Construction defect class actions in Colorado are now in jeopardy after a new bill introduced in the Colorado Senate aims to take away rights from condominium homeowners and protect builders.
Nearly a decade ago, Colorado passed a construction-defects law allowing at least two condo owners to bring a class action against dishonest builders with poor construction services, therefore protecting households from potentially dangerous structures. However, Senate Bill 177, currently sponsored by Sens. Mark Scheffel and Jesse Ulibarri and Reps. Brian DelGrosso and Jonathan Singer in the House, puts into place legal hurdles, such as required mediation and a majority of condo homeowners agreeing to a lawsuit, before the lawsuit can even be filed.
Proponents of SB 177 blame legal recourse as to why developers have been hesitant to build condos, despite the affordability to build and own this type of property. Advocates also claim that the new legislation would revive the condo market, bringing more jobs and housing options to Coloradoans.
Despite proponent’s assertions, Boulder-based economist Pat Pacey conducted a study to learn the real reasons behind the slowdown of Colorado condos built. According to Pacey’s findings, Colorado’s construction-defects law is nearly insignificant to the slow condominium development, considering condominiums are affected by strict lending requirements, expensive down payments, higher purchase fees, lower real income of potential buyers, later marriage rates, high college debt and even the continual growth of the apartment market since 2006.
“Clearly, the increased down payment, origination fees, mortgage insurance premiums, reduced real earnings are all more significant financial deterrents to home ownership than any barrier from construction-defect laws,” Pacey said.
Jonathan Harris, president of the non-profit Build Our Homes Right, which commissioned Pacey’s study, says SB177 makes it harder for homeowners to protect their consumer rights.
“If you give builders this free pass, you are inviting substandard construction,” Harris said.