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In 2008, The Point's HOA contacted Benson's firm, which is one of the so-called "big three" in the Denver area that focus on construction-defect litigation. After unsuccessfully trying to work with the general contractor — and, more important, the general contractor's insurance company — to resolve the issues without resorting to legal action, the firm filed a lawsuit on behalf of the HOA in 2011. The case is set for trial in Denver District Court in October.

A little boy in a teddy-bear T-shirt who's been watching the attorneys move from abandoned unit to abandoned unit approaches them after they lock the last door. "I want you guys to fix this house and put my friends back in that house so I can see them again," he says.

"That's the goal," Benson tells him.

"I always find it interesting when builders blame us for [them] not building," Benson says later when reflecting on the situation. "To some extent, what they're saying is true. But it's not us who made that problem. All we're doing is showing them what they did wrong."

The people telling the horror stories on the other side have fewer teddy-bear T-shirts. "The home builders walk in, I walk in, and of course we're those grubby capitalists," says Tom Clark, the CEO of the Metro Denver Economic Development Corporation and the executive vice president of the Denver Metro Chamber of Commerce. "And the trial lawyers bring in somebody who genuinely got screwed."

But Clark, who testified for the bill aimed at encouraging condo construction around transit, and others say that if construction-defect lawsuits are allowed to continue to run rampant and stifle condo development, even more people will get screwed.

Fewer condos means fewer young couples who will be able to build wealth by buying a condo and then selling it for a profit once they have a kid and upgrade to a single-family home. It also means less-stable neighborhoods, which have been linked to poorer academic performance for children. Fewer condos is also bad news for empty-nesters who want to downsize but don't want to rent. And the environment is out of luck, too; if people can't buy condos in urban centers, the argument goes, they'll look to houses in far-flung neighborhoods, creating more sprawl and more traffic.

One of the pro-condo camp's most persuasive arguments has to do with the impact on FasTracks, the multi-billion-dollar, seven-county transit expansion project that voters elected to support with a sales-tax increase in 2004. "If we don't fix this problem now on the front end, we're going to have nothing but apartments around transit," Clark says. That's not what his organization, the largest financial contributor to the FasTracks campaign, promised voters. What it promised was vibrant mini-cities built around light-rail stations, featuring a diversity of housing options, people, shops and restaurants that would resemble what healthy downtowns used to look like.

"We are at risk of pouring a portion of this multi-billion-dollar FasTracks investment down the drain if we can't develop this like we've all envisioned it," says Lakewood mayor Murphy, who is chairman of the Metro Mayors Caucus's FasTracks Task Force.

He and the mayors of other cities FasTracks will expand into say the interest in building multi-family housing around transit is returning, but nearly every proposal is for apartments.

"I've gone to developers and said, 'Could you bring us some for-sale in addition to rental?'" says Arvada mayor Marc Williams. "And they're afraid to do that right now."

"It really becomes an issue of, do we feel comfortable in projects that have that dangling sword over them — this potential construction-defect issue? And for me and for many developers, the answer is no," says David Zucker, the director of development for Zócalo Community Development, the firm behind the popular RiverClay condos in Jefferson Park.

Zócalo is currently developing one of the new high-rises around Denver Union Station, the 132-year-old downtown train station that's being transformed into a multi-modal hub with eight commuter-rail tracks, including one to Denver International Airport, as part of the FasTracks project. Zócalo's high-rise, called Cadence, will comprise 219 luxury apartments. It's one of several such developments ringing Union Station; according to the Downtown Denver Partnership, a total of 2,725 apartment units are either planned or under construction there, though the organization stresses that it's unlikely that all of the planned units will be built.

The number of condos under construction is zero.

***********

So how did the condo-development industry end up in this mess? Some point to state laws.

When Colorado was founded in 1876, the law of the land was "buyer beware," says Bruce Likoff, an attorney who has researched the law and who sides with the mayors in thinking that construction-defect lawsuits have gotten out of hand. In the early 1960s, however, the Colorado Supreme Court issued a pair of decisions that set a different precedent: Builders were now required to guarantee that a home was constructed to code and suitable for habitation.

"That was, frankly, the beginning of the problem, but the problem didn't explode right away," Likoff says. The concept of suing a builder for shabby construction was born in California, he says, and imported here in the early '90s. The first high-profile cases involved single-family homes built on so-called expansive soils in suburbs like Highlands Ranch. These soils, which are common in Colorado, expand when wet, causing foundations and driveways to crack.

