CONSTRUCTION DEFECT CLAIMS IN COMMON INTEREST

Denver Revised Municipal Code ch. 10, art. XII

in effect

Denver Revised Municipal Code § 10-201 Definitions.

Sec. 10-201. - Definitions. (1) "Association" shall be defined as provided in the Colorado Common Interest Ownership Act, Article 33.3 of Title 38, C.R.S., as amended. (2) "Common interest community" shall be defined as provided in the Colorado Common Interest Act, Article 33.3 of Title 38, C.R.S., as amended. (3) "Construction defect claim" means a civil action or an arbitration proceeding for damages, indemnity, or contribution brought against a development party to assert a claim, counterclaim, cross-claim, or third-party claim for damages or loss to, or the loss of the use of, real or personal property or personal injury caused by a defect in the design or construction of an improvement to real property that is part of a common interest community. (4) "Declarant" shall be defined as provided in the Colorado Common Interest Ownership Act, Article 33.3 of Title 38, C.R.S., as amended. (5) "Declaration" shall be defined as provided in the Colorado Common Interest Ownership Act, Article 33.3 of Title 38, C.R.S., as amended. (6) "Development party" means an architect, contractor, subcontractor, developer, declarant or affiliates of a declarant, builder, builder vendor, engineer, or inspector performing or furnishing the design, supervision, inspection, construction, or observation of the construction of any improvement to real property that is part of the common interest community or any other party responsible for any part of the design or construction of any portion of the common interest community, or any of such parties' affiliates, or the officers, directors, partners, shareholders, members, managers, employees or servants of any of them. (7) "Executive Board" shall be defined as provided the Colorado Common Interest Ownership Act, Article 33.3 of Title 38, C.R.S., as amended. (8) "Governing documents" means the declaration, articles of incorporation, bylaws, rules and regulations, policies and procedures of a common interest community. (9) "Unit" shall be defined as provided in the Colorado Common Interest Ownership Act Article 33.3 of Title 38, C.R.S., as amended. (10) "Unit owner" shall be defined as provided in the Colorado Common Interest Ownership Act, Article 33.3 of Title 38, C.R.S., as amended. (Ord. No. 15-811, § 1, 11-23-15)

Denver Revised Municipal Code § 10-202 Relationship of city building codes to construction defect claims.

Sec. 10-202. - Relationship of city building codes to construction defect claims. (a) In general. A violation of any city building code as adopted in article II of this chapter 10, or a failure to substantially comply with any such code shall not create a private cause or action. A violation or any city building code as adopted in article II of this chapter 10, or a failure to substantially comply with any such code may not be used to support or prove any construction defect claim, regardless of the statutory or common law theory under which the claim is asserted, unless the violation or failure to substantially comply results in one or more of the following: (1) Actual damage to real or personal property, (2) Actual loss of the use of real or personal property; (3) Bodily injury or wrongful death; or (4) A risk of bodily injury or death to, or a threat to the life, health, or safety of, the occupants of residential real property. (b) No strict liability for building code violations. Under no circumstances shall a violation of any city building code as adopted in article II of this chapter 10, or a failure to substantially comply with any such code, support or prove a construction defect claim based upon a theory of strict liability, or under the common law doctrine of negligence per se. (c) Code compliant improvements shall not be considered defective. The building codes adopted in article II of this chapter 10 are intended to establish a minimum standard for safe and sound construction in Denver. Therefore, any particular element, feature, component or other detail of any improvement to real property that is specifically regulated under the city's codes and is constructed or installed in substantial compliance with such codes shall not be considered detective for purposes of proving any construction defect claim. (Ord. No. 811-15, § 1, 11-23-15)

Denver Revised Municipal Code § 10-203 Informed consent for construction defect claims associated with common interest communities.

