The Colorado Legislature is considering a measure that would protect homebuilders of multifamily housing from lawsuits for faulty construction. It would do so by requiring arbitration or mediation for any construction-related conflicts between homeowners and builders before any lawsuit and would require that a majority of homeowners in an association vote to approve a lawsuit before it could be filed.
While there are some positive elements of Senate Bill 177, the fundamental premise is deeply flawed. Protecting homebuilders from full accountability for faulty construction will not resolve the multifamily housing shortage in Colorado.
Homebuilders, who are strong advocates of the measure that passed out of the Senate Business, Labor and Technology Committee on Wednesday, complain that the threat of litigation and associated high insurance costs make it cost-prohibitive to build owner-occupied condos in Colorado. Given that there has been a slowdown in such construction, lawmakers have responded with SB 177, which places several barriers in the path to a lawsuit over poor construction on multifamily projects. The link between the two issues is tenuous, at best.
While homebuilders surely appreciate the protection that SB 177 offers, the underlying assumption that ultra-litigious condominium owners are responsible for the multifamily housing shortage should raise more eyebrows than it seems to be. Conversely, to suggest that by making such legal action more difficult, homebuilders will rush to market with new condominium projects is a relatively huge leap of faith. The question, then, is what problem is SB 177 attempting to solve, exactly? Sen. Jessie Ulibarri, D-Commerce City, is a sponsor of the bill and has said that its intent is to help homeowners and homebuilders resolve disputes prior to their entering litigation. While that is an admirable sentiment that could save all parties money, it is somewhat of a curious undertaking for a state legislative body, particularly since the issue of poor construction seems to be somewhat widespread — sufficient, at least, to catch the Legislature’s attention. Given the apparent prevalence of dissatisfied condominium owners attempting to find recourse for shoddy construction, it is curious that lawmakers’ answer is to complicate that system.
While it may certainly be true that housing shortages are complicating life in some communities in Colorado – Durango among them – the answer should not be to raise the bar for consumers who are seeking a solution to a problem caused by homebuilders. Those developers’ complaints that Colorado’s rules make it burdensome to build affordable multifamily housing suggest that they would do so as long the state protects them when it turns out the construction was substandard. That is not exactly a bargain.
Whatever the substance of the contract, if one party fails to deliver the promises made to the other, the latter has a right to seek redress. Giving homebuilders protected status on the vague hope that doing so will prompt a resurgence of multifamily construction in Colorado is not particularly sound reasoning – nor is it the business of the state Legislature. Senate Bill 177 has had its day in the sun, with hours of testimony from all sides. The full Senate should dispense with it quickly, freeing legislators to find more appropriate ways of increasing Colorado’s housing supply.
