Are Construction Defect Laws Inhibiting the Development of Attached Ownership Housing in Colorado?
October 29, 2014 —
James M. Mulligan, Esq. – Snell & Wilmer, LLPThis article responds to the article published in the September 18, 2014 issue of the Construction Defect Journal. It provides a different perspective to this issue, based on the author's experience with these matters during the past decade of attention to this specific challenge.
During recent years, there has been much discussion about the lack of attached ownership housing construction in Colorado. The main culprit, according to several sources within the community, seems to be our state's construction defect laws.
Since 2001, there has been a periodic series of legislative fixes to our construction defect laws that saw the pendulum swing back and forth between the interests of the consuming public who purchase the homes and certain protections of the developers and homebuilders from excessive and unnecessary litigation. Some say that the current state of the law is more onerous than necessary on the developers and homebuilders and it is artificially inhibiting the development of multifamily ownership housing in a time of high demand and low supply.
A recent opinion article in the September 29th, 2014 issue of the Denver Post stated, in part:
"No one is suggesting that developers escape liability for construction defects or that homeowners be denied the right to sue. But under the state's current defect laws, the scales have tilted too far in favor of litigation as the default tool for resolving disputes. And this appears to be the biggest reason for the collapse in the number of new multifamily [ownership] dwellings in recent years."
Rather than the typical conflict between the plaintiffs’ bar (representing the homebuyer) and the homebuilding industry that has produced the "back-and-forth" nature of our construction defect laws in the past, this 2014 legislative session found new constituents and a different perspective on the issue. A broad ranging coalition that included the Metro Mayors Caucus, major segments of the affordable housing community, and the general business community came together to address what their research showed as an astonishing lack of construction of ownership attached housing. There was a continuing boom going on in the development of multifamily "rental" housing, but an even more unusual deficit in multifamily "ownership" housing. Research apparently showed that, although about 20% + of construction of attached housing was in the ownership format throughout the Rocky Mountain West, Colorado was only producing about 2%. Interviews conducted by the research group that was retained by this coalition revealed that the development and homebuilding community were not willing to commence construction of ownership attached housing because of the continuing threat of litigation available under current interpretations of our state's construction defect laws. Lenders were also reluctant to provide financing for such projects faced with the apparent real threat of litigation that could shut down their projects and materially impact their loan viability and the value of the loan's collateral. Moreover, insurance premiums to cover such claims were so high, and many times unavailable, as to make such projects unfeasible.
This lack of available multifamily ownership housing was creating an ever-increasing concern over the resulting imbalance of housing options in and around the metro area, where the urban character of the metro region would need such ownership options in the attached housing format in order to address the more dense character of the urban setting. This imbalance of ownership attached housing was thwarting the advancement of "community" in the context of creating opportunities for all options of housing so important for a community balance. This included ownership options in this format that address the need for the younger professionals entering the workforce, newly forming households, seniors desiring to scale down their housing size and location, as well as the segment of the market who have limited means and need to address the affordability of homeownership. This was being most clearly felt along the FasTracks lines where attached ownership housing was an important element in originally advancing the TOD communities that are expected to be developed around these transit stops.
Rather than engage the battle of creating more contention in the various aspect of construction defect legislation per se, this coalition attempted to temper their approach and address specific issues that seemed to advance protection of the consuming homeowner while, at the same time, advocating a method of dispute resolution encouraged in the state's laws regarding such issues.
Normally, attached ownership housing is developed under our state laws governing the creation of Common Interest Communities ("CIC's"), including those communities where there are units that are attached and contain common elements. These CIC's will be encumbered by certain recorded documents (normally referred to as "Declarations") that structure the "community" within which the units are located and set up certain rules and restrictions that are intended to respect the common interests of the unit owners within that community. There is also a Homeowners Association ("HOA") organized for the common interest community that is charged with the management of the common elements and the enforcement of the rule and regulations governing the community.
The coalition chose to address their concerns through a bill including a couple of changes in the state laws governing CIC's, which would provide further protection to the homeowner and advance alternative dispute resolution as an expedient approach to resolving disputes should they arise. Those changes included:
1. Majority Owner Vote Re: Litigation -Rather than allowing two owners plus a vote of the HOA Board to determine whether or not to file litigation alleging construction defects in a CIC, the proposed change would require a simple majority vote of the unit owners who are members in the respective HOA where the alleged defect occurred. This approach addressed the increasing concern of unit owners whose homes are unmarketable and not financeable during the course of any such litigation.
This does not prevent an aggrieved owner from pursuing claims regarding that person's own unit, it just requires a majority of the owners to vote for litigation that affects the entire CIC in such litigation. This approach also included a provision for advance notice to the owners of such pending litigation accompanied by several disclosures regarding the potential litigation and its potential impact on the respective owner. This approach to protecting the rights of homeowners in a CIC seemed to be in line with everyone's interests, while not preventing an individual consumer/unit owner to advance its own claims.