Sec. 10-203. - Informed consent for construction defect claims associated with common interest communities. (a) Additional information required in notice to unit owners. Before the executive board of a common interest community institutes any legal action involving a construction defect claim, the executive board shall include in the notice to unit owners required by C.R.S. § 38-33.3-303.5, the following additional information to more fully advise the unit owners of the nature of the action and the relief sought, in substantially the following form: (1) If the association does not file a claim by (DATE), the claim cannot be filed at all under the applicable statute of limitations, statute of repose, or both. (2) If the association prevails, the executive board expects that the association may recover from the defendant(s) an amount between $___ and $___. (3) The executive board intends to enter into a contingency fee arrangement with the attorneys representing the association, under which, of the amount the association recovers from the defendant(s), the attorneys will be paid a contingency fee equal to ___ percent of the (net) (gross) recovery. The executive board estimates that, in addition to the attorney fees, the association will incur costs totaling approximately $___ for consultants, expert witnesses, depositions, filing fees, and other expenses of litigation. (4) If the association makes a claim and does not win, the executive board expects that witness fees, and other costs (the amount listed in paragraph (3), above) plus defendant's consultant fees, expert witness fees, and court costs. (5) If the association does not recover from the defendant(s), it may have to pay to repair or replace the claimed defective construction work. (6) Until the claimed defective construction work is repaired or replaced, or until the construction defect claim is concluded, the market value of the affected units will be adversely affected. (7) Until the claimed defective construction work is repaired or replaced, or until the claim is concluded, owners of the affected units will have difficulty refinancing and prospective buyers of the affected units will have difficulty obtaining financing. In addition, certain federal underwriting standards or regulations prevent refinancing or obtaining a new loan in projects where a construction defect is claimed. In addition, certain lenders as a matter of policy will not refinance or provide a new loan in projects where a construction defect is claimed. (b) Timing for delivery of notice to unit owners. The notice to unit owners required by C.R.S. § 38-33.3-303.5, including the additional information set forth in subsection (a) of this section, must be sent at least sixty (60) days before service of the notice of a construction defect claim under the Colorado Construction Defect Action Reform Act, C.R.S. § 13-20-803.5. (c) Majority consent of unit owners required. A construction defect claim is not authorized unless the executive board obtains the signed, written consent from owners, other than the declarant, of units to which a majority of the total votes, excluding votes allocated to or units owned by the declarant, in the association are allocated, which written consent acknowledges that the owner has received the notice required under C.R.S. § 38-33.3-303.5, including additional information set forth in subsection (a) of this section, and approves of the executive board's proposed action. (d) Preservation of privileged information. Nothing in this section shall be construed to: (1) Require the disclosure in the notice or disclosure to a unit owner of attorney-client communications or other privileged communication. (2) Permit the notice to serve as a basis for any person to assert the waiver of any applicable privilege or right of confidentiality resulting from, or to claim immunity in connection with, the disclosure of information in the notice. (Ord. No. 811-15, § 1, 11-23-15)

Denver Revised Municipal Code § 10-204 Enforcement of covenants requiring alternative dispute resolution for construction defect claims.

Sec. 10-204. - Enforcement of covenants requiring alternative dispute resolution for construction defect claims. Whenever a declaration in a common interest community requires any form of alternative dispute resolution for construction defect claims asserted by the association, by the executive board, or by any unit owners, and the declaration expressly prohibits any future amendment to the declaration that would modify or eliminate the requirement for alternative dispute resolution without the consent of the declarant, then any attempt to modify or eliminate the requirement for alternative dispute resolution by the association, by the executive board or by the unit owners absent the consent of the declarant shall be deemed ineffective, an abrogation of a contractual obligation, and void as against public policy. This section shall apply if and only if: (1) The declaration contains a provision substantially in the following form: "The terms and provisions of the Declaration requiring alternative dispute resolution for construction defect claims inure to the benefit of Declarant, are enforceable by Declarant and shall not ever be amended without the written consent of Declarant and without regard to whether Declarant owns any portion of the Real Estate at the time of such amendment. BY TAKING TITLE TO A UNIT, DECLARATION REQUIRING ALTERNATIVE DISPUTE RESOLUTION OF CONSTRUCTION DEFECT CLAIMS ARE A SIGNIFICANT INDUCEMENT TO THE DECLARANT'S WILLINGNESS TO DEVELOP AND SELL THE UNITS AND THAT IN THE ABSENCE OF THE ALTERNATIVE DISPUTE RESOLUTION PROVISIONS CONTAINED IN THE DECLARATION, DECLARANT WOULD HAVE BEEN UNABLE AND UNWILLING TO DEVELOP AND SELL THE UNITS FOR THE PRICES PAID BY THE ORIGINAL PURCHASERS." and, (2) The provisions of the declaration requiring alternative dispute resolution for construction defect claims inures to the benefit of other development parties in addition to the declarant; and (3) The provisions of the declaration requiring alternative dispute resolution for construction defect claims are consistent with the requirements of the Colorado Uniform Arbitration Act, Part 2 of Article 22 of Title 13, C.R.S., including, but not limited to, the requirement that any mediator or arbitrator selected to preside over a construction defect claim must be a neutral third party as requirement by § 13-22-211(2), C.R.S., and that the mediator or arbitrator shall made the disclosures required by C.R.S. § 13-22-212; and (4) The provisions of the declaration requiring alternative dispute resolution for construction defect claims require that any mediation or arbitration must be held at a mutually agreeable location within the City and County of Denver; and (5) The provisions of the declaration requiring alternative dispute resolution for construction defect claims requires that any arbitration shall be governed by the substantive law of Colorado with regard to any remedy granted, and if the remedy is substantially affected by the arbitrator's failure to follow the substantive law of Colorado, a court may vacate or refuse to confirm the arbitrator's award on that basis. (Ord. No. 811-15, § 1, 11-23-15)

Denver Revised Municipal Code § 10-205 Effective date.

Sec. 10-205. - Effective date. This article XII shall be effective January 1, 2016, and shall apply to any common interest community created in the city on and after that date. (Ord. No. 811-15, § 1, 11-23-15)

Source: City and County of Denver, Revised Municipal Code and Charter (Municode Library, library.municode.com)URL: https://library.municode.com/co/denver/codes/code_of_ordinances?nodeId=TITIIREMUCO_CH10BUBURE_ARTXIICODECLCOINFetched: 10/27/2026