The Colorado Legislative Action Committee, CLAC, is supporting HB 1338, the "Homeowner Protection Act Of 2007" that was introduced March 7, 2007. This legislation has been assigned to the Judiciary Committee.

Industry pro-active construction defect legislation, HB 1338 makes waivers of certain basic statutory rights and remedies by residential property owners in their transactions with construction professionals void as against public policy. To find particulars of this legislation, find this bill number under "Select Bill Range" at the top of the page and click "GO."

For more background on construction defects and the opportunity to cure, see CAI's Public Policy "Quality Construction and Rights of Associations and Builders in the Event of Defects." The CAI Rocky Mountain Chapter's website provides information about this and other Colorado legislation.

HB 07-1338 - The Homeowner Protection Act

Rep. Pommer and Sen. Veiga
March 8, 2007

Purpose

To ensure the Construction Defect Action Reform Act of 2003 (CDARA) is allowed to work as designed to resolve claims between builders and homeowners, by protecting homeowners from being required to waive or limit their existing legal rights under CDARA in order to purchase a house.

What the Bill Does

• Makes contractual waivers of legal rights and remedies provided by CDARA void and unenforceable.
• Provides a very narrow solution to a major consumer protection problem.
• Does not change or alter any provisions whatsoever in CDARA --- it keeps intact the builder's right to notice and cure procedures, keeps intact the limitations on actual damages available to homeowners, and keeps intact caps on treble damages and attorney fees.
• Applies only to residential property and not to commercial property transactions.
• Does not change arbitration requirements.
• Does not interfere with limitations on homeowner remedies for claims made specifically under the builder express warranty programs.
• Does not interfere with waivers and releases in settlements between builders and homeowners.
• Exempts charitable organizations such as Habitat for Humanity.

Why the Bill Is Needed

• The use of unreasonable waivers against homeowners is a widespread practice in Colorado. Virtually all builders use a variety of take-it-or-leave-it contract waivers designed to limit consumer options when faced with the purchase of a new home. To make matters worse, these waivers are often hidden in the mountain of paperwork a buyer must sign at closing.
• To date, courts have upheld waivers, making it impossible for some owners of defective homes to get the problems corrected.
• Homeowner waivers allow builders to disregard the very construction defect laws their industry fought so hard to have enacted by CDARA in 2003.
• The best public policy is to allow carefully crafted and vigorously debated laws like CDARA to work as they are intended. Builder-imposed waivers undermine this good public policy.
• Builders want time for the existing construction defect laws to work - we agree. These laws should be allowed work without the law being negated by waivers.