condominiums; construction defects; actions; procedures

SB1450 - 572R - I Ver

REFERENCE TITLE:
condominiums; construction defects; actions; procedures

State of Arizona

Senate

Fifty-seventh Legislature

Second Regular Session

2026

SB 1450

Introduced by

Senators
Shope: Carroll;� Representatives Connolly, Crews, Liguori

AN
ACT

amending sections 12-552, 12-1361
and 12-1362, Arizona Revised Statutes; amending title 12, chapter 8,
article 14, Arizona Revised Statutes, by adding section 12-1363.01;
amending section 32-1162, Arizona Revised Statutes; amending title 33,
chapter 9, article 3, Arizona Revised Statutes, by adding section 33-1242.01;
relating to condominium property.

(TEXT OF BILL BEGINS ON NEXT PAGE)

Be it enacted by the Legislature of the State of Arizona:

Section 1. Section 12-552, Arizona Revised
Statutes, is amended to read:

START_STATUTE
12-552
.
Actions involving development of real property design,
engineering and construction of improvements

A. Notwithstanding any other statute
and
except as prescribed by subsections B and f of this section
, an action
or arbitration based in contract may not be instituted or maintained against a
person who develops or develops and sells real property, or performs or
furnishes the design, specifications, surveying, planning, supervision,
testing, construction or observation of construction of an improvement to real
property more than eight years after substantial completion of the improvement
to real property.

B. Notwithstanding any other statute,
for real property regulated under title 33, chapter 9, an action or arbitration
based in contract may not be instituted or maintained against a person that
develops or develops and sells real property, or performs or furnishes the
design, specifications, surveying, planning, supervision, testing, construction
or observation of construction of an improvement to real property more than
five years after substantial completion of the improvement to real property.

B.
C.
Notwithstanding
any other statute, a municipality or a county may not institute or maintain an
action or arbitration against a person who develops or develops and sells real
property or performs or furnishes the design, specifications, surveying,
planning, supervision, testing, construction or observation of construction of
an improvement to real property that is dedicated to the municipality or county
more than eight years after the improvement to real property has been accepted
by the municipality or county for ownership, operation and maintenance if the
action or arbitration is based on either:

1. A municipal or county code, ordinance or other
legal requirement.

2. A permit that is required as a condition of
development.

C.
D.
The
limitations of subsection
B

C
of
this section do not apply to an action or arbitration that is based on a claim
of a wilful, reckless or concealed violation of a municipal or county
requirement.

D.
E.
Subsection

B

C
of this section does not
limit any immunity or defense that is available to a municipality or county
pursuant to chapter 7, article 2 of this title.

E.
F.
Notwithstanding
subsection A or
B

C
of this
section, in the case of injury to real property or an improvement to real
property, if the injury occurred during the eighth year after the substantial
completion or, in the case of a latent defect, was not discovered until the
eighth year after substantial completion, an action to recover damages for
injury to the real property may be brought within one year after the date on
which the injury to real property or an improvement to real property occurred or
a latent defect was discovered, but an action may not be brought more than nine
years after the substantial completion of the improvement.

G. Notwithstanding subsection B of
this section, in the case of injury to real property or an improvement to real
property regulated under title 33, chapter 9, if the injury occurred during the
fifth year after the substantial completion or, in the case of a latent defect,
was not discovered until the fifth year after substantial completion, an action
to recover damages for injury to the real property may be brought within one
year after the date on which the injury to real property or an improvement to
real property occurred or a latent defect was discovered, but an action may not
be brought more than six years after the substantial completion of the
improvement.

H. Notwithstanding subsection B of
this section, if there is a pending complaint under section 32-1155 for
injury to real property or an improvement to real property regulated under
title 33, chapter 9, an action to recover damages for injury to the real
property or the improvement to real property may not be brought more than six
years after the substantial completion of the improvement.

F.
I.
The
limitations in subsections A, B
, c, F, G
and
E

H
of this section include any
action based on implied warranty arising out of the contract or the
construction, including implied warranties of habitability, fitness or
workmanship.

G.
J.
This
section does not apply to actions for personal injury or death or shorten the
period of warranty provided in an express written warranty.

