Monday, February 17, 2020

The Attack on Colorado’s Construction Industry Continues at the State Legislature


Here is a rundown of the latest goings on at the Colorado State Capitol:

SB 20-138 - Concerning increased consumer protection for homeowners seeking relief for construction defects.

As previously discussed, if enacted, Senate Bill 20-138 would:

  1. Extend Colorado’s statute of repose for construction defects from 6+2 years to 10+2 years;
  2. Require tolling of the statute of repose until the claimant discovers not only the physical manifestation of a construction defect, but also its cause; and
  3. Permit statutory and equitable tolling of the statute of repose.

The Senate Judiciary Committee passed SB 138 out of committee unamended, on a 3-2 party-line vote, on February 12, 2020, sending the Bill to the Senate Floor, where it is scheduled for Second Reading on February 18, 2020.

It does not yet appear that there is a sponsor for this Bill in the House.  If you haven’t already done so, it is imperative that you contact your State Senator to ask him or her to oppose SB 20-138.  You can find the contact for your Senator here.

SB 20-093 - Concerning protections related to mandatory agreement provisions, and, in connection therewith, enacting the "Consumer and Employee Dispute Resolution Fairness Act."

As previously reported, for certain consumer and employment arbitrations, the Bill:

  • Prohibits the waiver of standards for and challenges for evident partiality prior to a claim being filed and requires any waiver of such provisions after the claim is filed to be in writing;
  • Provides that the right of a party to challenge an arbitrator based on evident partiality is waived if not raised within a reasonable time of learning of the information leading to the challenge but that such right is not waived if caused by the opposing party;
  • Establishes ethical standards for arbitrators; and
  • Requires specified public disclosures by arbitration services providers but includes protections for certain confidential information.


The Bill also requires an individual arbitrator for certain consumer and employment arbitrations to make additional disclosures of information that might affect the arbitrator’s impartiality.
The Bill specifies how attorney fees and other reasonable expenses are to be awarded if a court vacates an award because of an arbitrator’s evident partiality or failure to make required disclosures and clarifies when appeals of orders may be made in consumer and employee arbitrations.

The Bill also provides that for a standard form contract involving a consumer or employee:

  • Specified terms are unenforceable as against public policy;
  • Including an unenforceable term constitutes a deceptive trade practice under the "Colorado Consumer Protection Act"; and
  • How certain cost-shifting provisions are to be interpreted.


The Senate Judiciary Committee Passed SB 93 out of committee, with amendments, on a 3-2 party-line vote on January 29th and the Senate Passed the Bill on Second Reading, again with amendments, on February 6th.  SB 93 now remains on the Senate Calendar for Third Reading.  You can find the most recent version of the Bill here.  Of all of the amendments made to the Bill in Committee or on the Senate Floor during Second Reading, only one seems to be aimed at alleviating the construction industry’s concerns with the Bill.  On Second Reading, Senator Foote offered Amendment No. L.010, which added a legislative declaration, reading: “The general assembly declares that nothing in this act is intended to approve, disapprove, modify, or overrule Vallagio at Inverness Residential Condo. Ass’n v. Metro Homes, Inc., 2017 CO 69, 395 P.3d 788.”  While this is nice, it does not do enough to remove the chilling effect on arbitration that the Bill will have.     

If you haven’t already done so, it is imperative that you contact your State Senator to ask him or her to oppose SB 20-138.  You can find the contact for your Senator here.

HB 20-1046 - Concerning payments in construction contracts governing improvements to private real property.

As a refresher, for all construction contracts of at least $150,000, the HB 20-1046 would require:

  • A property owner to make partial payments to the contractor of any amount due under the contract at the end of each calendar month or as soon as practicable after the end of the month;
  • A property owner to pay the contractor at least 95% of the value of satisfactorily completed work;
  • A property owner to pay the withheld percentage within 60 days after the contract is completed satisfactorily;
  • A contractor to pay a subcontractor for work performed under a subcontract within 30 calendar days after receiving payment for the work, not including a withheld percentage not to exceed 5%;
  • A subcontractor to pay any supplier, subcontractor, or laborer who provided goods, materials, labor, or equipment to the subcontractor within 30 calendar days after receiving payment under the subcontract; and
  • A subcontractor to submit to the contractor a list of the suppliers, sub-subcontractors, and laborers who provided goods, materials, labor, or equipment to the subcontractor for the work.


The bill does not apply to contracts with public entities or to a contract concerning one multi-family dwelling of no more than 4 units or one single-family dwelling. A person who fails to make a required payment must pay 1.5% interest per month until the debt is fully paid. In a lawsuit to enforce the bill, the prevailing party is awarded attorney fees and costs.

House Bill 1046 is currently on the Calendar for the House Business Affairs & Labor Committee on February 18th, for action only.

HB 20-1155 - Concerning requirements that builders of new residences offer buyers options to accommodate higher efficiency devices.

Finally, as previously discussed, current law requires a home builder to offer to a buyer of a new home one of the following:

  • A solar panel system or a solar thermal system;
  • To prewire or preplumb the home for these systems; or
  • A chase or conduit to wire or plumb the home for these systems in the future.


Section 1 of the House Bill 1155 changes this to require that the home builder offer each of these options.

Section 2 requires a home builder to offer one of the following options to a buyer of a newly constructed residence:

  • An electric vehicle charging system;
  • Upgrades of wiring to accommodate future installation of an electric vehicle charging system; or
  • A 208- to 240-volt alternating current plug-in located in a place accessible to a motor vehicle parking area.


Section 2 also requires the home builder to offer electric heating options. These requirements apply to both traditional detached, single-family homes and buildings that contain owner-occupied condominium units.

The House Committee on Energy & Environment passed HB 1155 out of committee, as amended, on an 8-1 vote, on February 13, 2020, sending the Bill to the House Floor, where it is scheduled for Second Reading on February 19, 2020.

For additional information about the Colorado legislative session or construction litigation in Colorado, you can reach Dave McLain at (303) 987-9813 or by e-mail at mclain@hhmrlaw.com


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Disclaimer

The information contained in this blog is provided for informational purposes only. It is not legal advice and should not be construed as providing legal advice on any subject matter.