There are lots of reasons why someone may have issues with the workmanship of a particular project. When this occurs with your painter or mechanic, the issue is typically resolved via a settlement, specific performance or perhaps small claims court. However, when the issue of workmanship is on a larger scale and the workmanship in question calls into doubt the overall condition of particular housing units, construction defect actions usually follow.
Section 13-20-801 of the Colorado Revised Statutes, also known as the Construction Defect Action Reform Act (“CDARA”), contains additional information regarding construction defect actions in Colorado. While this article will speak only to the information contained in the Colorado Common Interest Ownership Act (“CCIOA”), if you have any additional questions, you should review both CCIOA and CDARA with legal counsel.
Section 38-33.3-303.5 of the Colorado Common Interest Ownership Act discusses various requirements for instituting a construction defect action. Some of the more salient points are listed below for informational purposes. Remember to always consult an attorney when considering a construction defect action.
Notice and Meeting to Consider Commencement of a Construction Defect Action
- Before an executive board institutes a construction defect action, they must mail or deliver written notice of the anticipated commencement of the construction defect action to each unit owner at the owner's last-known address described in the association's records and to the last-known address of each construction professional against whom a construction defect action is proposed. Except that this notice requirement does not apply to construction professionals identified after the notice is mailed, or; joined parties in a construction defect action previously approved by owners.
- This notice must call a meeting of the unit owners, which must be held no less than ten days and no more than fifteen days after the mailing date of the notice, to consider whether to bring a construction defect action. A failure to hold the meeting within this time period voids the subsequent vote. A quorum is not required at the meeting. In no event shall the time period for providing the notice, holding the meeting, and voting exceed ninety days.
- The notice must state that:
- The conclusion of the meeting initiates the voting period, during which the association will accept votes for and against proceeding with the construction defect action. The disclosure and voting period shall end ninety days after the mailing date of the meeting notice or when the association determines that the construction defect action is either approved or disapproved, whichever occurs first.
- The construction professional against whom the construction defect action is proposed will be invited to attend and will have an opportunity to address the unit owners concerning the alleged construction defect.
- The presentation at the meeting by the construction professional or the construction professional's designee or designees may, but is not required to, include an offer to remedy any defect in accordance with section 13-20-803.5 (3) of the "Construction Defect Action Reform Act".
- The notice must also contain a description of the nature of the construction defect action, which identifies alleged defects with reasonable specificity, the relief sought, a good-faith estimate of the benefits and risks involved, and any other pertinent information.
- The notice must also contain several disclosures, ranging from the possibility of increased costs associated with the maintenance and/or repair of the construction defect to information regarding the responsibility of the association to pay for legal costs if the construction defect action is unsuccessful. For a full list of the required disclosures, please see section 38-33.3-303.5(1)(c)(III).
- The association must maintain a verified owner mailing list that identifies the owners to whom the association mailed the notice. The verified owner mailing list must include, for each owner, the address, if any, to which the association mailed the notice. The association must provide a copy of the verified owner mailing list to each construction professional who is sent a notice, at the required owner meeting. The owner mailing list must be deemed verified if a specimen copy of the mailing list is certified by an association officer or agent. If the association commences a construction defect action against any construction professional, the association must file its verified owner mailing list and records of votes received from owners during the voting period with the appropriate forum under seal.
- The substance of a proposed construction defect action may be amended or supplemented after the meeting, but an amended or supplemented claim does not extend the voting period. The executive board must give notice to unit owners of any amended or supplemented claim and must maintain records of its communications with unit owners. Owner approval is not required for amendments or supplements to a construction defect action made after the initial notice is sent.
Approval by Unit Owners
- Notwithstanding any provision of law or any requirement in the governing documents, the executive board may initiate the construction defect action only if authorized within the voting period by owners of units to which a majority of votes in the association are allocated. Such approval is not required for an association to proceed with a construction defect action if the alleged construction defect pertains to a facility that is intended and used for nonresidential purposes and if the cost to repair the alleged defect does not exceed fifty thousand dollars. Such approval is not required for an association to proceed with a construction defect action when the association is the contracting party for the performance of labor or purchase of services or materials.
- Notwithstanding any other provision of law, an owner's vote must be submitted only once and may be obtained in any written format confirming the owner's vote to approve or reject the proposed construction defect action. The association must maintain a record of all votes until the conclusion of the construction defect action, including all appeals, if any.
Vote Count - Exclusions
- For purposes of calculating the required majority vote under this subsection (1)(d) only, the following votes are excluded:
- Any votes allocated to units owned by a development party;
- Any votes allocated to units owned by banking institutions, unless a vote from such an institution is actually received by the association;
- Any votes allocated to units of a product type in which no defects are alleged, in a common interest community whose declaration provides that common expense liabilities are not shared between the product types;
- Any votes allocated to units owned by owners who are deemed nonresponsive. If the status of the nonresponsive unit owners is challenged in court, the court shall consider whether the executive board has made diligent efforts to contact the unit owner regarding the vote and may consider: Whether a mailing was returned as undeliverable; whether the owner appears to be residing at the unit; and whether the association has used other contact information, such as an electronic mail address or telephone number for the owner.
Notice to Construction Professional
- At least five business days before the mailing of the required notice to unit owners, the association shall notify each construction professional against whom a construction defect action is proposed by mail, at its last-known address, of the date and time of the meeting called to consider the construction defect action.
Keep in mind that there are many factors involved in considering the initiation of a construction defect action, and the procedure which associations are required to follow is but one of them. Always consult an attorney when considering a construction defect action.
For more information please refer to section 38-33.3-303.5 of the Colorado Common Interest Ownership Act.