H.
K.
For
the purposes of subsections A,
E

B,
F, G, H
and
F

I
of this
section, an improvement to real property is considered substantially complete
when any of the following first occurs:

1. It is first used by the owner or occupant of the
improvement.

2. It is first available for use after having been
completed according to the contract or agreement covering the improvement,
including agreed changes to the contract or agreement.

3. Final inspection, if required, by the
governmental body that issued the building permit for the improvement.

I.
L.
In
this section an action based in contract is an action based on a written real
estate contract, sales agreement, construction agreement, conveyance or written
agreement for construction or for the services set forth in subsection A of
this section. This section does not extend the period prescribed by
the laws of this state for bringing any action. If a shorter period
of limitation is prescribed for a specific action, the shorter period governs.

J. With respect to an improvement to
real property that was substantially complete on or before September 15, 1989,
the eight and nine-year periods established in subsections A and E of this
section shall begin to run on September 15, 1989. Notwithstanding
the provisions of subsection H of this section and section 12-505,
subsection A, this subsection applies to claims that accrued before May 14,
1992.

END_STATUTE

Sec. 2. Section 12-1361, Arizona Revised
Statutes, is amended to read:

START_STATUTE
12-1361.

Definitions

In this article, unless the context otherwise requires:

1. "Association" means either of the
following:

(a) The unit owners' association organized under
section 33-1241.

(b) A nonprofit corporation or unincorporated
association of owners
that is
created pursuant to a
declaration to own and operate portions of a planned community and
which

that
has the power under the
declaration to assess association members to pay the costs and expenses
incurred in the performance of the association's obligations under the
declaration.

2. "Community documents" means the
declaration, bylaws, articles of incorporation, if any, and rules, if any.

3. "Construction codes" means the
building, plumbing, electrical, fire, mechanical or other codes or ordinances,
including the international residential code however denominated, as adopted,
amended and enforced by the city, town or county in which the dwelling is
located.

4. "Construction defect" means a material
deficiency in the design, construction, manufacture, repair, alteration,
remodeling or landscaping of a dwelling that is the result of one of the
following:

(a) A violation of construction codes applicable to
the construction of the dwelling.

(b) The use of defective materials, products,
components or equipment in the design, construction, manufacture, repair,
alteration, remodeling or landscaping of the dwelling.

(c) The failure to adhere to generally accepted
workmanship standards in the community.

5. "Construction professional" means an
architect, contractor, subcontractor, developer, builder, builder vendor,
supplier, engineer or inspector performing or furnishing the design,
supervision, inspection, construction or observation of the construction of any
improvement to real property.

6. "Dwelling"
:

(a)
Means a single or
multifamily unit
that is
designed for residential use and
common areas and improvements that are owned or maintained by an association or
by members of an association.�
A dwelling

(b)
Includes the systems,
other components and improvements that are part of a single or multifamily unit
at the time of construction.

7. "Dwelling action" means any action
involving a construction defect brought by a purchaser against the seller of a
dwelling arising out of or related to the design, construction, condition or
sale of the dwelling.

8. "Maintenance records"
means receipts, logs, reports, service documentation or other material that is
in the purchaser's or association's possession or control and that relates to
routine or recommended maintenance of any dwelling system or component
identified in the notice of claim.

8.
9.
"Material
deficiency" means a deficiency that actually impairs the structural
integrity, the functionality or the appearance of the dwelling at the time of
the claim, or is reasonably likely to actually impair the structural integrity,
the functionality or the appearance of the dwelling in the foreseeable future
if not repaired or replaced.

9.
10.
"Purchaser"
means any person or entity who files a dwelling action.

11. "Remedy offer" means a
written offer by a seller or construction professional to repair, replace or
provide monetary compensation to resolve an alleged construction defect under
this article.

10.
12.
"Seller"
:

(a)
Means any person, firm,
partnership, corporation, association or other organization that is engaged in
the business of designing, constructing or selling dwellings,

including construction professionals.�
Seller

(b)
Does not include a real
estate broker or real estate salesperson as defined in section 32-2101
who provides services in connection with the resale of a dwelling following its
initial sale.
END_STATUTE

Sec. 3. Section 12-1362, Arizona Revised
Statutes, is amended to read:

START_STATUTE
12-1362.

