Construction Defects Call to Action

February 18, 2015

Dear Members,

As you are aware, construction defects reform is a top legislative priority for DMAR and CAR. Colorado communities are facing serious housing challenges. Rents are skyrocketing--rising faster than San Francisco and New York--making the Front Range one of the most expensive places in the country to live. The dream of homeownership for many Coloradans may soon be unreachable.

That's because a defect in state law has virtually halted the construction of affordable and attainable housing across Colorado. The condos that historically provided the most practical options for first-time homebuyers, as well as seniors looking to right-size their housing, are not being built because of the threat of time-consuming litigation.

Lawmakers can fix this defect in Colorado law by supporting Senate Bill 177. The consumer protections in Senate Bill 177 will create a quick and fair resolution for homeowners who need repairs while protecting the rights of all homeowners in a community.

Although construction defects is considered to be a state issue, DMAR has worked tirelessly to educate municipalities and counties on the importance of a diverse housing portfolio and the power of homeownership. These efforts have paid significant dividends as the Metro Mayors Caucus has called upon the state legislature to pass sensible reform. Some municipalities, such as Lakewood, have even taken it upon themselves to pass local construction defects reform bills. Still, a uniform, state solution is needed to promote increased development of owner-occupied housing.

CAR has joined the Homeownership Opportunity Alliance, a coalition that has been working to create a homeowner-protection bill with regards to construction defects. Senate Bill 177 would require a majority consent of the homeowners, not just the HOA Board, to enter into any litigation, as well as a common sense notice to each and every homeowner informing them of the affects this would have on their property. In addition, it encourages alternative dispute resolution (ADR) as the preferred method of resolving these disputes.

Currently, when an HOA is tied up in litigation, individual homeowners are unable to sell or refinance because banks will not finance properties with such encumbrances. It is important that construction defects are remedied, and homeowners have recourse, but it needs to happen in a way that will not restrict other homeowners’ property rights, nor deter development of a key property type in the state of Colorado.