By Deborah Goonan, Independent American Communities
Colorado Mayors continue to undermine construction defect statutes enacted several years ago to protect consumer interests. The latest city to join the ranks of chipping away at homeowner rights is Denver, following the lead of Lakewood and Aurora. City Council voted 12-1 in favor of the new ordinance.
While it makes sense for any association to carefully weigh the costs vs. benefits of litigation, and there is value in deterring frivolous claims, critics are concerned that the ordinance goes too far in restricting condo association owners rights to file a lawsuit. That benefits developers and construction companies at the expense of consumers.
A key provision of the new ordinance requires a majority vote of a condo association to initiate a construction defects lawsuit. While that may sound reasonable, consider the fairness of requiring a vote when the developer still happens to own a majority of the condo units, or when the developer still appoints one or more members of the association board.
The ordinance will also require Associations to abide by provisions in sales contracts that require binding arbitration in lieu of a civil lawsuit, but, as covered in a previous blog, binding arbitration tends to favor developer interests rather than consumer interests.
Mayors claim that reducing liability for builders will encourage them to construct new condo developments rather than more apartment buildings. But there’s no evidence of high buyer demand for condos, nor a strong desire by builders to begin investing in new starter-priced condo projects.
Below are the latest two news releases in the Denver area.
Denver council votes 12-1 in favor of condo defects ordinance
Jonathan Harris, president of Build Our Homes Right, said the passage of the ordinance left him “frustrated.”
“I’m encouraged at least one person seems to understand the problem,” Harris said of Kashmann’s “no” vote. “Unfortunately, it passed at the expense of the consumer.”
Harris said the ordinance will make it more difficult for associations and individual owners “to deal with defects if they have a problem.”
Earlier article with more details on the ordinance:
Denver council’s first vote for construction-defects reform law is unanimous
“The solution for homebuilders is to build the homes right in the first place, not take away the rights of homeowners,” said Jonathan Harris, a Denver condo owner and president of the group Build Our Homes Right.
But council members said it was some of the details added into the proposal for Mayor Michael Hancock by assistant city attorney David Broadwell that make this such an acceptable plan.
The measure demands that condo owners follow any mandates embedded in housing contracts that require arbitration rather than lawsuits, and several council members applauded a provision that neutral arbitrators be selected to resolve such disputes.