Dwelling action; notice of intent to repair or replace;
jurisdictional prerequisite; insurance; bifurcated trial; legislative intent

A. Except with respect to claims for alleged
construction defects involving an immediate threat to the life or safety of
persons occupying or visiting the dwelling, a purchaser must first comply with
this article before filing a dwelling action.

B. A seller and the seller's construction
professional who receive a written notice of claim pursuant to section 12-1363

or 12-1363.01
have a right pursuant to section 12-1363

or 12-1363.01
to repair or replace any alleged
construction defects after sending or delivering to the purchaser a written
notice of intent to repair or replace the alleged construction defects
pursuant to section 12-1363 or a remedy offer pursuant to
section 12-1363.01
.� The seller and the seller's construction
professional do not need to repair or replace all of the alleged construction
defects
specified in the notice provided pursuant to section 12-1363,
subsection A or section 12-1363.01, subsection A
.� A purchaser may
not file a dwelling action until the seller and the seller's construction
professional have completed all
intended
repairs and
replacements
of the alleged construction defects

identified in the intent to repair or replace the alleged construction
defects pursuant to section 12-1363 or the remedy offer pursuant to
section 12-1363.01
.

C. If a seller or a seller's construction
professional presents a notice received pursuant to section 12-1363
or 12-1363.01
to an insurer that has issued an insurance
policy to the seller or the seller's construction professional that covers the
seller's or the seller's construction professional's liability arising out of a
construction defect or the design, construction or sale of the property that is
the subject of the notice, the insurer must treat the notice as a notice of a
claim subject to the terms and conditions of the policy of
insurance. An insurer must work cooperatively and in good faith with
the insured seller or the seller's construction professional within the time
frames specified in this article to effectuate the purpose of this
article. This subsection does not affect the coverage available
under the policy of insurance or create a cause of action against an insurer
whose actions were reasonable under the circumstances, notwithstanding its
inability to comply with the time frames specified in section 12-1363
or 12-1363.01
.

D. Subject to Arizona
rules of court, the identified construction professionals shall be joined as
third-party defendants, if feasible.� Subject to Arizona rules of court, for
each construction defect found to exist, the trier of fact in any dwelling
action filed pursuant to this article shall first determine if a construction
defect exists and the amount of damages caused by the
construction

defect and identify each seller or construction professional whose
conduct, whether by action or omission, may have caused, in whole or in part,
any construction defect. The purchaser has the burden of proof to demonstrate
the existence of a construction defect and the amount of the damages caused by
the construction defect. The trier of fact shall thereafter
determine the relative degree of fault of any defendant or third-party
defendant. The trier of fact shall allocate the pro rata share of
liability based on relative degree of fault. The seller has the
burden to prove the pro rata share of liability of any third-party
defendant.� The determination of whether a construction defect exists, the
amount of damages caused by the construction defect and who may have caused, in
whole or in part, the construction defect shall be bifurcated from and take
place in a separate phase of the trial or alternative dispute resolution
process from the determination of the relative degree of fault of any defendant
or third-party defendant, unless the court finds that bifurcation is not
appropriate.

E. The
legislature finds and determines that given the complexity and multiparty
nature of dwelling actions, it is important to provide a streamlined process
for the resolution of construction defect claims and indemnification claims
between the seller and the construction professionals that is efficient,
economical and convenient for the parties involved. The legislature
further finds and determines that
,
for the majority of
dwelling actions, bifurcation of the issues of the existence of a
construction
defect and causation from the issue of
apportionment of fault is more efficient, fair and convenient for the parties.�
It is the legislature's intent that the bifurcation process prescribed in
subsection D of this section does not alter the seller's liability under the
seller's implied warranty to the purchaser. It is the legislature's
intent that the bifurcation process prescribed in subsection D of this section
be used and that the issues of existence of a construction defect, damages,
causation and apportionment of fault be tried in one trial unless the court
finds that the circumstances of the particular case at issue render bifurcation
inappropriate.
END_STATUTE

Sec. 4. Title 12, chapter 8, article 14,
Arizona Revised Statutes, is amended by adding section 12-1363.01, to read:

START_STATUTE
12-1363.01.

