| Summary |
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
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
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.
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