As quick as SB 14-220 was introduced, it was declared dead almost as fast. After passing out of the Senate Committee on State, Veterans and Military Affairs on a 3-2 vote, it was referred to the Judiciary Committee where, given the lack of time remaining in the session, the Committee declined to schedule the bill for a hearing, effectively killing the bill.
The bill, as introduced, had three functions, the first, to require the association follow the arbitration provision originally set forth in the declaration. The second provision, described as a full transparency provision, would have acted to seriously impede an association’s ability to bring a construction defect claim as the association would be required, prior to retaining any experts or consultants, send notices to the owners concerning the value of the claim, the impact on market value on the units both during the pendency of the claim and after completion and the likelihood of success on the claim. Finally, the bill contained a provision requiring full disclosure of the arbitration provision in the declaration at the sale of the unit to a purchaser.
In the hearing, two clear lines of arguments were made. The first being that the bill was necessary to incentivize builders into building affordable condominiums, an underserved market as the cost of construction defect litigation was driving builders out of the market. The opposition argued that this bill shielded developers from liability for constructing a defective product.
Even though this bill was killed in committee this year, this was the second year in a row that a construction defect reform bill was introduced, and each year it has more support. I would expect to see this on the legislative agenda again next year.