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Committee advances bill to limit long‑tail lawsuits against property appraisers
Summary
The Business Affairs & Labor Committee voted to send Senate Bill 35 to the Committee of the Whole after sponsors and appraiser groups described a compromise that would bar most stale claims against appraisers after five years while preserving exceptions for fraud and discrimination.
The Business Affairs & Labor Committee on Thursday advanced Senate Bill 35, a measure aimed at protecting licensed real estate appraisers from lawsuits brought long after they completed appraisal work while preserving avenues for consumers to pursue timely claims.
Representative Andrew Clifford, the bill’s sponsor, said the legislation restores balance after the 2008 mortgage market crisis and the ensuing wave of litigation that left appraisers vulnerable to suits years after they had completed a report. “Federal law, state law, record keeping requirements for appraisers is 5 years,” Clifford told the committee, and the bill aligns liability exposure with that retention period.
The bill’s sponsors and appraiser witnesses said the measure is a targeted response to a pattern in which entities that bought litigation rights years after loans were made pursued appraisers long after files had been disposed of. Brett Wilkerson, a certified general real estate appraiser, testified that some firms sued appraisers “10 to 15 years after the appraisals were completed,” describing a practice that threatens the viability of appraisal businesses and the profession’s ability to defend stale claims.
Consumer‑side groups and trade organizations described negotiations that narrowed earlier proposals. Casey Harpring, an attorney who identified himself as representing the Colorado Trial Lawyers Association in a neutral posture, said last year’s draft had included a statute of repose that “would have blocked homeowners and consumers from filing claims before they even knew there was a problem.” Under the current draft, Harpring said, legitimate consumer claims remain available because the bill preserves exceptions for fraud, misrepresentation and discrimination and clarifies that the five‑year limit starts when an appraisal is completed and delivered.
Colorado Mortgage Lenders Association Executive Director Betty Knecht told the committee the amended bill addressed lenders’ prior concerns and that the association had moved to a neutral position. Appraisal management companies and appraisers also testified in favor of the five‑year repose, saying it matches the profession’s federally mandated file‑retention period and is necessary to maintain panels of qualified appraisers.
After questions and a brief amendment phase in which sponsors said they had no changes, Representative Redlin Marshall moved to send SB 35 to the Committee on the Whole with a favorable recommendation; the motion was seconded. The committee approved the bill by voice/roll call, 12–0 with one excused.
The bill as presented forbids suits against appraisers brought after the specified period except where fraud, intentional misrepresentation or discrimination is alleged, and it preserves lenders’ and homeowners’ ability to pursue claims within the limitations period. Sponsors emphasized the bill is not intended to shield appraisers who commit professional misconduct.
The measure will next be considered by the Committee on the Whole.
Ending note: Sponsors said they will continue outreach to affected stakeholders as the bill moves through subsequent stages.