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39 comments
BTBT62
BTBT62

Sorry you need to read from bottom to top for the comment to make sense.

BTBT62
BTBT62

An additional economic perspective… maybe there is just less demand for brand new multi-family construction.The article doesn’t really address what consumers want in this market.There may be a perspective worth considering, in that after the last decade and an half of construction and defect contention, consumers don’t want to risk buying new shoddy products.Colorado’s defect atmosphere has demonstrated or alluded to a stigma about multi-family builders and their ability to build quality products.Who wants to “invest” in housing that has a higher than not percentage of being defective and costing one a lot of time, money and headache.I don’t.

BTBT62
BTBT62

My opinion, the current lack of ownership condo projects has less to do with construction defect, as it has to do with the economy’s supply and demand along with the timeline to initiate, fund and start a project.Right now all the “apartment” projects were started at or about the downturn and through the “recovery”.Statistics demonstrate that during down economic times, the rental demand jumps and the demand for ownership housing drops.Because rental demand has jumped, there is a need for more rentals because the supply is low.There were less multi-family rental starts in 2011, down almost 100,000 from the 10 year avg.So the supply is low, despite increase demand.From 2011 to projected 2015, rental demand is solid at an increase of 1.7 million units, whereas multifamily ownership housing is still dipping downside 1.4% last year to project 2015.If the economy rebounds, multi- family homeownership is project to be at the 1999-2000 level in 2015.So essentially, there is greater demand for rental property.(All stats either from multi-family section of HUD or multi-family section of Freddie Mac)

BTBT62
BTBT62

I do not agree with Tom Clark's assessment of "Fewer condos means fewer young couples who will be able to build wealth by buying a condo and then selling it for a profit once they have a kid and upgrade to a single-family home."You can't sell a defective home for a profit Tom.As a matter of fact, if the building is defective, the homeowners can’t re-fi or sell the condo and usually the homeowner loses money. So there should be a huge invested interest to ensure that ownership condo are built correctly.

And really, construction defects causing fewer condos causes poorer academic performance for children?Tom, we shouldn't settle for just throwing up condos because that's what was promised, we should strive to provide a quality condo units for ownership that will create value and return on investment.It’s hard to realize profit on a defective home.

BTBT62
BTBT62

For homeowners and HOAs, the question comes down to, who has the ability to protect themselves from defect issues.The builders absolutely can, not the homeowners.The homeowners aren't standing on-site for 24 hours a day ensuring construction is completed correctly and nor do they have the ability to fix an issue like the builder does. If the project was built right in the first instance and extra time was spent on carefully paying attention to details, the builder can limit its own risk.Which leads to the question addressed in the article, would someone pay an extra $500 to have the unit inspected during construction?Given even a higher estimate, I would have paid an extra $3,000.00 for my unit and given the builder as much extra time as it needed to ensure the job was done right... absolutely.You are usually talking less than 1% extra on a condo price. Given the headaches of the defects and what the process brings, it is an extremely small price to pay.

BTBT62
BTBT62

And to complain about expansion of the defects at that point seems to be capitulating to blaming someone else for problems one created or chose in the first instance not to properly address.That one window that leaked turned in a lot of windows, simply because the builder didn’t fix the one window issue when it was contacted in the first place.Another problem I experienced is that when builder’s treat homeowner’s like they are dumb and the builder emphatically espouses that the band-aid fix is sufficient, it does not lend to great relations for the defect issues when the band-aid fails (which we know it will b/c band-aids fall off).It lends to entrenchment and dissent. Lending to a potential solution for the builder, if there is an actual and serious warranty program that included a high level customer service piece, a builder could possibly end run many of these defect issues and get outside the SOR.

