Construction Defects: Will there actually be a fix in 2017?

Since 2001, construction defect legislation and litigation have had a significant impact on the construction of new affordable housing options in Colorado. Many developers, affordable housing advocates, and local officials attribute to the rise of construction defect cases to the decline of affordable owner-occupied attached housing in Colorado. Communities are faced with the decline of this housing stock in their communities and a large gap in affordable housing. This type of housing is not only popular for first time home buyers, but the aging population also is looking to downsize and, wherever possible, live closer to transit options.

Today, owner-occupied attached housing (condos)represents just 2 percent of new housing starts in the Denver metro area, compared to 20 percent in 2007. Because of this, would-be first-time home buyers, including young professionals, have significantly fewer options and are increasingly being forced into the skyrocketing rental market. The lack of condo options also leaves behind seniors who are looking to downsize from single-family homes. Rising rents all over the state of Colorado and lack of housing stock are amounting to a “housing squeeze” on Colorado citizens. The impact on low income families is even more severe.

Since the legislature has yet to adopt a statewide fix, several municipalities have adopted their own reforms. These communities include: Aurora, Arvada, Broomfield, Castle Rock, Centennial, Colorado Springs, Commerce City, Denver, Durango, Fort Collins, Lakewood, Littleton, Lone Tree, Loveland, Parker, Westminster, and Wheat Ridge. Each municipality designed a reform ordinance that they believe will work for their community. Solutions vary from allowing a developer a period of time to fix the issue, to utilizing plat notes, to creating barriers for suit involving specific building code violations.

However, this is not just a metro Denver issue. For example, several mountain towns are working to form a coalition to solve the issue in their communities. Even more rural, less populated areas are feeling the effect of the lack of residential ownership opportunities for their citizens.

The Colorado Municipal League supports common sense reforms to Colorado’s construction defect statute and that reform is in SB 16-156. This legislation creates a quick resolution process that is fair to homeowners who need repairs while protecting the rights of all owners in a community. CML is strongly advocating for the bill. At the same time, SB 17-157 as introduced provides a weaker change to the construction defect law while preempting meaningful reform at the local level, and the League is opposing this insufficient measure.

CML supports:

  • Alternative Dispute Resolution
  • Notice given to all unit owners
  • A simple majority vote of all unit owners before entering in a lawsuit

CML opposes:

  • Local preemption without a meaningful, comprehensive statewide solution

Construction defect reform is as important to local communities as it is to developers and contractors. There are clearly many forms a solution can take and local governments are already far ahead of the state in attempting to bring back condominiums in their municipalities. Municipal citizens need high quality affordable housing sooner rather than later, and local governments will continue to help provide that most basic of needs.

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