- A new construction defects law that could revive condominium development has passed the Colorado House unanimously and is expected to gain Senate approval as well, according to CBS Denver.
- The new legislation would reverse new-development obstacles contained in the existing law, such as a homeowners association's (HOA) ability to sue condominium developers without first obtaining homeowner approval.
- Developers say the current law has led to "frivolous" lawsuits that have all but halted condominium development in the state. Since 2005, condominiums' share of the new housing market has dropped from 20% to 2%.
The new law would give builders the right to work out any defect problems directly with unit owners rather than requiring them to go through the HOA. The bill would also require a majority of homeowners to vote in favor of legal action before any defects lawsuits can be filed. Currently, all it takes to proceed with a lawsuit is a nod from HOA board members.
The current law, passed in 2005 with the goal of protecting homeowners from shoddy construction, has also cost builders more for insurance, as their policies must cover a wider range of potential defects.
An August Wall Street Journal report indicated that the current construction defect laws in Colorado also negatively impacted the area's the entry-level home market because, according to the city of Denver, the laws cost builders $15,000 more per unit. Condominiums are often an affordable choice for first-time buyers, and their lack of availability has limited buyer options in a city that has seen significant rent and home price growth.
Earlier this month, Miami developer Renzo Renzi proposed a $500 million condominium project for downtown Denver. The project would include 800 units in two high-rises and offer retail, parking and rooftop patios. Real estate experts said the new supply of condos could help meet current demand and could potentially spark new development as well amid the environment of uncertainty under the current defects law.