DENVER – Homeowners in Colorado are bracing for another attempt by the Legislature to curb construction-defects lawsuits in an effort to spur the development of affordable housing.
The hot-button issue failed during the last legislative session, but it is likely to appear again in the next session that begins Jan. 7.
The overall goal is to spur housing development by minimizing fear of lawsuit. Homebuilders say they have few plans for building attached for-sale housing in the state, suggesting that the risk of being sued is “just not worth it.”
But homeowners say they need protections from defective construction, and lawsuits are their only recourse.
Chuck and Corinne Owens, Durango homeowners, experienced the problem firsthand when their townhome suffered major problems over the course of two years.
“There were major drainage problems that also caused serious damage in freeze and thaw conditions,” explained Chuck Owens. “We had rotted timbers, and the stucco on the exterior walls was done poorly and needs to be replaced.”
The retired couple said they need legal protections to find a solution.
“This has been a nightmare and taken so much of our time, but the repairs have to be made, there’s no way around it,” Owens said. “The legal protections that we have are important.”
The legislation last year would have required a majority of condo unit owners in a homeowners association to back filing suit against a homebuilder, instead of two unit owners, as is required under the current law.
It also would have mandated arbitration, and required notification to condo owners within an association about potential impacts as a result of filing a lawsuit.
Some homeowners could be pulled into a lawsuit if their association decides to move forward with legal action. During the course of that lawsuit, which could last several years, those owners might be unable to refinance or sell their units.
Lakewood recently became the first Colorado city to pass an ordinance aimed at curbing defects lawsuits. But that ordinance is likely to face numerous legal challenges without action by the state Legislature.
The reform effort has been pushed by a coalition, including homebuilders and the Colorado Metro Mayors Caucus.
A spokesman for the coalition could not immediately be reached for comment Friday.
Incoming House Speaker Dickey Lee Hullinghorst, D-Boulder, said she expects legislation to appear again next session, starting in the Senate, as it did last session. The bill was pushed by Democratic Sen. Jessie Ulibarri of Commerce City.
But Hullinghorst wonders if tackling construction-defects lawsuits is the way to address the affordable-housing issue.
“My feeling is that we need a much more comprehensive approach than just construction defects,” Hullinghorst said. “That’s just a small part of it.”
One target has been millennials, who feel that homeownership is simply out of their reach. Motivating builders to develop affordable housing would help place younger buyers into homes.
But Hullinghorst said there are other issues that should be addressed first, including student debt.
“This is probably a very appropriate time to have a broader conversation,” Hullinghorst said. “What do we really mean by affordable housing?”
Even though the measure was pushed by a Democrat last session, the issue crossed party lines, with Democrats and Republicans expressing concern and praise.
Senate President Morgan Carroll, D-Aurora, who will serve as Senate minority leader next session after Democrats lost control of the chamber, said the negotiating will have to take place in the House.
“At this point, the House negotiation is going to be more critical,” Carroll said. “For us, it’s always been about affordable housing, and the best way to get affordable housing isn’t necessarily taking a whack at people’s rights.”
