CAI issues alert regarding proposed Lakewood construction defect ordinance

by Jeffrey P. Kerrane ColoradoHomeowner AssociationsLegislativeNews

September 25, 2014




On September 22, 2014, the City of Lakewood Mayor and City Council introduced for first reading an ordinance (Ordinance O-2014-21) that would restrict homeowner rights with regard to construction defects in Lakewood. While the ordinance’s stated intent is to spur the construction of condominiums in Lakewood, this ordinance would actually go farther than last legislative session’s failed SB14-220 in eviscerating consumer protections for homeowners living in HOAs. The ordinanceessentially incorporates all of the provisions of SB14-220 and adds a right for the builder to repair any defects. If passed, the ordinance would do the following:

Redefine “construction defects” to a much more restrictive definition that only includes violations of building code and manufacturer specifications.
Grant builders the unilateral authority to determine the scope of defects, offer to repair those defects, and perform the repairs, while prohibiting an owner from refusing repairs or having a say in the repair process.
Require associations to comply with any declaration provisions concerning how construction defect claims are procedurally handled, including mandatory arbitration provisions drafted by the declarant.
Mandate that associations provide notice and disclosures to homeowners addressing a variety of issues that directly relate to the construction defects and the anticipated impact on homeowners of a legal action brought against the builder. This notice and disclosure would be in additional to the notice already required under the Colorado Common Interest Ownership Act.
Impose a prerequisite that associations receive written consent from at least 51% of owners prior to giving the builder notice of potential defects or proceeding with litigation or arbitration against the builder. Proxy voting would be prohibited as part of this owner consent process.

The Denver Post has reported that other Denver metro-area mayors are paying close attention to the outcome of this Lakewood ordinance, meaning that its passage could have a negative ripple-effect on homeowners throughout the region.

The Community Associations Institute’s Colorado Legislative Action Committee (“CLAC”) has also taken note and is actively following the issue. In addition to all of the concerns about the substance of the ordinance, CLAC is concerned that Lakewood is over-stepping its home rule authority with this proposed ordinance. CLAC has engaged an attorney who specializes in municipal law to provide an opinion on whether the Lakewood ordinance passes muster under home rule authority.

Regardless of the attorney opinion, CLAC will need unified homeowner and constituent voices to weigh-in on the Lakewood ordinance. CLAC spends a tremendous amount of time “behind the scenes” on these types of issues, but those efforts are futile without the participation and support of Colorado CAI members. In the coming days, watch for a Call to Action on this issue. Also, please mark your calendar for the second reading and comment session on this ordinance, currently scheduled for October 13, 2014, at 7:00 p.m. in the Lakewood City Council chambers at 480 S. Allison Parkway in Lakewood. Upcoming communications will include details about participation in this event.



CAI Government Affairs represents the interests of the 65 million people living and working in America’s community associations on legislative and regulatory issues at the local, state, and federal level of government