Homeowners would not be able to sign their rights away in contracts with builders under a measure lawmakers initially approved Wednesday.
House Bill 1338, dubbed the Homeowner Protection Act of 2007, would prohibit homebuilders from forcing buyers to sign contracts with certain provisions if they want the property.
Under the bill, the provisions in the contracts designed to protect builders from lawsuits would be voided if there is fraud or gross negligence. The homeowner also would not be able to waive
home-repair costs that are currently allowed by state law.
"I think very few homes are bad, but when they are and a homeowner can't get a remedy, it's devastating," said Rep. Jack Pommer, D-Boulder, who sponsored the bill. "Homebuyers may have invested their current and future income and sometimes need legal intervention to make
sure that their basic rights are available."
But opponents contended that homeowners and homebuilders should have the right to sign contracts with each other free of governmental interference.
"People should ... have some cognizance of what they're signing," said Rep. David Balmer, R-Centennial.
Ever closed on a house? There's quite a packet of papers to sign and even lawyers have a hard time reading and understanding it all, if real estate law isn't their specialty. Ordinary people would have to spend a lot of time, or hire a lawyer, to know what rights they're signing away and how it could come back to haunt them.
As a matter of fact, the CEO of a major homebuilder testified in committee that he didn't know what was in the standard contract this company uses. He said he only read it when a reporter asked him about this bill, and was both surprised and embarrassed and what he found.
During that same committee hearing, homeowners testified that they had put down earnest money before closing. When they balked at provisions in the sales contract, the homebuilders salesperson warned them they would lose their deposit if they refused to sign.
Opponents also predicted the bill would increase housing costs, making homes too expensive for many people.
Yes, the did. But they also said home prices would go up if the legislature didn't pass a bill called the Construction Defects Act back in 2003. That act took away many of the rights home buyers had if their new home started to fall apart. The legislature passed it. Home prices still went up and now homebuilders say they'll continue to to up unless they can get buyers to waive all of their legal rights.
Of course the homebuilders could worker harder to build houses property the first time, but that would probably causes prices to go up too.
The bill passed second reading and faces a third reading in the House before moving to the the Senate. If it becomes law, it will apply to lawsuits filed on or after the date of the bill's passage.
But lobbyists, especially those for the Colorado Association of Home Builders and the Denver Metro Chamber of Commerce, have been out in force opposing the bill.
Four years ago, homebuilders said their insurance rates had skyrocketed because of the number of lawsuits being filed against them.
They persuaded the legislature to pass a bill that, among other things, instituted hard caps on the amount of damages that could be awarded in lawsuits against them.
Pommer's bill doesn't increase those caps or institute a new legal remedy, he said.
No, it just holds homebuilders to the promises they made back in 2003.
Staff writer Karen Crummy can be reached at 303-954-1594 or kcrummy@denverpost.com.
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