DENVER — When lawmakers return to the Colorado State Capitol next week, they will have a full plate of issues to tackle. One that they will address are possible reforms to Colorado’s construction defect laws.
That has some homeowners concerned.
When Daniel Gonzales bought a new townhome in the Sloan’s Lake neighborhood in 2015, he thought he was making a wise decision.
“When I was looking to upgrade, I thought, 'Let's do new construction. It'll be nice and reduced maintenance,'” he said.
But three years later, he noticed a problem — a possible roof leak. He contacted the original builder, who he said provided only a “band-aid” fix.
“And sure enough, in the next rainstorm, I notice the leak reappear,” Gonzales said.
He said his neighbors had a similar problem.
After getting nowhere, they decided to take the matter to court.
“By the time we hired a lawyer, six of the 12 units in the complex were reporting leaks or waterproofing issues of some kind,” he said.
Homeowners groups say Colorado’s current laws protect builders more than homeowners.
For instance, they say homeowners have just six years to hold builders accountable for shoddy work, even though it can take just as long for homeowners to notice major problems like roof, siding, and window leaks.
“In Colorado, because of the way the laws are structured, the deck is sort of stacked against homeowners,” Gonzales said.
But Peter Lifari said it’s been anything but smooth sailing for homebuilders. He is a housing fellow at the Common Sense Institute and CEO of Maiker Housing Partners in Adams County, a housing authority that owns, operates, and develops multifamily affordable housing.
“We're on the Titanic. The band is playing, and we've hit the iceberg,” he said.
Lifari said the growing number of lawsuits against builders has led to a sharp drop in one of the most affordable types of housing for people looking to buy a home.
“What we found was, unfortunately, the condo development has essentially ground to a halt,” LiFari said.
LiFari authored a report last September detailing the decline in new condos in Colorado.
“What has happened is because of escalating risk in the construction litigation environment from lawsuits, insurance costs have just gone through the roof,” said LiFari. “Late last year, there were only 23 active condo developers in the front range compared to 146 back in 2007. And so, it has essentially created a de facto uninsurable housing type. And we've seen developers flee from the space.”
Lawmakers will consider legislation this year that the sponsors say will give homeowners more options to deal with construction defects.
“This bill needs to give homeowners more options to be made whole. Whatever we do has to keep a homeowner front and center,” said State Rep. Shannon Bird, D-Adams and Jefferson counties. “If there's a problem with your house, you need to be able to get it fixed. If that problem caused you damages or harm, you need to be made whole.”
Bird said the legislation could save homeowners money in the long run.
“Litigation is costly. And quite frankly, it doesn't always keep a homeowner whole,” Bird said. “When you sue somebody, usually it's a really long process before you can ever, ever get money back or maybe have a repair made.”
LiFari favors legislation that would limit who can be held responsible for defective construction.
“Right now, essentially you have these large umbrella policies and essentially the entire project is sued. What we would like to do is narrow that scope,” LiFari said.
He said this “ensures that each party involved in the construction process takes responsibility for their specific area of expertise.”
LiFari said he also supports a right to remedy law, in which “the responsible party is granted the right to work with the homeowner, find and be obligated to pay for a qualified third party to repair the defect promptly.”
He said this would quickly resolve matters and would be a win-win for homeowners and homebuilders.
LiFari said fewer lawsuits would make it easier for developers to build new condos, creating more affordable options for people looking to buy a home.
“This is the path forward and I think this is the session we can get it done,” LiFari said.
Gonzales said he worries homeowners will end up losing more than they already have if lawmakers pass legislation supported by the construction industry.
“I feel like maybe the construction industry is trying to use affordable housing as an excuse to further weaken construction defects protections for homeowners,” he said.
As for his case, Gonzales said after several years of litigation, he received a settlement. But he said it didn’t cover all of his expenses.
“I still had to write a five-figure check on top of that to make the necessary repairs,” Gonzales said.