Condominiums; notice; remedy offer; repair or replace; tolling of
time limits; admissible evidence; limitation of damages; definition

A. Before filing a dwelling action, a
purchaser of real property regulated under title 33, chapter 9 shall give at
least ninety days' written notice by certified mail, return receipt requested,
to the seller specifying in reasonable detail the basis of the dwelling
action. A seller who receives notice under this subsection shall
promptly forward a copy of the notice to the last known address of each
construction professional who the seller reasonably believes is responsible for
an alleged construction defect that is specified in the notice. The
seller's notice to each construction professional may be delivered by
electronic means.

B. A notice of claim shall include
copies of all maintenance records relating to any system or component
identified in the notice of claim or a certification that maintenance records
do not exist.

C. If maintenance records or a
certification that maintenance records do not exist is not provided, the notice
of claim is deemed incomplete and the deadlines or obligations under this
article do not apply until the maintenance records or certification that
maintenance records do not exist are provided.

D. If the claimant does not provide
maintenance records or certification that maintenance records do not exist,
there is a rebuttable presumption that any alleged defect affecting a system or
component that requires routine maintenance was caused by the claimant's
failure to perform ordinary maintenance.

E. After receipt of the notice
described in subsection A of this section, the seller and the seller's
construction professional may inspect the dwelling to determine the nature and
cause of the alleged construction defects and the nature and extent of any
repairs or replacements necessary to remedy the alleged construction defects.�
The purchaser shall ensure that the dwelling is made available for inspection
not later than ten days after the purchaser receives the seller's and the
seller's construction professional's request for an inspection.� The purchaser
may not allow any components or other improvements to be removed from the
dwelling for testing or any other purpose without the seller's prior written
approval. The seller MAY not unreasonably withhold approval of the purchaser's
request to remove components or other improvements from the dwelling for
testing or any other purpose. The seller and the seller's construction
professional shall provide reasonable notice to the purchaser before conducting
the inspection. The inspection shall be conducted at a reasonable
time. The seller and the seller's construction professional may use
reasonable measures, including destructive and nondestructive testing, to
determine the nature and cause of the alleged construction defects and the
nature and extent of any repairs or replacements necessary to remedy the
alleged construction defects. A second inspection may be conducted
within thirty days after the first inspection. If the seller or the seller's
construction professional conducts testing pursuant to this subsection, the
seller or the seller's construction professional shall restore the dwelling to
its condition before the testing.

F. The seller or THE SELLER'S
construction professional may provide a remedy offer to the purchaser.� The
remedy offer shall include either or both of the following:

1. A detailed scope of the repairs,
including the method and materials to be used, the identity of those performing
the work and a reasonable repair schedule.

2. A sum certain monetary offer.

G. SUbsection F of this section does
not prohibit the seller from offering monetary compensation or other
consideration instead of or in addition to a repair or
replacement. The purchaser, subject to the requirements of this
section, may accept or reject a remedy offer that consists of monetary
compensation or other consideration, other than repair or replacement and, if
rejected, may proceed with a dwelling action on completion of any repairs or
replacements the seller and the seller's construction professional intend to
make or provide.� The parties may negotiate for a release if an offer involving
monetary compensation or other consideration is accepted.

H. If the seller does not provide a
remedy to the purchaser's notice within ninety days after receiving the notice
or if the seller notifies the purchaser in writing that a remedy offer will not
be provided, the purchaser may file a dwelling action.

I. If the response provided pursuant
to subsection F of this section includes a notice of intent to repair or
replace the alleged construction defects, the purchaser shall allow the seller
and the seller's construction professional a reasonable opportunity to repair
or replace the alleged construction defects or cause the alleged construction
defects to be repaired or replaced pursuant to the following:

1. The purchaser and the seller or
the seller's construction professional shall coordinate repairs or replacements
within thirty days after the seller's remedy offer was sent pursuant to
subsection F of this section. A contractor or subcontractor that was
not involved in the construction or design of the dwelling and that performs
any repair or replacement of the alleged construction defect pursuant to this
section is liable only to the seller or purchaser who contracted for the contractor's
or subcontractor's services for the contractor's or subcontractor's scope of
work and that contractor or subcontractor may be named in an amended notice
pursuant to subsection M of this section or in the corresponding dwelling
action.

