Lakewood construction defects law
The following is a condensed version of an October 14, 2014 story by
Reporter- Denver Business Journal
For the full story, see:
The city of Lakewood on Monday became the first Colorado municipality to pass an ordinance that changes the way the state’s construction-defects law works within the city, by a vote of 7-4.
The ordinance, introduced by Lakewood City Council last month, seeks to take some of the risk out of building owner-occupied condominium units. The measure intends to add in some additional steps before a lawsuit is filed under a state law that allows homeowners associations to bring suit against builders of for-sale multifamily homes for construction defects.
Lawsuits stemming from the current construction-defects law have driven up the cost of insurance of for-sale homes and the added cost and risk of litigation have caused most developers to shy away from condo development, especially in lower price ranges.
Lakewood’s ordinance does three things:
Requires that “informed consent” is obtained from the majority of the owners in the association before claims are made against builders or developers. Only “non-declarant” homeowners would be included in this group, so if the builder still owns part of the property, that builder is not asked whether or not to sue itself.
Encourages alternate dispute resolution, or finding a faster, cheaper way to solve a construction defects problem instead of litigation.
Gives builders or developers the “right to repair” defects upon notice that the defects exist.
Community members and business leaders from all over the metro region turned up in Lakewood on Monday to give their opinions about the ordinance.
Some groups, such as the Community Associations Institute, say that the ordinance will open the door to shoddy construction and take away rights of homeowners by allowing builders to “legally to shirk responsibility for fixing construction defects they created,” according to the CAI.
But Lakewood Mayor Bob Murphy says that the ordinance actually affords homeowners more rights because it allows them more say and more options in the process of determining what kind of action to take in the event that a construction defect is found.
Real estate experts and government officials have called for reform of the state’s standing construction defects law, with an unsuccessful bill going before the Legislature earlier this year. New legislation is planned for the 2015 session.
The ordinance requires that 51 percent of the homeowners agree to go forward with a lawsuit.