Equal. Protection. Read again: Equal. Protection. Those are important words in America. Those two words succinctly state the core purposes of a democratic government. Each citizen should stand on an equal footing with all other citizens. The basic function of government is to ensure equality under the law. Government must protect a citizen’s rights in the legal system, and must not interfere or discriminate. Discrimination is the opposite of equality. Rejection is the opposite of protection.
Senate Bill 15-177 is an absolute travesty of equal protection under the laws. This proposed legislation will completely deprive condominium purchasers of the right of access to a court of law when a developer builds a defective condominium. This bill interferes with equal access to justice and discriminates against condominium owners. You should be outraged and share your outrage with your legislator.
This piece of legislation, if passed, will permanently deprive condominium owners of the right to go to a court of law to obtain compensation for a poorly built condominium. This legislation would create a less favored class of citizens for purposes of access to justice. Condominium owners would be forever required to use only arbitration, whereas all other property owners are able to go to court if their poorly built property is not repaired under a warranty claim.
As proposed, here is how it works. Because developers and builders have had to previously pay claims for defective construction, they now insert dispute resolution provisions which favor the developers into the covenants for a new project. The developer prepares those covenants before anyone has built or bought any homes. When condominium owners assume control of the community and become aware of these unfavorable provisions, they may vote as condominium owners in this democracy of ours to change those covenants for another dispute resolution process of their choosing. SB 15-177 provides that even after all the owners purchase their condominiums and discover that they are defective, they will never have the opportunity to amend their covenants to go to court to claim fair compensation.
The bill creates a legislatively-imposed requirement that construction defect claims be submitted to arbitration instead of court and surprisingly claims that “represents a commitment on the part of the unit owners and the association” on which the developers are entitled to rely. This statement glosses over the fact that when the covenants are written and filed, there are no unit owners and there is no association. How can a unit owner, who hasn’t yet purchased a condominium, commit to limited access to justice?
The reason for all of the publicity concerning construction defect settlements is not because of construction defect litigation; it is because of defectively constructed condominiums. The developers and their insurance companies are not paying settlements because of litigation; they are paying settlements because reliable engineers and other experts have concluded that the condominiums were poorly built and not in compliance with existing codes. The developers and builders need to prevent the construction defect problems on the front end, and not avoid liability through an onerous dispute resolution process on the back end. There would be no construction defect settlements if the units were properly built. The single largest investment for most citizens is their home. Their life-savings should not be jeopardized because the developers and builders are able to minimize liability by forcing the owners to arbitrate. The developers and builders have the right to go to court. Why should the condominium purchasers be forced into a construction-friendly arbitration process?
The bill goes even further in its discrimination against condominium owners. Every other person has a right to hire and pay experts or consultants to investigate whether the problems in a building are caused by defective construction. Such a preliminary investigation is the prudent and responsible first step before claiming that construction defects exist. But Senate Bill 15-177 will prevent a homeowners association from hiring experts and consultants to conduct such an investigation until 60 days after a very detailed notice to the owners. That notice requires the association to describe the costs of litigation, the impact on market values and marketability, and describe how the association intends to pay for a lawsuit. In other words, the construction industry is requiring homeowners associations to send out a letter which they worded to scare and deter homeowners from pursuing construction defect litigation, while at the same time depriving the homeowners association of the very ability to investigate whether there are defects in the first place.
Every condominium community in Colorado has a right to amend their declaration of covenants. Those covenants are akin to a constitution, and the property owners can change their constitution if they want. But Senate Bill 15-177 states that the provisions inserted by the developer and the builder which protect them are in everybody’s best interest, and that the owners don’t even get the right to change their constitution. Is that equal protection under the law, or is that discriminatory rejection of condominium owners? This pushes the pendulum too far in the opposite direction.
Right now, the only incentive or deterrent to prevent defective construction is the prospect for litigation if the construction is not properly done. Senate Bill 15-177 creates improper incentives and imposes improper solutions. If this bill became the law, the developers and builders would have even less incentive to build condominiums properly. They would know that any claim for defects would be steered into arbitration services. Arbitration services are preferred by developers and builders because the awards are lower.
Developers and builders have the right to go to court in their legal disputes. The owners of single-family homes have a right to go to court for their building defects. The owners of commercial buildings, apartment buildings, farms and ranches all have the right to go to court to air their legal disputes over defective construction. Senate Bill 15-177 creates a new subclass of citizens who don’t ever get to go to court: condominium owners. Do all of you condominium owners and future condominium owners think you are second-class citizens? I don’t. Call your legislator. Write them. Call and write again. You are entitled to equal access to the courts and equal protection under the law. Equal. Protection.
The attorneys at Altitude Community Law P.C. can provide guidance concerning the process for properly reporting claims to insurers. Please feel free to contact us if you have any questions at 303.432.9999.