BTBT62
BTBT62

From an HOA's perspective there is usually no choice but to go through the defect suit process.Any claim about warranty issue... when you call the builder and tell them you have problems, they usually send the lowest guy on the totem pole off another job with a caulk gun (b/c he is really non-essential to the other job, which should help one conclude the quality of work that is going to be performed).If the fix involves anything beyond that, the developer/builder usually ducks its head into the sand like an ostrich.So after no response from the builder/developer or offer to repair (my experience, didn't even get an offer of repair or Plan B proposal), the HOA has no choice because the issues are too big for the homeowners to come out of pocket to pay for the repairs.Even if the homeowners are not made completely whole, being 60% of the way there is better than being nowhere near at all.

rocky
rocky

A big problem is that these attornies partner up with construction defect companies such as reconstruction experts.  Reconstruction Experts work the property management companies angle looking for anything that could potetentially be deemed as a defect.  Once they see that they may have a case they call in Sullen or Benson to build their case.  So in a sense the defect attornies have these construction companies in their back pocket working for them.  Once the case is settled, the HOA typically has a sense of trust in these defect companies because they wrote the cost of repair estimates for Sullen, who got them their money.  So in turn the construction company has a leg up on competition to complete the project for x amount of dollars after they settled.  You tend to see the same companies chasing these defects with the attornies.  For the attornies its a win win.  They get the case and they have defect specialist out their looking for their next  case.  For the construction company, its a win win.  They get the work to get the property functioning during the litigation.  As well as the reconstruction.

bill772
bill772

I'm honestly surprised that the legal profession and the insurance community of risk managers have not created a proactive remedy for Construction Defect claims coming from condo owners.  In the design and construction industry, we limit our risks by assigning responsibility to the various parties within our agreements and Construction Documents.  The developer is the person who is responsible to create the HOA by-laws, CC&R's and purchase contracts.  The fact that they have not used these agreements and rules documents to prescribe a warranty remedy puzzles me.  Developers could put in place a fully staffed warranty service to quickly respond to any one homeowner's complaint without "repairing every window in the building" if they didn't leak.  The responsive and focused warranty team would be far more effective than the extrapolation method of repairs created by the HOA's attorneys and experts who are exclaiming that if they only get "one bite at the apple," they're going to make sure that everything is included in that bite.  No wonder it's such expensive litigation and the attorneys are making so much money on their contingency engagements. By the time the settlement check arrives and the attorneys extract their percentage fee, there's not enough money to fix all the issues that were claimed in the complaint. 

This is not that complicated.  When you consider that the basis for filing a suit against the developer is based upon the CC&R's and the approved set of plans for the project, why isn't anyone making sure that those documents combined with the purchase contract provide a non-litigation remedy?  In the long run, it might be a lot less expensive that some of the high cost, low-rated insurance that is out there now.  There needs to be a serious workshop to create a new set of rules that has some common-sense solutions built into the agreements and rules.  The mayors should convene this meeting along with the various parties and their counsel and build some sensible policy. (bill@wfdexter.com)

bauerku
bauerku

Thanks for writing this expose on construction in Denver.  You discuss the problem that no-condo building is creating with taxes and TOD.  Another issue is affordable housing.  Denver's inclusionary housing ordinance only applies to for sale units NOT rentals.  With no protection for affordable housing, Denverites are now facing one of the highest rent burdens in the country.  

WillieStortz
WillieStortz

Is there anything in this country that lawyers haven't destroyed? 


We need laws that limit lawyers fees in class action lawsuits. So that true victims aren't once again exploited by these bottom feeding lawyers. 


I'm glad that Westword posted the pictures of these two low life scumbags. Everyone should know what they opportunistic weasels look like.

nopenope
nopenope

"Fewer condos means fewer young couples who will be able to build wealth by buying a condo and then selling it for a profit once they have a kid and upgrade to a single-family home."

 This statement is flawed.  It assumes appreciation (profit) on a condo purchase.  Anyone holding a condo right now (particularly if you purchase at the top of the market) knows that it has most likely not appreciated in value.  In all likelihood, it has lost a significant amount of value, and/or of the purchase price.

So instead of a step up property, condo ownership has instead become a financial sinkhole.

patricia.calhoun
patricia.calhoun moderator topcommentereditor

i'd like to publish some of these comments in our print letters to the editor seciton -- ideally with the author's full name. If that's okay, e-mail me at patricia.calhoun@westword.com.

Gilbilly
Gilbilly

Most modern condo's and apartments are built like shit by the most unskilled of construction workers with the crappiest of materials all in an effort to save a dollar.  Maybe if they built decent developments and lowered their profit margins a little they wouldn't get sued so regularly.

marc_bayes
marc_bayes

I don't think I've seen one condo complex that is not or has not been in litigation with builders. Not to mention that nearly all condo units in the Denver Metro area will no longer go FHA because of owner occupant versus investor ratios. There are a few that will but for the majority condo's are now cash or conventional loans only. 

