Colorado voters are being asked Nov. 2 to consider the complex issues surrounding the proposed Amendment 34, which would reverse the effects of a state law enacted in 2003 to limit the amount of money homeowners can collect in lawsuits about construction defects.
House Bill 1161 placed limits on lawsuits about construction defects and required homeowners to give construction professionals a period of time to correct the defects or offer a financial settlement before the homeowner pursues a suit. It also limits the recovery of damages to the value of the property, the cost of replacement or the cost of repair, whichever is least. It caps at $250,000 extra damages for "pain and suffering" and expenses such as temporary housing and legal costs. Before the law, homeowners could seek as much as triple their actual damages.
Proponents of Amendment 34 say it would restore the protection property owners need and preserve those protections within the state constitution. Detractors say the motivation behind the amendment is protecting the profits of legal firms specializing in class-action construction-defects lawsuits, particularly in tract subdivisions.
"Amendment 34 is the byproduct of a disagreement between two lawyers who specialize in construction-defect litigation and the state legislature," Marchus Pachner said. He is a spokesman for the "No on 34" campaign. "Lawmakers passed HB 1161 in 2003, setting clear guidelines for the handling of complaints about construction mistakes or defects. Two days after the governor signed the bill into law, these two lawyers, who have made millions by filing class-action construction defect cases, drafted Amendment 34."
Proponents of Amendment 34 say HB 1161 singled out one industry for special protection and eroded the ability of homeowners and commercial property owners to recover all of the damages they are entitled to.
They say Amendment 34 would change a system that improperly favors construction professionals at the expense of property owners. They point to the hundreds of thousands of dollars being spent by some of the largest homebuilding firms in the state to resist passage of the amendment.
Attorney Scott Sullan, one of the chief backers of the amendment, said opponents are using a big-money campaign to create the false public perception that it would allow a return to frivolous lawsuits. But Sullan said the wording of the amendment would not restore triple damages that were available to property owners before HB 1161 passed.
Amendment 34, as worded, wouldn't just reverse most of the provisions of HB 1161, it would use the state's constitution to prohibit similar bills in the future.
Amendment 34 opponent Evan Dryer said that its provisions would lead to increased insurance premiums for homeowners and contractors and, as a result, would increase the cost of construction and housing in the state. Lack of specificity in the amendment's language raises the possibility that homeowners who take on home improvement projects could become vulnerable to lawsuits years after they sell a home, he said.
Proponents of Amendment 34 say it's not reasonable to ask individual property owners to expend the time and resources to negotiate effectively remedies for defects with construction professionals or large home building corporations. They say the amendment places needed protections for property owners in the state constitution.
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