Developments in Construction Defect Reform

Denver is the most recent city along the Front Range to introduce a construction defect ordinance in hopes to foster development of more owner-occupied multifamily housing.

The unwillingness to develop multifamily projects is largely blamed on the toxic climate spawned from construction defect litigation under the Colorado Construction Defect Action Reform Act (“CCDARA”). After what was perceived as a significant failure of the Colorado General Assembly to pass meaningful reforms in 2013 and 2014, a number of cities took it upon themselves to tackle the chilling effect of construction defect litigation.

Aurora, Commerce City, Lakewood, Littleton, and Lone Tree have all enacted ordinances in an effort to encourage the development of owner-occupied attached housing in the words of Littleton to “insur[e] a sustainable and diverse mix of housing options that allow individuals to invest long-term in the community.” Click here for a pocket guide summarizing some of the key concepts in these local ordinances.

While the ordinances are an optimistic step in the right direction, the ordinances merely alter “first steps” in the notification phase of defect litigation. None truly protect builders from the aggressive damages and attorney fees provisions of Colorado state law – nor is it likely Courts would allow local ordinances to restrict owners from remedies available under state law.

More than one year since Lakewood passed its ordinance, the Denver Business Journal reports that no applications have yet been filed to construct an owner-occupied condominium project which leads me to believe that developers and construction professionals are not comforted by local attempts to reform construction defect litigation.

What would encourage new development of multi-family housing in 2016?

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