3 ms·

The Decline of Condominium Construction in CO: Addressing Litigation Reform

5 points by jseliger 3y ago

gravypod 3y ago
This is CO focused but I feel like some investigation is needed in other regions as this seems to be a large problem with many places. Building rental units has just become the no-brainer choice.
ImPostingOnHN 3y ago
this blog entry claims that: 1) the decrease in condo building is due to high construction liability insurance costs 2) the high construction liability insurance costs are due to lots of construction defect litigation 3) the lots of construction defect litigation is due to... the analysis stops there, without examining why, other than "because the state made us responsible for our construction defects" one would think they would look inward and wonder why they were constructing buildings with so many defects instead, they just say the state should find ways to indemnify condo developers for constructing buildings with defects
- Animats 3y ago
  The problem seems to be that the Denver area has unusual soil situations that cause foundation problems. Here's the view from a firm that defends builders.[1] Many of the problems involve building motion long after construction. Hence litigation. Denver seems to have an unusually large number of foundation repair contractors. [1] https://www.hhmrlaw.com/publications/CD%20Overview%20(2013%20edition).pdf https://www.hhmrlaw.com/publications/CD%20Overview%20(2013%2...
  - olliej 3y ago
    If you know the soil is unusual, you should be designing for that soil. The fact that failing to account for that leads to damage warranting legal action is indicative of poor design and construction, exactly what should place liability on the designers and constructors. In what world does it make sense not to?
- olliej 3y ago
  Eg offload the full cost of construction onto taxpayers. If you are a private business that can only operate at a profit with tax payers footing a chunk of the bill you aren’t profitable. Any “profit” being made is simply theft from tax payers. End of story. That said I couldn’t read the actual content of the article on my phone because every thing kept trying to force me to log in with an ms account?
  - eru 3y ago
    > If you are a private business that can only operate at a profit with tax payers footing a chunk of the bill you aren’t profitable. Any “profit” being made is simply theft from tax payers. End of story. I'm not sure that's as much of an argument as you think it is. Many military contractors are run for-profit, but the tax payer is footing the bill.
quasse 3y ago
I am automatically extremely skeptical of any think tank who's name starts with "Common Sense" or similar, and I feel vindicated once again. This seems to be a lobbying piece on behalf of the mega-developers who build slap-dash stick frame multifamily buildings and then wash their hands of them before the dust settles and the new owners realize that they were constructed to the lowest (or no) standards by the cheapest general contractor. >These laws hold developers and builders accountable for perceived defects in the construction of condominium projects, even if the defects are minor, provide little to no economic loss to the homeowner, or do not affect the structural integrity of the building. Sounds like litigation was catching up to these "investors" peddling shoddily built units in large buildings to desperate first time homebuyers. Imagine the poor developers being held accountable for construction defects in the buildings they built. Condos conveniently have a mechanism for collective action built in (the condo board or HOA) which probably made it much more likely that a developer would be held legally accountable when a building had major defects. I'm willing to bet that the shift to single family homes is great for them because a lone homeowner is unlikely to have the legal firepower to take on one of the large developers for shoddy construction.
- dan-robertson 3y ago
  The author is apparently CEO of “a socially conscious public housing authority, owner, operator and developer of multifamily affordable housing based in Adams County, Colorado”. I feel like your “mega-developers trying to exploit keen home buyers” take is probably too simplistic.
skybrian 3y ago
An alternative explanation is that recent interest rate increases are at least partially responsible for the decline in condo construction. Comparing Colorado to other states might shed some light on this?
- dan-robertson 3y ago
  Look at figure 8. They don’t have 2023 data but seem to think it started before the recent rate increases. I don’t really see their claimed 2017 change on the graph.
Simulacra 3y ago
I'm surprised that it doesn't mention HOA's more and their bad behavior in Colorado as a reason. https://news.ycombinator.com/item?id=37510816 https://news.ycombinator.com/item?id=37510816

5 points by jseliger 3y ago

This is CO focused but I feel like some investigation is needed in other regions as this seems to be a large problem with many places. Building rental units has just become the no-brainer choice.

ImPostingOnHN 3y ago

this blog entry claims that: 1) the decrease in condo building is due to high construction liability insurance costs 2) the high construction liability insurance costs are due to lots of construction defect litigation 3) the lots of construction defect litigation is due to... the analysis stops there, without examining why, other than "because the state made us responsible for our construction defects" one would think they would look inward and wonder why they were constructing buildings with so many defects instead, they just say the state should find ways to indemnify condo developers for constructing buildings with defects

Animats 3y ago
The problem seems to be that the Denver area has unusual soil situations that cause foundation problems. Here's the view from a firm that defends builders.[1] Many of the problems involve building motion long after construction. Hence litigation. Denver seems to have an unusually large number of foundation repair contractors. [1] https://www.hhmrlaw.com/publications/CD%20Overview%20(2013%20edition).pdf https://www.hhmrlaw.com/publications/CD%20Overview%20(2013%2...
- olliej 3y ago
  If you know the soil is unusual, you should be designing for that soil. The fact that failing to account for that leads to damage warranting legal action is indicative of poor design and construction, exactly what should place liability on the designers and constructors. In what world does it make sense not to?
olliej 3y ago
Eg offload the full cost of construction onto taxpayers. If you are a private business that can only operate at a profit with tax payers footing a chunk of the bill you aren’t profitable. Any “profit” being made is simply theft from tax payers. End of story. That said I couldn’t read the actual content of the article on my phone because every thing kept trying to force me to log in with an ms account?
- eru 3y ago
  > If you are a private business that can only operate at a profit with tax payers footing a chunk of the bill you aren’t profitable. Any “profit” being made is simply theft from tax payers. End of story. I'm not sure that's as much of an argument as you think it is. Many military contractors are run for-profit, but the tax payer is footing the bill.

quasse 3y ago

I am automatically extremely skeptical of any think tank who's name starts with "Common Sense" or similar, and I feel vindicated once again. This seems to be a lobbying piece on behalf of the mega-developers who build slap-dash stick frame multifamily buildings and then wash their hands of them before the dust settles and the new owners realize that they were constructed to the lowest (or no) standards by the cheapest general contractor. >These laws hold developers and builders accountable for perceived defects in the construction of condominium projects, even if the defects are minor, provide little to no economic loss to the homeowner, or do not affect the structural integrity of the building. Sounds like litigation was catching up to these "investors" peddling shoddily built units in large buildings to desperate first time homebuyers. Imagine the poor developers being held accountable for construction defects in the buildings they built. Condos conveniently have a mechanism for collective action built in (the condo board or HOA) which probably made it much more likely that a developer would be held legally accountable when a building had major defects. I'm willing to bet that the shift to single family homes is great for them because a lone homeowner is unlikely to have the legal firepower to take on one of the large developers for shoddy construction.

dan-robertson 3y ago
The author is apparently CEO of “a socially conscious public housing authority, owner, operator and developer of multifamily affordable housing based in Adams County, Colorado”. I feel like your “mega-developers trying to exploit keen home buyers” take is probably too simplistic.

skybrian 3y ago

An alternative explanation is that recent interest rate increases are at least partially responsible for the decline in condo construction. Comparing Colorado to other states might shed some light on this?

dan-robertson 3y ago
Look at figure 8. They don’t have 2023 data but seem to think it started before the recent rate increases. I don’t really see their claimed 2017 change on the graph.

Simulacra 3y ago

I'm surprised that it doesn't mention HOA's more and their bad behavior in Colorado as a reason. https://news.ycombinator.com/item?id=37510816 https://news.ycombinator.com/item?id=37510816