FHA made it even harder with removing "Kiddie-Condo" loans at the start of 2013 so parents can no longer use an FHA loan to purchase their kids a home that they will not be living in. Condo's are a mess.

 @CONATIVE said it best: "The solution is a combination of more accountability on the builders side to build a better product and less power on the attorneys side for exploiting meager claims".

CONATIVE
CONATIVE

The solution is a combination of more accountability on the builders side to build a better product and less power on the attorneys side to exploit meager claims. 

These attorneys are like ambulance chasers. They pick a project that has not been sued, purchase a unit for $100-$200k, and strip the unit to its bones looking for defects. 

More often than not they are the ones knocking on doors, trying to get as many homeowners to drink their defect Kool-Aid so they can have enough support for a class action suit. 

Hopefully the bill will be tweaked for the next session and they will get it right. Otherwise, a lot of tax-payer money will be wasted since the Fastracks projects will not yield its original intended return on investment. 


fishingblues
fishingblues topcommenter

Scott Sullan is scum. He has made a mega fortune suing home builders.  Some of the problems are real, but most are not.  Sullan doesn't care about anything except lining his pockets.  Think about it.  There are thousands of components in a home.  I could find at least ten things wrong with every home ever built.  Most are not serious.  Do you want to know one of the biggest reason the cost of housing is so high?  Look no farther than racketeers like Sullan and his ilk.    (I am not a home builder and have no dog in the fight.)   

Meghan Smith
Meghan Smith

I have one someone could take off my hands

Ben Beeby
Ben Beeby

Its the condo market nationwide. There are also a lot of limitations on financing on Condos. They cannot have a lawsuit, they have to be more than 50% owner occupied etc. Additionally High Rise Condos are almost impossible to finance. If Denver wants condos, they are going to need to help finance people, cause the banks dont have any appetite for more foreclosed condos.

rocky
rocky

@BTBT62

I do agree with you, to an extent.  60% isn't much after years of litigation where the CD issues get worse.  However, if you fix the problem sometimes the work get's taken out of the litigation because it is considered fixed.  A company can provide "temporary repairs"  but the HOA still has to pay for those repairs.  These day's HOA's typically get 1/3 of what they need to fix their problems.  So say you get have 1 million in repairs needed.  HOA get's a 3rd of that. $300k? Then take out the CD attornies 20%.  Not much left over to fix the repairs needed.  This is also not taking into account the issues getting worse during the few years of litigation.

BTBT62
BTBT62

Yes, but RE give a warranty on its product that extends at least as far as the defect period.  This is way more than what the original contractor gave and the engineering is followed to a T.  That's why RE doesn't have a reputaiton of being sued for defective work, because RE follows the proper protical without cutting corners. 

fishingblues
fishingblues topcommenter

@nopenope    Wow, what a freaking pessimist.  The housing market, whether condo or single family, goes up and down just as the stock market does. We have a cyclical economy.  Over the long haul the stock market and housing both go up.  It is a statistical fact.  Look it up and quit with the hysteria.  If you are dumb enough to buy at the top and sell at the bottom, you deserve what you get.  

patricia.calhoun
patricia.calhoun moderator topcommentereditor

make that  letters to the editor "section."

doug400
doug400

@Gilbilly My buddy Kieth was a sub for many of the big builders and was asked 5 years ago to cut 15% from his subcontract.  My buddy sharpened his pencil and made the cuts and told me that he was only cashflowing to keep his crews together, but was not making money.  When he went to sign the contracts he was told to cut another 15%.  Instead, he asked me to help him dissolve his company...someone else DID sign those contracts though...it's no wonder there are issues...

nopenope
nopenope

@Gilbilly This is true of most single family homes being built now as well.

doug400
doug400

@CONATIVE This is an urban myth that has no basis in reality.  A rumor that has taken on a life of its own, but is nevertheless completely and utterly false.  Channel 9's Adam Schreger asked me about that rumor first in 2000 when the rumors first started.  The rumor was specifically directed at me.  I even had a local attorney testify to exactly what CONATIVE posted in an Arbitration about me specifically. 

