“Create all these empty houses”
But the line between construction defect law and lower costs isn’t universally agreed upon. An analysis by Jeffrey E. Nehls, an economist with Boulder-based Pacey Nehls Economic Consulting, found broader economic winds played a bigger role in pushing developers to build for-rent units like apartments instead of for-sale multifamily properties like condos.
In short, institutional investors found for-rent developments more enticing than for-sale developments after the Great Recession and that trend has never really let up. And it’s not a trend unique to Colorado, but something being seen nationwide, his report found. In his view, that boils the debate down to a clear concern over weakening consumer protections versus the uncertainty that it would have any real effect on new condo construction.
“Changing these laws isn’t going to move the needle in terms of changing the economic behavior of the builders, and which companies build or don’t build in Colorado,” Nehls said in an interview. “It’s just more profitable for them to build rental units. They have this capital lined up to build them and that’s what they’re going to do. Tweaking these laws won’t change that behavior, but will come at the risk of jeopardizing homeowner safety.”
The separate House bill aims squarely at the consumer protection piece. It would extend the window for a construction defect lawsuit from six years to 10 years, and change when that clock starts, to include when the defect is actually found, not just when it should have been found.
Rep. Jennifer Bacon, a Denver Democrat, noted that the two proposals have some overlap, but aren’t necessarily in direct opposition to each other. Her bill aims at the larger housing market, while the Senate bill has more focus on condos, in particular. Affordable housing doesn’t just mean building it; it means making sure people are protected if their homes are built poorly.
“We have to be sure that, especially if we’re doing this for the attainable and affordable markets, that people — when they are the most leveraged in their lives — are able to recover if something goes wrong,” Bacon said. “We have to find a balance between all of that.”
That’s the position Miller, the Erie homeowner, finds herself in: What good is new building if the homes aren’t inhabitable?
“It doesn’t make sense to build houses that are inflated in costs and have these defects,” Miller said. “Because then all it does is create all these empty houses.”
Backers of Bacon’s bill see it as encouraging builders to take stronger responsibility for their work — and they fear the Senate bill has the opposite effect by giving them more outs for bad building. Jonathan Harris, chair of the advocacy group Build Our Homes Right, has spent 20 years fighting for stronger consumer protections, starting with his own long legal battle over problems with his condo in Denver’s Five Points neighborhood.
“There’s a lot of good builders out there,” Harris said. “The problem, really, is the few unscrupulous builders that are giving more of them a bad name. If they just stood behind their work, this wouldn’t be an issue.”