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— Multifamily Properties Quarterly — July 2015
Alliance formed two years ago to
find a legislative solution to this
statewide problem. The mission is
clear: Colorado needs a more efficient
statewide system for addressing con-
struction defect issues that will protect
consumers and homeowners while
helping jump-start condo develop-
ment.
During the last legislative session,
the alliance worked with bipartisan
lawmakers and built a diverse coali-
tion of more than 30 statewide may-
ors, elected local officials, affordable
housing advocates, and business and
trade groups to find the right balance
on this issue. That effort produced
Senate Bill 177.
SB 177 sought to spur attainable
condos through a series of common
sense changes in law that the alliance
believed would reduce the threat of
expensive, time-consuming litigation,
increase the supply of attainable hous-
ing and protect the rights of all home-
owners in a community. The changes
included a majority vote by all home-
owners in a community before enter-
ing litigation, disclosure of costs and
financial impact to all homeowners
of litigation and, most importantly, a
preference of mediation and arbitra-
tion to settle defects claims.
Through SB 177, the alliance was
able to raise public awareness and
support for this issue across Colorado.
Editorial boards – including the Denver
Post, Colorado Springs Gazette, Boul-
der Daily Camera, Fort Collins Colora-
doan, Longmont Times-Call and Love-
land Reporter-Herald – all positively
endorsed SB 177 as an important step
toward addressing our state’s housing
challenges.
In the end, SB 177 was killed in
the state House of Representatives.
SB 177’s demise represents a missed
opportunity for many Coloradans,
including would-be first-time home-
buyers and seniors.
Interestingly, as the General Assem-
bly session ended, the Colorado Court
of Appeals issued a decision inVallagio
at Inverness Residential Condomini-
umAssociation versus Metropolitan
Homes – a dispute between a home-
owner association and homebuilder
over the removal of arbitration from
governing documents as a way to
resolve defect claims. According to the
decision, an arbitration clause cannot
be removed without the declarant’s
consent, and the requirement to use
arbitration is enforceable. A petition
requesting review has been filed with
the Colorado Supreme Court.
Additionally, several communities
are looking at ordinances to address
construction defects. Cities like Lake-
wood and Lone Tree already passed
measures to encourage condo devel-
opments. Many other cities facing
affordability, density and transporta-
tion issues are currently working on
local solutions.
The Homeownership Opportunity
Alliance continues to work on a uni-
fied state process while vigorously
pursuing local solutions to the
state’s housing challenges.
s
Cover Story
Colorado’s desperate need of
for-sale condos, especially in the
Denver metro area has become
so great that some development
teams have decided to push for-
ward with plans for condo proj-
ects despite the state’s current
construction defects law.
GreenSpot Real Estate and
Urban Green Development have
broken ground on Factory Flats
at 3198 Blake Street in the River
North neighborhood of Denver.
Factory Flats features 24 oversized
residential units that range in size
from 1,188 square feet to 1,456 sf.
The mixed-use project also has
plans for office and retail space.
“Factory Flats is exactly the
type of development that Denver
needs right now,” said Tracye Her-
rington, co-owner, co-founder and
employing broker of GreenSpot
Real Estate. “The city has very few
new construction for-sale condo
options, and as millennials and
baby boomers continue to come in
droves to Denver, they want to live
in beautiful, green, community-
focused places in vibrant, walk-
able neighborhoods like RiNo.”
Herrington said the risk of being
sued for construction defect is
something that she is definitely
thinking about, but at the same
time, is confident that diligent
planning and expert construction
will mitigate the thought of litiga-
tion.
“We are taking all necessary
steps throughout the process,”
said Herrington. “Through the
use of forensic documentation we
are set up better so that we don’t
have the complexities that lead to
defect. We will make sure that the
homeowner association is funded
and insured well and the devel-
oper also is building an insurance
policy into the documentation.”
Factory Flats is a sustainably
focused condo development that
will feature LEED certification and
solar-powered units, something
that Herrington said also aids in
reducing the chance for defect
lawsuits.
“Because this is a green project
all the systems are high quality
and are built to a higher building
standard,” said Herrington. “Of
course there is still risk, but it is
a risk we are willing to take and
because of the way we are build-
ing this complex we believe the
chance of litigation will be much
lower.”
Not long ago, 23
percent of Colorado's
new construction
housing consisted
of affordable
condominiums and
townhomes. Today, it
stands at 4 percent.
