Should Your HOA Board File a Construction Defect Claim? A Guide for Colorado Board Members

You did not volunteer to serve on your HOA board so you could manage multimillion-dollar litigation. You stepped up to help your community. But now you may be facing construction defects that threaten property values, safety, and your neighbors' financial wellbeing. That is a heavy burden to carry.

The fear and confusion are understandable. You worry about personal liability. You worry about making the wrong call and upsetting homeowners.You are not alone in feeling this way.

This guide will walk you through the decision-making process step by step so you can act with confidence. Across more than 1,000 cases and over $500 million recovered, we at Nelson Law Firm have guided hundreds of HOA boards through this exact process. What follows is experience-based guidance built from real outcomes for real communities.

What Legal Framework Governs HOA Construction Defect Claims in Colorado?

Colorado's Construction Defect Action Reform Act, commonly known as CDARA, establishes the rules for how construction defect claims must be filed in this state. In plain terms, CDARA requires your HOA to provide the builder with a formal notice of claim before a lawsuit can proceed. The builder then has the right to inspect the property and propose repairs before litigation moves forward.

Reference: CDARA, C.R.S. Section 13-20-801 et seq.

In 2017, the Colorado legislature added a significant requirement under HB 17-1279. HOAs must now obtain approval from at least 65 percent of unit owners before filing a construction defect lawsuit. This single change reshaped the litigation landscape for boards across the state.

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Understanding these requirements early matters. They affect your timing, your strategy, and how you communicate with your community. This is knowledge that puts your board in a position of strength, not complexity that should discourage you from acting.

What Is Your Fiduciary Duty When Defects Are Discovered?

As an HOA board member, you have a fiduciary duty to act in the best interest of all owners. When construction defects are identified, ignoring them or delaying action can expose the board to claims of breach of that duty.

Investigating potential defects is not optional. Once your board becomes aware of issues such as water intrusion, structural damage, drainage failures, or building envelope problems, you have an obligation to explore legal options.

Here is what many board members do not realize: seeking legal counsel to evaluate a potential claim is part of fulfilling your fiduciary duty. It is not an aggressive or adversarial step. A consultation does not commit your HOA to litigation. It simply provides the board with the information needed to make an informed decision on behalf of every owner in the community.

How Do You Get 65 Percent Owner Approval to Move Forward?

The 65 percent approval requirement is a concern we hear often from board members. Many see it as a major obstacle. We encourage you to reframe it as an opportunity to educate and unite your community.

Here is a practical, step-by-step approach:

Step one: Work with experienced counsel to prepare a clear, factual presentation for homeowners. This should explain the defects, the financial exposure if repairs are not pursued, and what the litigation process looks like.

Step two: Hold a town hall or informational meeting where owners can ask questions. Transparency builds trust, and trust builds votes.

Step three: Make the voting process accessible. Use mail-in ballots or other methods allowed under your HOA's governing documents to maximize participation.

Step four: Address common owner concerns directly. This includes fears about special assessments, timeline, disruption to daily life, and retaliation from the builder.

We help boards prepare for and conduct these votes. In our experience, communities with clear communication almost always reach the threshold when the defects are real and well documented.

What Should a Board Look for in Construction Defect Counsel?

This is not general real estate law. Construction defect litigation requires specialized expertise in engineering, building science, insurance coverage, and Colorado-specific statutes. The firm you choose will be the single most important decision your board makes.

We advise boards to ask potential counsel the following questions:

• How many HOA construction defect cases have you handled?
• What is your track record of results?
• Do you take cases on contingency so the HOA does not pay out of pocket?
• Are you prepared to go to trial if necessary, or do you only settle?
• Do you have relationships with qualified experts such as engineers and building consultants?

Many firms push volume and quick settlements that leave money on the table. Look for a quality-over-volume approach where every case is prepared as if it will go to trial. This trial-ready posture is what drives strong results at mediation and settlement. Builders and their insurers negotiate differently when they know the other side is not bluffing.

Will Board Members Be Personally Liable?

This is the single biggest fear we hear from board members, and we want to address it clearly. Under the Colorado Revised Nonprofit Corporation Act, C.R.S. Section 7-128-401, and most HOA governing documents, board members who act in good faith and with reasonable care are protected by the business judgment rule.

Acting responsibly to investigate and address known defects is exactly the type of good-faith conduct the law protects.

Let us also address another common myth: that filing a lawsuit will tank property values. The truth is the opposite. Unrepaired defects are what depress values. Litigation is the path to restoring your community.

One more myth worth addressing: management companies always have the board's best interest in mind. Some management companies discourage litigation because of their own relationships with developers. Your board deserves independent legal advice, free from those conflicts. These fears are valid, but they should not prevent you from protecting your community.

What Results Can Boards Expect?

Nelson Law has over $500 million recovered across more than 1,000 cases. Many of these involved HOA communities where boards initially felt overwhelmed but ultimately secured full repair funding for their owners.

We prepare every case for trial. That is not a slogan. It is the approach that produces the strongest outcomes for communities. Builders and their insurers know we will not back down, and that changes every negotiation.

What Should Your Board Do Next?

Here are the key takeaways every board member should remember:

• Investigating defects is part of your fiduciary duty, not an aggressive act.
• Understanding CDARA and the 65 percent vote requirement early gives your board a strategic advantage.
• Personal liability fears should not prevent you from protecting your community.
• Choosing experienced, trial-ready counsel is the most important decision your board will make.

The first step is a confidential consultation to evaluate your community's situation. There is no cost and no obligation.

If your board is facing construction defects or considering a claim, contact us for a free case evaluation.