March 30, 2017 12:02 PM UTC

Developers Torpedo Best Construction-Defects Deal They're Likely To Get--Again

• 3 Comments
• by: Colorado Pols

As the Durango Herald’s Luke Perkins reports, a once-heralded deal between Republicans and Democrats in the Colorado General Assembly to address the perennially fraught issue of making it harder for homeowners in multifamily developments to sue builders over defects in construction is coming apart:

The Homeownership Opportunity Alliance, which is a group of community leaders backing efforts to reform construction defects litigation, has pulled its support on two bipartisan measures aimed at easing the problem.

Assistant House Minority Leader Alec Garnett, D-Denver, said the alliance voted Tuesday night to pull its support from House Bill 1279, which would require a homeowners association gather a simple majority of votes from unit owners in order to pursue litigation for defects.

A dispute concerning the period of time available for HOAs to gather votes and how it would affect the time frame when litigation could be brought forward by homeowners caused the alliance to pull its support.

The bill had been scheduled for committee hearing Wednesday, but it was postponed after the alliance’s decision. The measure would pause legal maneuvers for 120 day while votes for moving forward with litigation were gathered from homeowners.

This would extend the period when contractors would be liable for defects by an additional four months, Garnett said. “You’re willing to say: ‘We don’t want anything; this is worse than having significant reform moving forward because of 120 days.’ That makes me suspect.”

As the Colorado Statesman’s Ernest Luning reports, nothing seems to be good enough for builders short of forcing homeowners into binding arbitration–a nonstarter with homeowners’ association groups and activists on the issue:

“I’m frustrated that the folks who seem to care most about this issue continue to move the goal posts,” Garnett told reporters at a media briefing. [Pols emphasis] “I’m just frustrated that we got to that point and there’s unanimous opposition from this huge coalition that represents everyone who wants to work in this space,” he added.

The [Homeownership Opportunity Alliance], allied with the 40-member Metro Mayors Caucus, has pushed hard without success in recent years for legislation to rewrite the rules governing how homeowners can pursue complaints against condominium builders for construction defects. Earlier this session, the groups backed a Republican-sponsored Senate bill that would have set many of the same steps as House Bill 1279 while also requiring homeowners to submit to binding arbitration or mediation before filing a lawsuit, a provision Democrats reject, saying it denies homeowners the right to pursue claims in court.

This latest compromise between Democratic Rep. Alec Garnett and GOP Reps. Cole Wist and Lori Saine was hailed by House Speaker Crisanta Duran as the long-awaited solution to a problem that the legislature has been unable to “solve” for years running. The Build Our Homes Right coalition, which has consistently fought attempts to fully take away homeowners’ rights to sue while working in good faith, were prepared to accept it as a compromise that didn’t go too far against homeowners.

But just as we’ve seen in years past, nothing short of shunting all construction defect claims into arbitration will suffice for the builder industry. It’s important to keep in mind that the “shortage” of affordable condos in the Denver metro area cannot be conclusively traced back to any individual policy, like laws that allows homebuyers to sue over defects. The correlation vs. causation at the heart of this debate is in no way settled, and opponents of these bills say the situation is being manipulated–at best–by builders to gut basic protection for consumers from shoddy workmanship.

With builders showing the same lack of good faith they’ve demonstrated for years now on this issue, we think it’s time for the legislature to step back and think about what the whole point of this exercise is. As honest attempts at compromise are shot down by the industry’s lobbyists, maybe we should revisit who is benefiting–and what problem we’re really solving.