By Jill Ralph. A state bill heading for decision in Colorado has advocates for homeowners squaring off with home builders in a battle that has ignited one of the fiercest state legislative brushfires yet over how best to remedy construction problems. The outcome for builders, should the bill fail to pass, is concern that the cost of builder insurance will rise higher than Pikes Peak; or worse, that builders may not be able to get any insurance at all.
Colorado House Bill 1161, like many other recent state initiatives, seeks to place restrictions on homeowner lawsuits by encouraging resolution for construction complaints before homeowners turn to litigation. The bill would require homeowners to go to builders with their complaints, give them first right of refusal to make repairs, and provide 90 days notice before filing a lawsuit.
A separate state senate measure passed in late February to cap damages homeowners can collect from builders is to be reconciled with HB 1161 before it goes to Gov. Bill Owens for signature.
The bill, which was mounted by the Colorado Association of Home Builders, has garnered high-profile support from Colorado's business elite, including Larry Mizel, CEO of MDC Holdings, who had helped lead lobbying efforts. Consumergroups argue the bill restricts homeowners' rights by unfairly protecting builders from lawsuits.
Ultimately, future home buyers and builders alike may both be the big losers. American Family Insurance, one of a diminishing number of builder insurers, announced in advance of the bill's resolution it was reevaluating whether to continue providing insurance to home builders in Colorado and 16 other states. The Madison, Wis.-based company worries it may face a growing risk of large class action suits in the future. One of its underwriters added, "Our claim experience is the worst in Colorado." If insurers pull the plug on builders, it will be harder for the small and medium builders to keep building.