CONSTRUCTION DEFECT REFORM BILL STILL NOT INTRODUCED

Among political maneuvering and complaints of delay from bill sponsors, a construction defect reform bill aimed at sparking construction of condominium units and transit oriented developments has not yet been introduced.  With the legislative session officially ending on May 7, 2014, introduction and passage this year is in doubt.

According to the Denver Business Journal, the bill is being held up by majority leaders because of the fear that the bill has sufficient support to pass.  The bill, which has support from local mayors and business leaders, would protect builders who choose to build condominiums from construction defect law suits.   The belief is that the “Legislature must make it harder to file class-action lawsuits regarding condominium construction or risk losing that segment of the market completely— and trial lawyers and homeowners groups who say that limitations on homeowners’ rights won’t revive this form of affordable housing” (Denver Business Journal April 30, 2014).    These statements are based largely on a report completed by an independent research group which blames large scale litigation as the primary reason the construction of condominiums has diminished in the state over the last few years.  The slow-down in the construction of units in this market segment has made the availability of affordable housing units limited as well.

Opponents of any construction defect reform bill however, believe that the protections contained in the Colorado Construction Defect Reform Act are essential to protect purchasers of these units.  Purchasers of units within condominiums can at times, become subject to large scale repair requirements due to the actions of builders in communities.  During this time, prosecuting a construction defect case can be trying even with a cooperative builder.  When negotiations become a problem, it is absolutely essential that the Association be able to have access to the legal system.

Instead of introducing the construction defect bill, SB 14-219 was introduced into the Senate.  This bill requires a study on affordable housing be created and delivered to the legislature.  This study will look at, among other things, (i) current market trends for owner occupied affordable housing, (ii) changes in demographics and behaviors of consumers of affordable housing and rental affordable housing; (iii) a review of the availability of financing for purchasers of owner-occupied affordable housing and for builders of affordable housing,  both as owner occupied and as rentals; (iv) availability of insurance for these units; and (v) a general review of federal and states laws that impact the construction of new owner occupied affordable housing units.   A full list of the study requirements is set forth in the proposed bill.  The study will be due before March 15, 2015.

While studying the problem may shed some light on the issue as to why construction of condominiums and other affordable housing products has come to a virtual stand- still the study will not provide the incentive hoped for by the construction industry that may entice them to resume the construction of condominium units and other affordable housing products.   Both sides of this issue continue to gear up for a long awaited debate on the issues relating to condominiums, construction defects and the need to protect both the builder as well as the homeowner.