2. Repairs or replacements shall
begin as agreed by the purchaser and the seller or the seller's construction
professional, with reasonable efforts to begin repairs or replacements within
thirty-five days after the seller's remedy offer was sent pursuant to
subsection F of this section. If a permit is required to perform the repair or
replacement, reasonable efforts shall be made to begin repairs or replacements
within ten days after receipt of the permit or thirty-five days after the
seller's remedy offer was sent pursuant to subsection F of this section,
whichever is later.

3. All repairs or replacements shall
be completed using reasonable care under the circumstances and within a
commercially reasonable time frame considering the nature of the repair or
replacement, any access issues or unforeseen events that are not caused by the
seller or the seller's construction professional.

4. The purchaser shall provide
reasonable access for the repairs or replacements.

5. The seller is not entitled to a
release or waiver solely in exchange for any repair or replacement THAT IS made
pursuant to this subsection, except that the purchaser and seller may negotiate
a release or waiver in exchange for monetary compensation or other
consideration in a remedy offer.

6. At the conclusion of any repairs
or replacements, the purchaser may commence a dwelling action or, if the
contract for the sale of the dwelling or the community documents contain a
commercially reasonable alternative dispute resolution procedure that complies
with section 12-1366, subsection C, may initiate the dispute resolution
process, including any claim for inadequate repair or replacement.

J. During the notice and repair or
replacement process, and for thirty days after substantial completion of the
repair or replacement, the statute of limitations and statute of repose,
including section 12-552, THAT APPLY to the purchaser, including any
construction professional involved in the construction or design, are tolled as
to the seller and the seller's construction professional who were involved in
the construction or design of the dwelling for all alleged construction defects
described in reasonable detail in the written notice sent to the seller
pursuant to subsection A of this section.

K. The
statute of limitations and statute of repose, including section 12-552,
that apply to the seller's claim for indemnity or contribution against any
construction professional is tolled from the date the seller receives the
notice required by this section until nine months after the purchaser's service
of the civil complaint or arbitration demand on the seller.

L. All conduct of parties during the
repair or replacement process prescribed in subsections E, F, H and I of this
section may not be introduced in any subsequent dwelling action.� Any repair or
replacement efforts undertaken by the seller or the seller's construction
professional are not considered settlement communications or offers of
settlement and are admissible in evidence.

M. A purchaser may amend the notice
provided pursuant to subsection A of this section to include alleged
construction defects that are identified in good faith after submission of the
original notice. The seller and the seller's construction
professional shall have a reasonable period of time to conduct an inspection,
if requested, and thereafter the parties shall comply with the requirements of
subsections E, F, H and I of this section for the additional alleged
construction defects that are identified in reasonable detail in the notice.�
For the purposes of this subsection, reasonable time does not mean a time frame
that is less than the time frames provided in this section.

N. Subject to Arizona rules of court,
during the pendency of a dwelling action, the purchaser may supplement the list
of alleged construction defects to include additional alleged construction
defects that are identified in good faith after the filing of the original
dwelling action and that have been identified in reasonable detail as required
by this section.� The court shall provide the seller and the seller's
construction professional a reasonable amount of time to inspect the dwelling
to determine the nature and cause of the additional alleged construction
defects and the nature and extent of any repairs or replacements necessary to
remedy the additional alleged construction defects and, on request of the
seller or the seller's construction professional, sufficient time to repair or
replace the additional alleged construction defects. The parties
shall comply with the requirements of subsections E, F, H and I of this section
for the additional alleged construction defects that are identified in reasonable
detail in the notice.

O. The service of an amended notice
that identifies in reasonable detail the alleged construction defects during
the pendency of a dwelling action shall relate back to the original notice of
alleged construction defects for the purpose of tolling applicable statutes of
limitations and statutes of repose, including section 12-552.