2. Alternative Dispute Resolution -This proposal clarified the stated intent of the CIC statutes that advances alternative dispute resolution by providing that any mandatory arbitration provisions that are already contained in the Declaration that encumbers the respective unit in a CIC shall not be changed or deleted without the permission of the Declarant (e.g.; the developer of the CIC). This provision was to affirm a provision that the purchasing unit owner was aware of at the time of purchase and that it follows the spirit and intent of the state statutes governing such CIC's.
Notwithstanding the curative nature of these proposals, the legislation did not address the issue because a legislative maneuver was employed that did not allow for its consideration during the waning days of the session.
More recently, one of Colorado's municipalities, the home rule city of Lakewood, passed a local ordinance addressing this issue in a similar fashion, with a few more definitive suggestions regarding how to alleviate the lopsided nature of our current state of law. Without going into detail at this time with that specific ordinance, or the issue of its ability to address matters of a state-wide concern at the local level, the point is that several of Colorado's local communities, frustrated with the inability of the state legislature to deal with the issue are, at the very least, sending a signal that something must be done and, if the state is unwilling to lead on this matter, local communities will have to act.
This issue has not receded into the back room, and we will see a continuing crusade from an updated coalition to address these reasonable modifications to our state laws that will at least provide some protections to the CIC homeowner regarding unwanted litigation and some relief to the homebuilding industry from excessive litigation.
James M. Mulligan is a partner in the Denver office of Snell & Wilmer, LLP, a full-service commercial law firm located in nine cities throughout the Western United States and in Mexico. The firm’s website is http://www.swlaw.com.
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General Contractor/Developer May Not Rely on the Homeowner Protection Act to Avoid a Waiver of Consequential Damages in an AIA Contract
August 04, 2011 —
Higgins, Hopkins, McLain & Roswell, LLCRecently, in Caribou Ridge Homes, LLC v. Zero Energy, LLC, et al., Case No. 10CV1094, Boulder County District Court Judge Ingrid S. Bakke entered a ruling and order on the Plaintiff’s Motion for Determination of Question of Law Pursuant to C.R.C.P. 56(h) on Issue of Damages. The Order found that the Plaintiff was not a homeowner intended to be protected by the Homeowner Protection Act (the “HPA”) and thus could not pursue its claims for consequential damages against Defendant.
By way of background, on June 18, 2008, Plaintiff Caribou Ridge Homes, LLC (“Caribou”) entered into a Standard Form Agreement Between Owner and Contractor AIA Document A114-2001 (the “Contract”) with Defendant Zero Energy, LLC (“Zero Energy”). Plaintiff hired Zero Energy to serve as a general contractor for the construction of a single-family home in the Caribou Ridge subdivision in Nederland, Colorado. A provision in the contract contained a mutual waiver of consequential damages (“Waiver”).
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Reprinted courtesy Higgins, Hopkins, McLain & Roswell, LLC
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The National Building Museum’s A-Mazing Showpiece
July 09, 2014 —
Beverley BevenFlorez-CDJ STAFFThe “massive maze” designed by the Bjarke Ingels Group (BIG) is now open at the National Building Museum in Washington D.C., reported Architect Magazine. The roughly 60-foot square maze reaches about 18 feet, but the “walls slope in toward the center, allowing visitors to see more of the maze as they move through it.” When you reach the center, you get a complete overview of the maze.
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The Top 10 Changes to the AIA A201: What You Need to Know
May 24, 2018 —
Christopher G. Hill - Construction Law MusingsFor this week’s Guest Post Friday here at Musings, we welcome back Melissa Dewey Brumback. Melissa is a construction law attorney with Ragsdale Liggett in Raleigh, North Carolina. Aside from the fact that she is a UNC grad and fan, she’s okay!
In 2017, as it does every ten years, the American Institute of Architects (AIA) updated most of its standard form contract documents, including the A201 General Conditions. This cycle, the contract changes are evolutionary in nature, not revolutionary. Even so, it is crucial to know the changes to avoid making a fatal mistake that could cost you money on a construction project. In reverse order, the top 10 changes you need to know include:
# 10: Differing Site Conditions
Prior editions of the A201 provided that upon encountering differing site conditions, the Contractor was to promptly provide notice to the Owner and Architect, before the conditions are disturbed, and in no event later than 21 days after the conditions were first observed. A201–2017 shortens the time for notice from 21 to 14 days.
