May 05, 2023 11:14 AM UTC

Again With the Construction Defects Reform Nonsense?

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• by: Colorado Pols

As the 2023 legislative session winds to a close (Monday is Sine Die), lawmakers from both political parties are starting to think about priorities for 2024. Among the issues that have come up for discussion lately is the idea of another round of legislation dealing with one of the all-time bullshit arguments in Colorado: Construction defects reform.

If you’re unfamiliar with the phrase, “construction defects reform” is basically about protecting developers from being sued when their new apartments or condominiums start leaking water (or worse).

The Colorado Sun has more details today in its “Unaffiliated” newsletter:

One of the lead sponsors of the land-use bill pending in the Colorado legislature hinted this week that there are state lawmakers looking into taking on what’s considered by the construction industry as one of the holy grails of housing policy: construction defects.

One of the holy grails for housing policy? Um, no. Construction defects reform may be the “holy grail” for contractors and builders who don’t want to worry about shoddy construction coming back to bite them in the ass later, but it doesn’t do anything to help anyone else.

Contractors say Colorado liability laws around construction defects — basically issues that arise after a home is built —are hampering their ability to increase housing stock because they push insurance costs high and stoke concerns about litigation. Those anxieties especially come into play for condominium construction. [Pols emphasis]

The Colorado Contractors Association and Colorado Association of Homebuilders both told The Colorado Sun earlier this year that while the land-use changes in Senate Bill 213 would help spur more housing construction, construction defects policy must be changed to really unleash the measure’s potential.

The legislature tackled construction defects laws in 2017, but the associations say it wasn’t enough.

“Without construction defects reform, it’s still going to be a tough sell to build multi-unit condos in Colorado because there is so much risk,” said Tony Milo, who leads the Colorado Contractors Association. [Pols emphasis]

Without construction defects reform we can’t build more housing! The problem with this argument is that you can easily refute these claims merely by opening your eyes.

Don’t believe us? Take a drive around the Metro Denver area today and see if you can find a large plot of land where apartments or condos are NOT being built literally at this very moment.

Go ahead, we’ll wait…

…Contractors and builders have been whining that condo construction had “dried up” for at least the last decade. In 2017, developers managed to coax a pretty good deal out of lawmakers, but then they walked away from the table because they wanted more; ultimately a compromise was worked out, albeit one that developers immediately claimed was not good enough. As we wrote in this space in May 2017:

The compromise legislation approved this year requires a majority of homeowners to initiate legal action, not the HOA board–and requires homeowners be informed about the potential effect of litigation on the ability to sell their properties. For homeowner groups and lawyers who represent them, that’s as far as they see the need to go. Opponents of the homebuilders in this fight argue that the real solution is for developers and builders to stand by their work–avoiding construction defects to begin with, and fixing problems in good faith quickly when they occur.

With all of this in mind, it’s revealing that builder lobbyists are already declaring their intention to return next year to push the same bills that died this year. It’s long been suspected that builders are misusing Colorado’s hot housing market to extract concessions from lawmakers, and blaming liability over construction defects for many other factors that have led to a shortage of affordable housing in this state. After years of complaining, now even after a bipartisan compromise has passed, it’s time to ask the question: is anything short of stripping homeowners of their legal rights to protect their biggest investment going to make the developers happy?

Because if not, maybe it’s time to tell them enough is enough.

In 2023, builders are STILL claiming that they can’t build more housing [pause for laughter] because of concerns about lawsuits related to poor construction — such as the horror show that was the Beauvallon building in Denver. The serious answer in response is pretty simple: If you don’t want to get sued, then don’t do shoddy work.

Construction defects reform is not really about housing policy; developers got some of what they wanted in the 2017 bill, but that ended up doing nothing to make housing more affordable in the Denver area. The only thing that construction defects reform does is make more money for developers by shielding them from potential lawsuits. It’s a great deal for them; not so much for anyone else.

It was silly in 2017 when developers were claiming that they couldn’t build more housing unless lawmakers passed a bill to help them. It’s completely absurd that they are making THE SAME ARGUMENT six years later, particularly when you can’t throw a rock in the Denver area without hitting some new type of development.

If this is an actual problem for regular people, developers at least need to come up with a different argument that passes the eye test. Until then, legislators from both political parties need to stop listening to the same old nonsense.