Highlights:
- Lakewood this week approved an ordinance regarding construction defect litigation.
- Lakewood was the first.
- A nonprofit hopes it won’t be the last.
Lakewood this week became the first city in Colorado to take on construction defect litigation, which has brought the construction of entry-level condos to a halt in the state.
A non-profit coalition with a wide-range of members is hoping Lakewood won’t be the last.
The Homeownership Opportunity Alliance ⎯ whose members includes area mayors, affordable housing advocates, economic development officials and contractors ⎯ is urging other cities to follow Lakewood’s “bold leadership” to address construction defect litigation.
The Lakewood City Council passed an ordinance this week to address how construction defects are addressed and remedied on new construction within city limits.
The decision is expected to be challenged in court by proponents of the current state law on construction defects that was adopted in 2005.
A condo has not been built in Lakewood for almost a decade, while thousands of apartments have been built, according to Lakewood Mayor Bob Murphy, one of the 25 members in the alliance.
“Lakewood is fortunate to have the first of the FasTracks lines to open,” Murphy said.
“Part of this regional vision was a network of transit-oriented communities, each offering a mix of uses and a full spectrum of housing choices,” Murphy continued.
There are six light ratio stations in Lakewood, with zoning entitlements that have been in place since 2009, he said.
“Eighteen months after the opening of light rail, we have 10 multi-family projects in the works, totaling 2,000 units, he said.
“Not a single one of these new units will be owner occupied,” Murphy said.
“In fact, the last such unit built in Lakewood was in 2006.”
The Lakewood ordinance passed just after midnight on Tuesday.
Murphy said it will help alleviate the challenges to building presented by current state laws.
The new city ordinance provides builders and developers a right to repair a defect before a lawsuit may be filed by a homeowners’ association or individual homeowners.
At the same time, the ordinance allows a homeowner to object to a builder’s repair. It also requires a majority of condominium homeowners—instead of a simple majority of an HOA’s board, which can be as few as two people—to agree to a defects lawsuit.
Under current state statute, lawsuits frequently are the first course to resolve a defects issue, according to the alliance.
This forces up insurance premiums for builders and has led to a significant drop in the development of affordable, multi-family for sale housing in the Denver metro area and other parts of Colorado.
According to Metrostudy, condos currently represent only 4.6 percent of new home starts in Denver compared to more than 26 percent in 2006.
“As I’ve said many times, this is not just a home building issue, it is a community-building issue,” Murphy said.
“Providing a choice of attainable priced housing is critical to the ongoing vibrancy of Lakewood and other cities and counties throughout Colorado,” he added.
The Homeownership Opportunity Alliance is a nonprofit coalition of business groups, housing and transit advocates, and mayors and local officials that have come together to propose common-sense reforms that would increase the supply of for-sale multi-family housing by engaging housing advocates, builders, developers, Realtors and homeowners in creating incentives for constructing these sought-after housing options.
Interested in buying a home in Lakewood? Please visit COhomefinder.com.
Have a story idea or real estate tip? Contact John Rebchook at JRCHOOK@gmail.com. InsideRealEstateNews.com is sponsored by Universal Lending, Land Title Guarantee and 8z Real Estate. To read more articles by John Rebchook, subscribe to the Colorado Real Estate Journal.
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