13-20-803.5 (1), A3
CONSTRUCTION PROFESSIONAL MAY INVOKE THE RIGHT TO REMEDY TO4
CURE A CLAIM BY:5
(I) C
OMPLYING WITH SUBSECTION (1)(b) OF THIS SECTION; AND6
(II) P
ERFORMING THE WORK OR HIRING A CONSTRUCTION7
PROFESSIONAL TO PERFORM THE WORK .8
(b) T
O INVOKE THE RIGHT TO REMEDY AFTER RECEIVING A NOTICE9
OF CLAIM IN ACCORDANCE WITH SECTION 13-20-803.5 (1), A10
CONSTRUCTION PROFESSIONAL MUST NOTIFY THE CLAIMANT THAT SENT11
THE NOTICE OF CLAIM THAT THE CONSTRUCTION PROFESSIONAL INTENDS12
TO INVOKE THE RIGHT TO REMEDY.13
(2) W
HEN A CONSTRUCTION PROFESSIONAL INVOKES THE RIGHT TO14
REMEDY, THE FILING OF AN ACTION BY A CLAIMANT IS SUBJECT TO SECTION15
13-20-803.5.16
13-20-810. No separate cause of action. T
HIS PART 8 DOES NOT17
CREATE A SEPARATE CAUSE OF ACTION .18
SECTION 7. In Colorado Revised Statutes, 38-33.3-302, add19
(3)(c) as follows:20
38-33.3-302. Powers of unit owners' association. (3) (c) (I) F
OR21
A MATTER TO AFFECT THE COMMON INTEREST COMMUNITY UNDER THIS22
SUBSECTION (3) AND SUBSECTION (1)(d) OF THIS SECTION IN A23
CONSTRUCTION DEFECT CLAIM OR LEGAL ACTION , THE MATTER MUST24
CONCERN REAL ESTATE THAT IS OWNED BY THE ASSOCIATION OR BY ALL25
MEMBERS OF THE ASSOCIATION .26
(II) I
F AN ASSOCIATION TAKES AN ACTION UNDER SUBSECTION27
SB24-106
-10- (1)(d) OF THIS SECTION FOR A CONSTRUCTION DEFECT ON BEHALF OF TWO1
OR MORE UNIT OWNERS AND THE MATTER DOES NOT CONCERN REAL2
ESTATE OWNED BY THE ASSOCIATION :3
(A) T
HE ASSOCIATION AND EACH CLAIM ARE SUBJECT TO EACH4
DEFENSE, LIMITATION, CLAIM PROCEDURE, AND ALTERNATIVE DISPUTE5
RESOLUTION PROCEDURE THAT EACH UNIT OWNER WOULD BE SUBJECT TO6
IF THE UNIT OWNER HAD BROUGHT THE CLAIM ; AND7
(B) T
HE ASSOCIATION HAS A FIDUCIARY DUTY TO ACT IN THE BEST8
INTEREST OF EACH UNIT OWNER , SEPARATE AND APART FROM ANY9
INTEREST THE ASSOCIATION MAY HAVE IN THE MATTER .10
SECTION 8. Act subject to petition - effective date -11
applicability. (1) This act takes effect at 12:01 a.m. on the day following12
the expiration of the ninety-day period after final adjournment of the13
general assembly; except that, if a referendum petition is filed pursuant14
to section 1 (3) of article V of the state constitution against this act or an15
item, section, or part of this act within such period, then the act, item,16
section, or part will not take effect unless approved by the people at the17
general election to be held in November 2024 and, in such case, will take18
effect on the date of the official declaration of the vote thereon by the19
governor.20
(2) This act applies to actions and notices of claims received on21
or after the applicable effective date of this act.22
SB24-106
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