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DENVER (CBS4) Colorado lawmakers are debating a bill that would change the state’s construction defect law. Senate Bill 177 has bi-partisan support in both houses, and is intended to spur new construction of mid-priced condominiums across the state.

“Right now, housing is experiencing a crunch in Colorado, not just in the Metro Area but statewide,” said Senator Jesse Ulibarri, a democrat representing District 21 and one of the sponsors of SB 177.

LINK: Senate Bill 177

Ulibarri says the lack of affordable condominiums is squeezing middle class families, millennials, and retirees out of the home buying market. Developers say that Colorado laws work against them and  they can’t afford to build affordable condos in Colorado.

“The proposal in front of us is designed to ensure that when there are issues with the construction of multiple-family housing like condos, that those issues are resolved quickly, and ultimately that the homeowner is fully informed about those potential defects,” Ulibarri told CBS4.

The bill requires that disputes over construction defects go to mediation as a first step. It also calls for a majority of homeowners to vote in favor of taking action on the defect. There are provisions for disclosing to homeowners the extent of the defect and the process they’ll go through to resolve it. The bill also requires that the governing documents of a homeowners association cannot be changed once they’re written.

“The contract, as written when the developer transfers the property to the homeowners, that’s a contract and stays in place so everyone knows how they’re going to deal with any kind of conflicts that come up,” Ulibarri explained.

Opponents say that the bill unfairly limits homeowners as they try to get important repairs made to their homes.

“Anybody who’s producing a product should be responsible for what they produce. I don’t think it’s appropriate to let home builders and developers off the hook,” said Jonathan Harris, the president of Build Our Homes Right.

Build Our Homes Right is a group that advocates for the rights of homeowners. Harris and his neighbors faced a massive construction defect issue with their condo building. They were able to settle their claim, but it took 9-years to resolve. Harris will testify at the State Capitol against SB 177.

“I think, right now, the immediate goal is to leave the laws alone. In the future, I would like to see us increase the protections for consumers that we’ve lost in the past,” Harris says.

Catherine Stefan is among the homeowners at Town Square Lofts who is frustrated by a construction defect complaint.

“It’s very frustrating with what the laws are and also dealing with contractors  and nobody’s wanting to take blame for it,” Stefan told CBS4.

The condos at Town Square Lofts have water leaking issues. It traces back to work done on the balconies in 2006. The homeowners association did intrusive testing on the building to get a handle on the extent of the problem. Intrusive testing includes cutting into the walls, cutting out some of the brickwork, and taking off the metal facades.

“They found $2.2 million (in damage). Basically the entire brick façade needs to be taken off and waterproofing put behind it,” said Neval Gupta, owner of two condos at Town Square Lofts and a member of the HOA.

The homeowners hired a lawyer and took the developer to court. The case landed in arbitration and was heard by a panel of three private judges.

“Our share, I think, is $96,000 so the two sides together, before this is done, are going to have spent $200,000…that’s just one the arbitration process,” said Jesse Witt, the lawyer for Town Square Lofts.

Witt calls arbitration cost prohibitive, and feels like it’s not a good fit for construction defect cases.

Town Square Lofts won their arbitration case, and was awarded about half of the money they were requesting to make repairs to the building.

Senators supporting SB 177 say it won’t fix all the factors that lead to lower condo construction in Colorado, but they say it’s a start. Although to admit that passing the bill is no guarantee that construction will happen.

Libby Smith is a Special Projects Producer at CBS4. If you have a story you’d like to tell CBS4 about, call 303-863-TIPS (8477) or visit the News Tips section.

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