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Update Regarding Colorado’s 2014 Legislative Session

February 25, 2014

The most recent session of Colorado’s general Assembly began on January 8, 2014. This is a highlight of the bills that have been introduced so far which we thought would be of interest to our construction clients.

Denver Mayor’s Call to Help Developers

The day before the opening of the session, Denver Mayor Michael Hancock called on Colorado lawmakers to pass legislation that would make it easier for developers to avoid lawsuits when they build condominiums. He was referencing a bill that failed to pass last year regarding transit-related construction.
Specifically, in 2013, a Senate committee killed a measure that would have allowed developers to fix any construction defects at transit-oriented projects before condominium owners could file lawsuits against them. Currently, builders only have the right to offer to repair defects, not the right to actually make the repairs. This measure was aimed at getting more builders to construct condominiums around public transportation lines.
Unfortunately, Mayor Hancock’s pleas have gone unanswered. To date, there have not been any bills introduced meant to spur condominium development in Colorado. Out of the bills that have been introduced, however, there are several that should be of interest to property owners and construction professionals.

Capping Construction Contract Retainage

House Bill 14-1165 would cap the retainage permitted in construction contracts to five percent and would make provisions in contracts with a higher retainage unenforceable. A retainage in a construction contract is the money held back from payment to the contractor until the construction project reaches substantial completion and the work is accepted by the property owner. This bill is intended to ensure that retention in private construction contracts remains an efficient means of securing timely and satisfactory performance, without imposing an undue burden on contractors.

Expanding the Right to Attorney’s Fees if Case is Dismissed on Motion

In Colorado if a case is filed as the result of property damage or personal injury, and the case is dismissed pursuant to Rule 12(b) of the Colorado Rules of Procedure (e.g. failure to state a claim upon which relief can be granted, lack of jurisdiction, and insufficient service of process), the defendant is awarded his or her attorneys’ fees. House Bill 14-1153 would extend the right to attorneys’ fees for dismissals under Rule 12(b) to all civil actions, including contract claims, regardless of whether the contract has an attorney fee provision.

Regulating HOA Property Managers’ Fees

House Bill 14-1254 requires a licensed property manager who performs services for a homeowner’s association (HOA) through employees or subcontractors to fully disclose to the HOA, initially during contract negotiations and annually thereafter, all fees and charges that the manager will bill to the HOA for services performed by those employees or subcontractors. This bill may protect property owners subject to HOA regulations from paying hidden or unwanted service charges.

Requiring Certification of Home Inspectors

Under current law, home inspectors are not subject to regulation by any state agency. House Bill 14-1272 requires home inspectors to be certified on or before July 1, 2015 by the director of the division of real estate in the department of regulatory agencies. This bill is intended to provide standards for certification, education, examination, and discipline for those who inspect homes in conjunction with residential real estate transactions.

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