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Debate surrounding construction defect lawsuits likely to return during Colorado's next legislative session

Opponents believe it will hurt homeowners while bolstering builders
Debate surrounding construction defect lawsuits likely returns next session
Posted at 8:05 AM, Dec 05, 2023
and last updated 2023-12-05 10:14:02-05

DENVER — Buying a home is arguably one of the most important investments a Coloradans make during their lives. However, if the home comes with construction defects, a homeowner can sue the developer.

Construction defect lawsuits have been at the center of a debate that has lasted decades in Colorado, and will likely be revived in the 2024 legislative session. State Representative Shannon Bird, D - Adams and Jefferson Counties, plans on being one of the primary sponsors to introduce a bill that aims to protect the rights of homeowners while also encouraging more condominium construction in Colorado. She expects it to be a bipartisan effort.

“This bill needs to give homeowners more options to be made whole. Whatever we do has to keep a homeowner front and center. If there's a problem with your house, you need to be able to get it fixed. If that problem caused you damages or harm, you need to be made whole," Bird said. “Second, we need to drive down the cost of building more entry level condominiums and one key way to do that is to bring in more insurance companies, and create an environment in Colorado where more insurance companies say this is a place we want to do business. This is a place where we want to insure the construction of more condominiums.”

Bird explained how she believes the two issues, construction defect liability and insurance costs, are connected.

“Colorado had a housing boom in the early 2000s. And many condos were built, many of them weren't built up to standards... The state of Colorado had to take action to make sure that homeowners had an opportunity to be made whole, get their homes built right, and pay them [homeowners] if they suffer damages," Bird said, explaining the history of the construction defect lawsuits. “In the state of Colorado, our population has been booming. And for at least the last ten years, if not more, the number of people moving into our state has greatly exceeded the state's capacity and actual construction of new homes... The biggest share of housing stock being built right now are apartments. We're not seeing mid-level, entry-level condominium construction happening anymore.”

The Colorado lawmaker said condominiums were once the more affordable option for first-time homebuyers.

“We do have a robust litigation environment. Most developers know that if they build a condominium, a lawsuit is certain to follow. I can't speak to the merits of that, whether that's warranted or not. What I do think is a fair response is to give homeowners other options. If there is a problem with your home, we need to give you another way to get the problem fixed that doesn't have to result in litigation," Bird said. “Litigation is costly. And quite frankly, it doesn't always keep a homeowner whole. When you sue somebody, usually it's a really long process before you can ever get money back or maybe have a repair made.”

Lokal Homes, founded a little over a decade ago, constructs condominiums, townhomes and single-family homes at "attainable price-points." Company representatives told Denver7 via email that construction defect litigation has caused condominiums "to be too expensive to insure and most insurance carriers have exited the Colorado market based on the unfavorable legal climate... Because of insurance carriers historic losses with this product, the cost to insure these projects is very expensive and that cost in turn is passed onto the buyers of the condos and townhomes making them more expensive for Coloradans."

Bird said the draft of her bill aims to give homeowners more options to deal with construction defects, hoping to bring more insurance companies to do business in Colorado.

“This legislation is headed in the direction of giving a homeowner more options," Bird said, when asked what the other options would be. "Perhaps you, instead of wanting to sue your builder, maybe you just would like your builder to come in and fix the defect. For many, that's the option. I don't think anybody builds or wants to purchase a home and then enjoys the idea of suing as your only method of making yourself whole. Many of us would like the developer to come in and fix the problem.”

Talk of the bill being drafted is already upsetting many who have fought to protect and expand the right of homeowners to sue their developer. Jonathan Harris, with Build Our Homes Right, got involved with the issue after the condominium he purchased in 2004 came with several construction defects that he said were experienced by a number of his neighbors.

“You can't trust what you're buying nowadays, because the builders are taking shortcuts," Harris said.

Harris and his neighbors filed a lawsuit against their developer, which was settled in 2013, and was meant to fund repairs to the building in Five Points.

“We didn't get enough money to really make ourselves whole. We've done a lot of repairs to this building, and we're gradually doing more and more. We've gotten to the point where all the major stuff is repaired. But it's an ongoing battle," Harris said.

Over the course of his lawsuit, Harris testified at the Colorado Capitol several times, and felt as though most people who spoke out about the issue were fighting against homeowners. He is skeptical about new legislation being introduced next session.

“Every time that it's revisited, the developers are trying to take away more homeowners rights," Harris said. “They've been telling us all along, that that's costing them a lot of money, and blaming us for not building condominiums, and not building low-income housing. And in the meantime, they're telling the shareholders, they're making a lot of money, and this is not going to be a problem for them.”

Ultimately, Harris feels developers are blaming homeowners instead of building quality homes.

“You build low quality housing," Harris said, "And you have more problems.”

Debate surrounding construction defect lawsuits will likely return next legislative session

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