Will reason finally prevail in the Colorado Legislature?
The Colorado Senate on April 11 passed long-sought legislation to reform the state’s defective construction-defects law. Now it’s the House’s turn.
Senators voted 23-12 in favor of Senate Bill 156, with five Democrats joining all 18 Republicans in supporting the measure. Will the Democratic-controlled House follow suit? That’s a bigger question, as opposition to any changes in the law has been fierce for years.
Senate Bill 156 would require arbitration for any disputes regarding construction deficiencies in condo projects. Current law makes it far too easy for litigation to be initiated and has led to a dramatic decline in condominium construction. Condos as a percentage of new-home construction now account for just 3 percent, down from more than 20 percent just a few years ago.
Simply put, builders are afraid of being sued for even minor construction issues.
That has helped drive a spike in housing prices, as new product can’t keep up with demand. Condos represent starter homes for many buyers and an affordable option for seniors and others. The dearth of new projects has led to higher home prices and a flood of new apartment projects, with spiking rents.
Getting to a system whereby condo construction can get back toward that 20 percent market share would bring a flood of new multi-family homes on the market, helping to alleviate the housing shortage and fostering home ownership.
Opponents of the measure — and other efforts to reform construction-defects legislation — argue that home buyers deserve access to the court system to ensure that their rights are protected.
But many of the reform opponents hail from the legal profession itself, which stands to benefit significantly from a perpetuation of the current litigious system.
Colorado — especially the Front Range — desperately needs new housing. Sending construction-defects claims to arbitration, rather than litigation, could go a long way to alleviating the problem, though one local analyst told BizWest that it could take years to know whether that alone would spur new condo construction.
But there’s no time to waste, with the housing shortage only going to worsen.
This bill has already made it farther into the legislative session than previous attempts, so it’s encouraging. But we strongly urge the House to follow through and pass SB-156.