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Councilors compromise on construction defects law

Policies would protect builders from frivolous lawsuits
Homeowners at Rivergate Lofts, south of downtown Durango, won a $26.4 million settlement in 2011 after it was determined there were significant stabilization and support problems associated with defective construction. The Durango City Council is considering making it more difficult for homeowners associations to file lawsuits in an effort to spur more construction of homes and lower their prices.

Greater protections for condominium builders to guard against frivolous construction defects lawsuits are moving forward within city limits.

The Durango City Council did not take any formal action Tuesday, but councilors talked through several concerns raised by Councilor Dick White, and they agreed to strike one of the three pieces of a potential new ordinance. The council will formally consider the ordinance again in early July.

Earlier this year, the council had anticipated the Colorado General Assembly might act to revise the law that has slowed condominium construction. But the negotiations collapsed.

When it seemed likely to fail, councilors talked about the need to pass an ordinance and act locally.

“We really want our community to have housing,” Mayor Christina Rinderle said.

The council is considering an ordinance that mirrors what 12 other cities across the state have passed. It could give developers the right to repair their construction, and it could require a majority of homeowners to approve a lawsuit before it is filed in court.

The council decided to take out a provision that would require homeowners associations to abide by a mediation or arbitration process required by the governing documents of the association. The law would retain the homeowners associations’ rights to amend the documents and file a lawsuit instead.

This change would likely require a two-thirds majority, like other changes to governing documents, Rinderle said.

“It is some protection for the people to define their own destiny,” Councilor Dean Brookie said.

Some residents told councilors in April that homeowner association boards are elected to make decisions for their members. But when lawsuits for shabby construction are filed, owners can’t refinance or sell their property, and so the governing association should be required to get consent from at least a simple majority of all the owners, Rinderle said. Requiring a majority to file a lawsuit should help ensure that the concerns are real.

“If there is a legitimate defect, those homeowners should be able to pursue that remedy,” she said.

But new laws like this proposal are important because they are spurring condo construction in Denver and Lakewood, she said.

White was convinced of the need for this ordinance after meeting with homebuilders and learning about the predatory practices of trial lawyers, he said.

mshinn@durangoherald.com

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