Whether you are in the market to downsize or are looking to be a first time home buyer, you have likely noticed that your housing options in Colorado have become extremely limited over the course of the last several years. If you are a contractor and have worked on multi-family projects in the recent past, you know why the housing options are limited in the State of Colorado. In the past two years, there have been studies commissioned and articles published in local periodicals investigating the extreme slowdown seen in the construction of owner-occupied multi-family housing, namely condominiums and townhomes. Those of us involved in and with the construction industry are intimately familiar with the lengthy, complicated, and incredibly expensive construction defect litigation that has plagued multi-family construction in the State of Colorado and brought it to a virtual halt.
And now, local municipalities and elected officials are starting to take notice. Most recently, the City of Lone Tree passed Ordinance No. 15-01, to become effective on April 1, 2015. According to the City of Lone Tree, Ordinance No. 15-01 is “aimed at encouraging the development of owner-occupied, multi-family residential projects through the adoption of regulations designed to balance the risk and exposure to builders and developers of such projects, while still protecting homeowners from legitimate construction defect claims.”
The Lone Tree ordinance functions very similarly to the current state laws concerning construction defects. Under the Lone Tree ordinance, a homeowner who discovers a construction defect must send written notice of the defect via certified mail or personal delivery to the responsible builder, contractor, or design professional. The homeowner is required to provide dates and times within 28 days for the builder to access the property for inspection and/or testing purposes. The builder is required to acknowledge receipt of the notice within 14 days, or the protections of the ordinance do not apply, and the homeowner may file suit. Similar to the state law, the builder may offer to repair the defect within 30 days after the initial inspection, or 28 days after notice of the claim. Under the Lone Tree ordinance, however, the homeowner may deliver a written objection to the builder’s offer to repair “if the claimant believes in good faith that the proposed repairs will not remedy the alleged defect.” The builder is then allowed ten days within which to modify the repair proposal in accordance with the homeowner’s objections or propose alternatives. The Lone Tree ordinance precludes a builder from making any repairs while an objection is pending. A homeowner may still file a lawsuit if not satisfied by the repairs or the offer of repairs.
Under the Lone Tree ordinance, a condominium owners association must obtain the written consent of 51% of the homeowners to commence legal action, and such consent must be obtained within 60 days after notice of the alleged defect is sent to the builder. The ordinance also touches on amendment or deletion of the alternative dispute resolution provisions typically found in the homeowners association’s governing documents. The ordinance provides that any subsequent amendment to the declaration that removes or amends the arbitration or mediation requirement is not effective for any construction defect claim based on an act or omission already discovered.
The City of Lone Tree should be applauded for having the courage to take action to address the lack of owner-occupied condominium units, particularly in its transit-oriented zones around light rail stations. For additional information regarding Colorado construction litigation, please contact David M. McLain at (303) 987-9813 or by e-mail at mclain@hhmrlaw.com.