P. By written agreement of the seller
and purchaser, the time periods provided in this section may be extended.

Q. For the sale of a dwelling that
occurs within the statutory period set forth in section 12-552, the
escrow agent, as defined in section 6-801, shall provide notice to the
purchaser of the provisions of this section and sections 12-1361 and 12-1362. This
subsection does not create a fiduciary duty or provide any person or entity
with a private right or cause of action or administrative action.

R. A purchaser who files a contested
dwelling action under this article must file an affidavit with the purchaser's
complaint, under penalty of perjury, that the purchaser has read the entire
complaint, agrees with all of the allegations and facts contained in the
complaint and, unless authorized by statute or rule, is not receiving and has
not been promised anything of value in exchange for filing the dwelling action.

S. If the seller does not comply with
the requirements of this section and the failure is not due to any fault of the
purchaser or as a result of an unforeseen condition, including an unforeseen
weather condition or government delay, the purchaser may commence a dwelling
action.

T. If the purchaser fails to comply
with the requirements of this section before bringing a dwelling action, the
dwelling action shall be dismissed. If the dwelling action is
dismissed after the statute of limitations or statute of repose, including
section 12-552, that applies to the purchaser, any subsequent dwelling
action brought by the purchaser is time barred as to the seller and the
seller's construction professional involved in the construction or design of
the dwelling.

U. If a timely remedy offer was made
and repairs were substantially completed, the purchaser's damages are limited
to the following:

1. The reasonable cost of completing
or correcting repairs.

2. Temporary housing, storage and
relocation costs.

3. The amount of the actual property
damage.

4. The reasonable cost of inspecting
the completed repairs.

V. For the purposes of this section,
"reasonable detail" includes all of the following:

1. An itemized list that describes
each alleged construction defect with sufficient detail to allow the seller or
seller's construction professional to identify the alleged construction defect.

2. The location that each alleged
construction defect has been observed by the purchaser in each dwelling that is
the subject of the notice.

3. The impairment to the dwelling
that has occurred as a result of each of the alleged construction defects or is
reasonably likely to occur if the alleged construction defects are not repaired
or replaced.

4. The street address for each
dwelling that is the subject of the notice.
END_STATUTE

Sec. 5. Section 32-1162, Arizona Revised
Statutes, is amended to read:

START_STATUTE
32-1162.

Statute of limitations; remedy violations

A. A person may file a written complaint pursuant to
section 32-1155 with the registrar alleging a licensee has committed a
violation of this chapter.� The complaint must be filed:

1. For new home builds or other new building
construction,
except real property regulated under title 33,
chapter 9,
within two years after the earlier of the close of escrow or
actual occupancy.

2. For all other projects,
except
real property regulated under title 33, chapter 9,
within two years
after the completion of the specific project.

3. For real property regulated under
title 33, chapter 9, within five years after the earlier of the close of escrow
or actual occupancy.

B. For licensure regulatory purposes under this
chapter, a licensee's qualifying party is responsible for any violation of this
chapter committed by the licensee during the period of time that the qualifying
party is named on the license.� This subsection does not impose personal
liability on the qualifying party for a licensee's violation of this chapter.

C. For licensure regulatory purposes under this
chapter, a person named on a license is responsible for any violation of this
chapter committed by the licensee during the period of time that person was
named on the license.� This subsection does not impose personal liability on a
person named on a license for a licensee's violation of this chapter.

D. A licensee doing business as a sole proprietor
may be personally liable to the registrar for the purposes of enforcing this
chapter, including subrogation proceedings brought by this state pursuant to
section 32-1138.
END_STATUTE

Sec. 6. Title 33, chapter 9, article 3, Arizona
Revised Statutes, is amended by adding section 33-1242.01, to read:

START_STATUTE
33-1242.01.

Association's construction defect claims; inspection; meeting;
vote; definitions

A. In a civil action brought pursuant
to section 12-552, subsection B, G or H, and after the time periods in and
requirements prescribed in sections 12-1363.01 and 33-2002 are
complete, the board of directors shall first obtain the approval by a vote of
at least two-thirds of the unit owners before the board of directors may
institute, defend or intervene in litigation or administrative
proceedings. The board of directors may initiate the action only if
authorized by a vote of the unit owners pursuant to this section.

