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February 14, 2024 SB 24-106
Legislative Council Staff
Nonpartisan Services for Colorado’s Legislature
Fiscal Note
Drafting Number:
Prime Sponsors:
LLS 24-0290
Sen. Zenzinger; Coleman
Rep. Bird
Date:
Bill Status:
Fiscal Analyst:
February 14, 2024
Senate Local Govt. & Housing
Brendan Fung | 303-866-4781
brendan.fung@coleg.gov
Bill Topic: RIGHT TO REMEDY CONSTRUCTION DEFECTS
Summary of
Fiscal Impact:
☒ State Revenue
☒ State Expenditure
☐ State Transfer
☐ TABOR Refund
☐ Local Government
☐ Statutory Public Entity
The bill modifies the Construction Defect Action Reform Act and establishes a right to
remedy construction defect claims. It minimally increases state revenue and
expenditures starting in FY 2024-25.
Appropriation
Summary:
No appropriation is required.
Fiscal Note
Status:
The fiscal note reflects the introduced bill.
Summary of Legislation
The bill modifies requirements to initiate a construction defect action and clarifies the conditions
under which a claim is settled and released under the Construction Defect Action Reform Act.
Right to remedy. Current law allows construction professionals to settle construction defect
claims by either paying an agreed upon sum or remedying the claimed defect. The bill
establishes a right to remedy for construction professionals to remediate work on a construction
defect claim. Completion of remedial work settles and releases a claim, and all future claims
related to the construction defect are limited to the remedial work.
Homeowner associations. Current law allows a construction defect action to be initiated by a
majority vote of homeowner association (HOA) unit owners. The bill increases a simple majority
to a two-thirds vote and requires an HOA to obtain written and signed consent from each unit
owner. Additionally, when an HOA partakes in construction defect litigation on behalf of itself or
unit owners, the bill requires the alleged construction defect to affect HOA real estate that is
owned by the association or by all members. If the construction defect does not affect real
estate owned by the association, the HOA and each claimant are subject to legal proceedings
and resolution.
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February 14, 2024 SB 24-106
General provisions. The bill clarifies that a person who has had a claim brought on their behalf
is considered a claimant and expands additional forms of binding alternative dispute resolution.
When a claimant seeks damages for failure to comply with building codes or industry standards,
the bill requires actual property damage to be the result of a building code violation and
requires the risk of injury, death, or threat to life, health, or safety to be imminent and
unreasonable.
State Revenue
Starting in FY 2024-25, the bill may increase revenue to the Judicial Department from an
increase in civil case filings fees to the extent that construction professionals invoke the right to
remedy, but fail to complete remedial work. The fiscal note assumes that construction
professionals will comply with the law and any increase will be minimal. Revenue from filing fees
is subject to TABOR.
State Expenditures
The bill increases workload in the Department of Regulatory Agencies (DORA) and the Judicial
Department beginning in FY 2024-25, as described below.
Department of Regulatory Agencies. The HOA Information and Resource Center in the DORA
serves as a resource for consumers to understand rights and responsibilities under current law.
The center also registers common interest communities like HOAs and other housing
cooperatives, and tracks complaints. Workload may increase for the center to respond to
questions from HOAs and residents. This workload is expected to be minimal and no change in
appropriations is required.
Judicial Department. Trial courts in the Judicial Department may experience an increase in
workload to the extent additional civil cases are filed under the bill. The fiscal note assumes that
construction professionals will comply with the law and any increase will be minimal.
Effective Date
The bill takes effect 90 days following adjournment of the General Assembly sine die, assuming
no referendum petition is filed, and applies to actions and notices of claims received on or after
the effective date.
State and Local Government Contacts
Judicial Local Affairs Regulatory Agencies
The revenue and expenditure impacts in this fiscal note represent changes from current law under the bill for each
fiscal year. For additional information about fiscal notes, please visit the General Assembly website.