Colorado Politics

Curbing litigation is key to affordable housing | Denver Gazette

Here’s a species that urgently needs to be reintroduced into Colorado’s ecosystem: condos.

Years ago, they were a staple of new residential construction. Sometimes high-rises, sometimes townhomes built side-by-side, the once-affordable alternative to single-family homes have been disappearing from new housing stock across the state.

Why? Lawsuits – made all too easy to file by the trial lawyers’ lobby – have all but chased them away.

It’s up to our state’s policymakers to bring them back – by reining in runaway litigation. An earnest effort to do so appears to be afoot in the Legislature, which convenes its 2024 session on Wednesday. The pending legislation stands to gain bipartisan traction, as well.

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As reported this week by The Gazette and Colorado Politics, state Sen. Rachel Zenzinger of Arvada and state Rep. Shannon Bird of Westminster – both members of the Democratic majority at the Capitol – are likely to introduce a bill providing practical alternatives to costly, confrontational litigation when homeowners find flaws in the construction of their homes.

Their measure could, among other provisions, help condo owners sidestep the incentive for going to court over construction errors by providing a better framework for the owner and builder to work together to fix what’s wrong. The options could include having the original builder make repairs, finding a separate contractor, or requiring a cash offer by the builder that allows the homeowner to find their own contractor.

Right now, the option of choice is litigation, orchestrated by personal-injury lawyers who make a killing suing builders. The lawyers would rather keep the law as it is.

Current statute ensures ever fewer builders will want to build condos. The condos are targeted by the lawyers because one lawsuit involving multiple units – even if only a few of them had flaws – provide a bigger payday than single-family homes in damages awards and out-of-court settlements.

The litigation bonanza not only puts the damper on condo construction up front but also raises builders’ liability-insurance premiums.

The return of condos to Colorado is a key to addressing the state’s affordable-housing shortage. Condos offer a less expensive housing alternative for a range of homebuyers – especially, first-time, entry-level buyers, as well as single professionals and empty nesters. And ownership gives them a chance to build equity.

A report released in September by Colorado’s Common Sense Institute found Colorado condominium construction has declined sharply over the last 15 years. Condominium development between 2018 and 2022, across 11 Front Range counties, was 76% lower than between 2002 and 2008. A key cause of the condo crunch, the study concluded, was the state’s lenient construction-liability law.

“Amid a thriving economy and an influx of young professionals, condos are considered attractive choices for many buyers due to their low-maintenance lifestyle and often more affordable price tags compared to single-family homes,” said the Common Sense study’s author, Peter LiFari, who’s a housing fellow with the institute and heads Maiker Housing Partners, a public housing authority in Adams County.

“In essence, condos are the ideal starter homes, and the ideal options for overhoused seniors at affordable prices,” LiFari said.

Kudos to Zenzinger and Bird for trying to restore a viable market for condominium construction. Let’s hope they can get enough Republicans on board to offset the longtime clout the trial lawyers carry with ruling Democrats.

Denver Gazette Editorial Board

Coins stacked in wooden house frame on table. Home mortgage loan rate. Saving money for future retirement. Real estate investment or property ladder concept. Housing project for construction business (copy)
(Photo by Zephyr18, iStock)
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