B. Before holding a meeting of the
unit owners to vote on the matter pursuant to this section, the association
shall:

1. Describe the specific units or
common elements that are subject to the alleged construction defect.

2. Describe the physical condition of
the units or common elements that are subject to the claim.

3. Describe any modifications,
maintenance or repairs to the units that were performed by the unit owners or
the association.

4. Provide copies of any written inspection
reports performed by the association and the condominium developer at least
five business days before the date of the meeting to vote.

5. Provide any copies of written cash
offers, completed repairs or offered repairs by the condominium developer to
remedy any defect alleged as prescribed in section 12-1363.01 to the unit
owners.

C. Before a vote of the unit owners,
the association shall deliver by certified mail or by electronic means written
notice of the anticipated commencement of a construction defect action to each
unit owner. The notice shall also be provided by certified mail to:

1. The developer of the condominium.

2. any construction professional
identified in the proposed construction defect action.

D. The developer of the condominium
and any construction professional identified in the proposed construction
defect action have the right to attend and participate in the meeting as
provided by this section.

E. The notice to unit owners pursuant
to subsection C of this section must call for a meeting of the unit owners to
be held not less than fifteen days and not more than thirty days after the date
the notice is mailed.� The notice must contain:

1. A description of the nature of the
construction defect action, a description of the alleged defect or defects and
the relief sought.

2. A disclosure that the construction
defect claim may result in increased costs to the association in maintenance or
repair or cause an increase in assessments or special assessments to cover the
cost of repairs.

3. A disclosure that the construction
defect claim may result in increased costs to the association to cover
litigation costs, including ATTORNEY fees.

4. The
fee arrangement agreed to by the board of directors and the attorneys
representing the association, including the percentage of the recovery from the
defendant that the attorneys may receive.

F. The
meeting to consider instituting, defending or intervening in litigation
pursuant to section 12-552 and in compliance with this section shall include a
presentation by the association or its attorneys of the alleged construction
defects.

G. The CONDOMINIUM developer and the
construction professionals against whom the construction defect is alleged have
the right to:

1. Attend the meeting required by
this section.

2. Make a presentation regarding the
condition of the property, any investigation completed, any proposed scope of
repair or remediation, including any remedy offer made under section 12-1363.01,
and any available alternative dispute resolution process.

3. Respond to questions asked by unit
owners.

4. Request access for additional
inspections or request a subsequent vote of the unit owners on the remedy offer
or any modified remedy offer made in writing by the developer or construction
professional. The ASSOCIATION may deny requests made pursuant to
this paragraph.

H. The association shall maintain a
record of all votes until the conclusion of the construction defect action,
including any appeals.� The association may not commence a construction defect
action unless authorized by an affirmative vote of at least two-thirds of
the unit owners of the association who are eligible to vote and whose votes are
collected at, and not later than, the meeting required by this section.� the
association may not adopt a vote requirement that is greater than the
two-thirds requirement prescribed by this subsection for the purposes of
commencing a construction defect action.

I. This section applies in addition
to any applicable provisions of title 12, chapter 8, article 14 and chapter 18
of this title.

J. For the purposes of this section:

1. "Construction defect"
means a material deficiency in the design, construction, manufacture, repair,
alteration, remodeling or landscaping of a unit or common element that is the
result of one of the following:

(
a
) A violation
of construction codes applicable to the construction of the unit or common
element.

(
b
) The use of
defective materials, products, components or equipment in the design,
construction, manufacture, repair, alteration, remodeling or landscaping of the
unit or common element.

(
c
) The failure
to adhere to generally accepted workmanship standards in the community.

2. "Construction
professional" means an architect, contractor, subcontractor, developer,
builder, builder vendor, supplier, engineer or inspector performing or
furnishing the design, supervision, inspection, construction or observation of
the construction of any improvement to real property.
END_STATUTE

Sec. 7.
Effective date

This act is effective from and after
December 31, 2026.