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Christopher G. Hill, The Law Office of Christopher G. HillMr. Hill may be contacted at
chrisghill@constructionlawva.com
Philadelphia Court Rejects Expert Methodology for Detecting Asbestos
October 11, 2017 —
Christian Singewald, Wesley Payne & Jonathan Woy - White and Williams LLPLawsuits against talcum powder manufacturers have recently made headlines for the multimillion dollar verdicts returned in favor of plaintiffs with ovarian cancer. However, lawsuits brought by individuals with mesothelioma who did not work in occupations traditionally associated with asbestos exposure represent another potential liability for talcum powder manufacturers and retailers. In such cases, expert testimony linking mesothelioma to trace amounts of asbestos in talcum powder should be carefully scrutinized.
Reprinted courtesy of White and Williams LLP attorneys
Christian Singewald,
Wesley Payne and
Jonathan Woy
Mr. Singewald may be contacted at singewaldc@whiteandwilliams.com
Mr. Payne may be contacted at paynew@whiteandwilliams.com
Mr. Woy may be contacted at woyj@whiteandwilliams.com
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Best Lawyers Honors Hundreds of Lewis Brisbois Attorneys, Names Four Partners ‘Lawyers of the Year’
September 16, 2024 —
Lewis Brisbois Newsroom(August 15, 2024) - Best Lawyers has selected 171 Lewis Brisbois attorneys across 47 offices for its 31st edition of The Best Lawyers in America. It has also recognized four Lewis Brisbois partners on its "Lawyers of the Year" list: San Diego Partner Gary K. Brucker Jr. (Litigation - Real Estate); Weirton Managing Partner Michelle L. Gorman (Mass Tort Litigation/Class Actions - Defendants); Roanoke Partner Paul C. Kuhnel (Medical Malpractice Law - Defendants); and Los Angeles Co-Administrative Partner Steven R. Lewis (Product Liability Litigation - Defendants).
Please join us in congratulating the following attorneys on their Best Lawyers recognition! You can see the full list of attorneys named to Best Lawyers' Ones to Watch in America
here.
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Lewis Brisbois
SB800 Is Now Optional to the Homeowner?
August 30, 2013 —
James Ganion - Ulich & Terry, LLPThe following communication republished courtesy of James Ganion, Ulich & Terry, LLP
Dear Builders, Colleagues, and Interested Parties:
I attach for your review a copy of this week’s opinion of the California Court of Appeal in our case of Liberty Mutual v. Brookfield. This opinion represents a significant change to the right of California builders to repair homes under SB800, California’s Right to Repair Act.
In a nutshell, the Court determined that SB800 was not intended to replace prior applicable law, but merely be supplemental to prior law. Thus, a homeowner, or in this case the homeowner’s insurer, can pick and choose among SB800 and prior law, or even allege both in the alternative. In so deciding, the Court of Appeal reversed the holding of the trial court which had held, as so many trial courts have since 2003, that SB800 was intended to be the new exclusive remedy for construction defect claims.
While we of course take issue with most of what the Court of Appeal has to say, the real life net effect is that SB800 is now optional to the homeowner, meaning the “right” to repair now lies in the hands of the homeowner who can elect to simply bypass that law and proceed with the filing of a lawsuit under prior law. Hardly what any of us believe the legislature intended.
ULICH & TERRY LLP as counsel for Brookfield in this case will be filing a petition for rehearing with the Court of Appeal by September 6, 2013. Anyone interested in supporting the petition may file a letter with the Court of Appeal, preferably by September 13, 2013. Thereafter, assuming the Court of Appeal does not grant rehearing, we will be filing a petition for review with the California Supreme Court.
Our firm, as appellate counsel, has established a website
libertymutualvbrookfieldcrystalcove.com and through it will be providing information regarding the case, including copies of pleadings, orders, deadlines, and information on how to provide support for this case, which is of interest to the home building industry.
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James Ganion James Ganion can be contacted at
jganion@ut-law.com
Georgia Legislature Passes Additional Procurement Rules
May 30, 2018 —
David R. Cook Jr. - Autry, Hall & Cook, LLPOn May 3, 2018, Governor Nathan Deal signed HB 899 into law, officially making it Act 389. Act 389 modifies O.C.G.A. § 13-10-4 and § 36-91-23 relating to public works bidding and contracts of state and local governments, respectively. Both sections are modified in the same bill because they contain the same language. The bill prohibits the disqualification of bidders based upon lack of previous experience with the project’s desired construction delivery method.
Before the modifications, the code protected a contractor from disqualification only for lack of previous experience on a job of comparable size. After the modification, the law expands to prohibit disqualification based on lack of previous experience with comparable job size and lack of previous experience with the construction delivery method.
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David R. Cook Jr., Autry, Hall & Cook, LLPMr. Cook may be contacted at
cook@ahclaw.com