Murrow
Murrow

Thanks for that note at the end. You sound completely unbiased...

marc_bayes
marc_bayes

@Meghan Smith Would love to help you out if you're looking at selling.

rocky
rocky

@BTBT62

From my understanding RE provides a one year warranty unless otherwise worked out.  Also, I know property managers who have used RE on CD cases that have had plenty of issues.  Many considered secondary litigation against RE but were burnt so badly during the first litigation, they chose not too.  Litigation can be extremly trying on homeowners and HOA's.  With HOA's typically only recieving a 3rd of what they need, it's not always in the best interest to go to litigation not only once but a second time.  RE doesn't do new construction for a reason.  If they did, I assure you they would have claims.

fishingblues
fishingblues topcommenter

@doug400   Wow!  So what allegedly happened to your "buddy Keith" is indicative of the entire industry?  Is that what you want people to believe you believe?  

fishingblues
fishingblues topcommenter

@nopenope @Gilbilly   Is it?  How would you know?  You have shown yourself to be highly prejudiced, hysterical and generally full of crap.   

doug400
doug400

After I received the transcript, the attorney called me with the arbiter and all of the other attorneys on the line and apologized.  I have never owned a multi-family residential unit and have never done anything close to what you described.

In addition, understand that we handle these cases on a contingent fee basis.  We do not take marginal or "meager" claims as it would not make sense. 

fishingblues
fishingblues topcommenter

@Murrow   Thanks for your enlightened contribution Ed.  

I believe everyone should disclose their position, so that people can view it accordingly.

Since you don't appear too bright, I'll let you in on a secret.  NO ONE is completely unbiased.  Hope that helps. 

fishingblues
fishingblues topcommenter

@Murrow   "loser pays" is in effect (in watered down fashion) in only Alaska and Texas.

Contingent representation makes it too easy to sue someone.  We have become a litigious society.  Too many think it is the way to a fast buck.  I would concur that some form of this may be necessary.  However, severe restrictions in attorney compensation and "reasonable" awards need to be placed.    

fishingblues
fishingblues topcommenter

@nopenope @fishingblues @Murrow I have purchased several, in fact.  I have not had any problem whatsoever.  My experiences have been mostly positive.  The key is  the superintendent.  All builders use essentially the same materials and subs.  Proper supervision is what yields a good house.  

Murrow
Murrow

@fishingblues You're a feisty one.  

1.  It's my understanding that recoverable litigation fees & costs is a long standing practice.  However, sometimes the "winner" is not always clear cut.  In construction defect there are a number of issues, where in some areas damages may be awarded and others not.

2.  Contingency representation is important for enabling adequate representation and access to the legal system.  In this case individual homeowners or HOA's rarely have the resources to fight a protracted legal battle against a builder/corporation on an hourly basis.

3. I'm sure there is disagreement on what "realistic" means, but fair enough.

nopenope
nopenope

@fishingblues @Murrow Have you ever bought a house or condo at construction?  I have, and it has been a nightmare of shoddy, substandard work.  You can have the longest punch list in the world, but getting a builder to address actually address anything is next to impossible.  Especially if you have a job and must try to chase them down, get appts, get them to SHOW UP to said appts, etc.  They build as cheaply as possible and then just hope that they can avoid the lawsuits and do nothing to cure as well.

fishingblues
fishingblues topcommenter

@Murrow   Golly, aren't you sensitive!  You must be a liberal.  I don't imagine your snide comment to me {"Thanks for that note at the end. You sound completely unbiased..."} would constitute 'trolling' in your unbiased mind?  So now you want to pretend like you are sensible and willing to discuss rationally?  

I'm not sure we will ever rid the earth of the parasitic, opportunistic, greedy slime balls that ruin the legal profession.    However, since you asked ---- considerations for tort reform:

1.  If initiating party loses, they and their attorney pay costs of opposing party.

2.  Serious review and possible elimination of 'contingency' practices.

3.  Realistic cap on damage awards including the elimination of punitive and other non-economic damage. 

Murrow
Murrow

@fishingblues Oh thank you! Your personal insults and diatribe really contribute to the conversation.  I know it's easy to troll online comments and not everyone has the time to write a novel about their disdain for one man, but your position is lacking some context.  Since you're not a builder, what has led you to such visceral hate?  Or better yet how about opining on what kind of tort reform you would like to see.  

No one likes litigation but there has to be a way to promote development while also protecting homeowners from shoddy building.  This is a complex issue, but one of the big problems is it often takes a long time for serious damage from defects to show itself, and not all builders are equally responsive to repairing problems (or even around years down the road).  In the end I think it's better to err on the side of protecting individuals, but I hope that any reform that comes through will help limit the length and outsized costs of these lawsuits.

 
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