We need your support on this one. As you’ve probably noticed, construction is once again revving up across Colorado. Those cranes and crews are a good sign as we continue to recover from the recession. But, one area of construction continues to lag because of almost-guaranteed litigation, and it’s impacting our residents and their housing options.
Along the 122 miles of FasTracks rail, in areas around Union Station and across the West Line, redevelopments and new developments are sprouting new high-density buildings—but we aren’t seeing a diverse array of housing options. Particularly, almost no affordable condominium homes are being built. In fact according to a recent article by the Denver Business Journal, only 2 percent of our new housing stock is condos, compared to around 20 to 25 percent in other metro areas around the country.
That means an entire segment of homebuyers—from young families and first-time homebuyers trying to build equity to empty-nesters and retirees who are downsizing—is being shut out from affordable homeownership.
Why the drought of affordable condos? Our members tell us that the likelihood of a construction lawsuit makes building affordable condos virtually impossible.
When there is a dispute with a builder over construction, a simple majority of the board of directors of a condo homeowners’ association (HOA) can decide on behalf of all owners to file a lawsuit. In Colorado, it’s less a question of if a lawsuit will be filed and more a question of when. Costs from litigation and additional insurance ultimately have to be paid by the consumer (in this case the homeowner). That means the only condos that are being built today are more expensive. And, when the association ties condo owners to litigation, they then face hurdles when it comes to refinancing or selling their home. Their units are encumbered by the litigation.
Mayors in the metro area have been working on this issue for months, and we have joined their effort. State Sen. Jessie Ulibarri has committed to helping us solve this problem with legislation that would ensure all owners are engaged in the decision to pursue legal action and have information about options to resolve the issue, as well as the anticipated costs and potential impacts on home value resulting from a lawsuit before pursuing litigation. The potential legislation could also require that if alternative dispute resolution (ADR) was a condition in the original purchase agreement, then ADR must be used to try to address any alleged defects.
We feel that this legislation will help rationalize how owners and builders deal with disputes and engage owners in the decision to litigate, fully aware of its potential consequences. It also preserves owners’ right to pursue litigation if they determine that’s the best course. Unfortunately, this potential legislation faces a number of major hurdles—starting with simply being introduced in the legislature.
Here’s where you come in. We need you to contact Senate President Morgan Carroll and House Speaker Mark Ferrandino to tell them why this legislation is so important to Colorado’s business community. Just click here to take action and send them a message.
We hope this bill will be the first step toward ensuring home buyers in Colorado can find the home they want. We believe that as lawsuits decrease, insurance rates will go down and our builders will no longer be deterred from offering a full array of housing options. Join us in supporting Sen. Ulibarri and encouraging community growth in Colorado.
Construction Defects Testimonials
CAR is still requesting that if you have a story or testimonial of a client who was looking for a particular price range, particularly in the more affordable $150-200,000 range, in a particular area but was forced to broaden search area in order to find an affordable property, or a client who was looking to buy near transit-oriented development but could not find any affordable housing, or one who had trouble receiving financing or re-financing due to construction defect litigation taking place in the association please let us know so we may use these scenarios to help explain the need for this legislation and the impacts that it would have on affordable housing in Colorado. Please send these to GovAffairs@coloradorealtors.com.