Few issues before the Colorado Legislature this year reflect more polarized views than the latest attempts to reform the state’s construction defect laws.
If you believe homebuilders and their allies, the drastic downturn in condominium construction in Colorado is chiefly a result of the cost of insurance for developers, contractors and subcontractors. This, in turn, is the result of large judgments in defect lawsuits that have prompted trial lawyers to solicit more such actions, as trial lawyers are wont to do.
If you believe some unfortunate local condo owners who have struggled, often for years, to get shoddy construction fixed, you might conclude with them that it should be easier, not harder, for homeowners to get relief from defective workmanship.
We actually agree with both arguments, which makes navigating this year’s proposed legislation a little tricky.
One bill seeks to make it harder for lawyers to sign up a handful of owners and then file suit on behalf of all the units in a development — this is the ticket to a big award — by requiring a majority vote of all the homeowners in the association, not just a vote of its board. It also seeks to impose mediation and/or arbitration in most cases, which would remove much of the financial incentive produced by outsized jury awards.
Another bill seeks to make it harder to sue by severely limiting the amount of time — “statute of repose” is the lyrical term of art — a homeowner has to file suit after a project is completed, from the current six years down to three.
With so much money at stake, there are well-funded studies and arguments on both sides. Caught in the middle are would-be, first-time homebuyers, who are finding it increasingly difficult to find homes they can afford. In the absence of action from the Legislature, some communities — notably Lakewood, last year — have taken steps to reduce builder liability in order to get construction moving again.
We do not believe it is either wise or necessary to cut the amount of time homeowners have to discover and seek redress for defects. Colorado’s six-year period is already among the shortest in the nation, and some defects — hidden plumbing leaks that lead to mold, for example — can take longer than three years to discover.
On the other hand, we do believe in making this less fertile ground for trial lawyers and their hefty contingency fees. Requiring a majority vote of an HOA’s members rather than merely its board, and requiring resort to mediation and arbitration before or instead of court, strike us as fair ways to address the problem.
We agree with Housing Colorado, a nonprofit devoted to the expansion of affordable housing, that the latter steps are reasonable ones to take in the face of our current housing shortage.
— Dave Krieger, for the editorial board. Email kriegerd@dailycamera.com. Twitter @DaveKrieger
