Construction Defect litigation, not economy, to blame for lack of Denver multi-family residential construction

Construction defect lawsuits are the primary factor impacting builders’ willingness to take on new projects in the Denver metro. That is the conclusion reached by local government officials.

According to the recent Denver Metro Area Housing Diversity Study [PDF] prepared by Economic & Planning Systems, Inc. for the Denver Region Council of Governments, the mix of construction projects in Denver is not very diverse. Specifically, condo projects represent only 11% of construction projects in the area – down from 30% in 2006.

According to reporters at Westword:

Developers and builders report that they won’t build new condo projects because of the high likelihood that they’ll later be sued by the homeowners’ association for shoddy construction, a claim they say is often exaggerated. Regardless of where the truth lies, most lawsuits end up settling for millions of dollars. That kind of liability has caused a majority of the companies who previously insured Colorado builders to bow out of the condo game altogether, local agents say, making the outlook for new construction even more bleak.

There’s a saying among those who blame the condo decline on these types of lawsuits — and on the tenacious lawyers who file them on behalf of homeowners: “There are two types of condo projects: those that have been sued and those that will be sued.”

Via Westword, Westword Blogs and DRCOG (PDF)