1. The Tattered
Patchwork
of Local
Ordinances
CAI Rocky Mountain Chapter
2016 Spring Showcase
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2. PRESENTERS
Ed Fronapfel, MSCE, PE
Owner
Heidi Storz, Esq.
Partner
Mari Perczak, Esq.
Shareholder
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3. INTRO SLIDE
PRESENTER
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4. Denver
Aurora
Colorado Springs
Commerce City
Lakewood
Littleton Lone Tree
Parker
Map Source:
http://mapsof.net/uploads/static-maps/colorado_county_map.png
Wheat Ridge
Loveland
Fort Collins
Westminster
Local CD Ordinances Have Cropped
Up All Along the Front Range (2014)
Arvada

5. Arvada
Forced Arbitration
With Builder-Selected Arbitration Service??
Not Even In Declaration – Requires Homeowners
to Go to Recorded Plat to Figure This Out

6. Aurora
Forced Repairs by Builder
• Homeowner or HOA has no right to reject a builder’s proposed deficient or unsafe repair
Forced Arbitration
Takes Control Out of Board’s Hands
• Requires homeowner vote for matters that the BOD should handle
Requires HOAs to Make Disclosure of Unknown Information
• Before making a notice of claim, HOAs must disclose the cost of repairs ; the effect upon
marketability of units; and other information

7. Colorado Springs
Required Disclosures of Unknown Information
• Requires HOAs to disclose information that is not readily available
prior to fully investigate its construction defect claims
Forced Repairs
• Builder is unilaterally entitled to make all repairs – including
hazardous or inappropriate ones
Takes Control Out of Board’s Hands
• Requires homeowner vote for matters that the BOD should handle

8. Commerce City
Forced Repairs by Builder
• Homeowner or HOA has no right to reject a builder’s proposed deficient or unsafe repair
Forced Arbitration
• Using builder-selected arbitration services and builder-selected arbitration rules
Takes Control Out of Board’s Hands
• Requires homeowner vote for matters that the BOD should handle
Requires HOAs to Make Disclosure of Unknown Information
• Before making a notice of claim, HOAs must disclose the cost of repairs ; the effect upon
marketability of units; and other information

9. Denver
Eliminates Implied Warranty of Habitability
Releases builders from the requirement to construct in compliance
with manufacturers’ instructions
Takes Control Out of Board’s Hands
• Requires homeowner vote for matters that the BOD should handle
Requires HOAs to Make Disclosure of Unknown Information
• Before making a notice of claim, HOAs must disclose the cost of repairs ; the effect upon
marketability of units; and other information that the HOA likely does not know at that time

10. Fort Collins
Makes it a Criminal Act to Attempt to Modify an HOA’s
Declaration Regarding Arbitration
Takes Control Out of Board’s Hands
• Requires homeowner vote for matters that the BOD should handle
Requires HOAs to Make Disclosure of Unknown Information
• Before making a notice of claim, HOAs must disclose the cost of repairs ; the effect
upon marketability of units; and other information that the HOA likely does not
know at that time

11. Lakewood
Forced Arbitration
Forced Repairs by Builder
• Homeowner or HOA has no right to reject a builder’s proposed deficient or unsafe repair
Takes Control Out of Board’s Hands
• Requires homeowner vote for matters that the BOD should handle
Requires HOAs to Make Disclosure of Unknown Information
• Before making a notice of claim, HOAs must disclose the cost of repairs ; the effect upon
marketability of units; and other information that the HOA likely does not know at that time

12. Littleton
Forced Arbitration
Forced Repairs by Builder
• Homeowner or HOA has no right to reject a builder’s proposed deficient or unsafe repair
Takes Control Out of Board’s Hands
• Requires homeowner vote for matters that the BOD should handle
Requires HOAs to Make Disclosure of Unknown Information
• Before making a notice of claim, HOAs must disclose the cost of repairs ; the effect upon
marketability of units; and other information that the HOA likely does not know at that time

13. Lone Tree
Forced Arbitration
Takes Control Out of Board’s Hands
• Requires homeowner vote for matters that the BOD should handle
Requires HOAs to Make Disclosure of Unknown Information
• Before making a notice of claim, HOAs must disclose the cost of repairs ; the effect
upon marketability of units; and other information that the HOA likely does not
know at that time

14. Loveland
Takes Control Out of Board’s Hands
•Requires homeowner vote for matters that the BOD should
handle
Requires HOAs to Make Disclosure of Unknown
Information
•Before making a notice of claim, HOAs must disclose the cost of
repairs ; the effect upon marketability of units; and other
information that the HOA likely does not know at that time

15. Parker
Forced
Arbitration

16. Wheat Ridge
Forced Arbitration
Forced Repairs
• HOA cannot reject a builder’s unsafe or deficient repairs
Takes Control Out of Board’s Hands
• Requires homeowner vote for matters that the BOD should handle
Requires HOAs to Make Disclosure of Unknown Information
• Before making a notice of claim, HOAs must disclose the cost of repairs ; the effect upon
marketability of units; and other information that the HOA likely does not know at that time

17. Critical Issues Raised
by These Ordinances
Defining
“Construction
Defect”
• Denver
Absolute Builder
Rights to Repair
• Aurora
• Commerce City
• Lakewood
• Littleton
• Wheat Ridge
Strategic Efforts
to Eliminate
Builder Liability
• All Municipalities

18. Absolute “Right to Repair”
Spoliation of Evidence of Construction Defects
Repair of Defects
•Cure of Problem
•Correction of Resultant Damages
Other Concerns

19. Spoliation of Evidence
of Construction Defects
• If repairs are unsuccessful, or the parties end
up in litigation after repairs, evidence of
defects would have been destroyed during
repairs performed by builder
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20. Two-Prongs to Repairs
to Construction Defects
• Correction of defective condition
– No third-party oversight to ensure repairs are made in
compliance with code or other requirements
• Repair of resultant damage
– No quality control or third-party oversight to ensure
correction of resultant damage
– No incentive to do so (resultant damage can be hidden
during repair process)
– No method for owners or HOA to require such repairs
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21. Absolute “Right to Repair”
Other Concerns
• Same contractor who caused defects in the first
place could make repairs
– No opportunity for HOA or owners to vet contractor
• Consequences of poor/incomplete repairs:
– Increased maintenance costs
– Reduced service life of building or component
– Change/damage aesthetical appearance
– Reduce value of property
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22. Absolute “Right to Repair”
Other Concerns
• No requirement to correct life-safety issues
• No compensation to owners or HOA for:
– Prior repairs
– Investigation/engineering costs
– Attorney fees
– Loss of use
• No protection from filing of subcontractor liens?
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23. Strategic Efforts to Limit
or Eliminate Builder Liability
• Limits on Powers of BOD to Transact
Association Business
• Required Disclosures
• Non-negotiated arbitration provisions
• Ability to control HOA long after completion
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24. Limits on Powers of BODs to
Transact Association Business
• CCIOA permits Associations to institute litigation on behalf
of the Association or two or more owners regarding
matters affecting the common-interest community
– Colo. Rev. Stat. Sec. 38-33.3-302(1)(d)
• Many of the local ordinances remove this power and
require a majority vote of homeowners within specific
restrictive time periods
– These time periods serve no function but to provide one more
stumbling block for HOAs to seek remedies for defects and
provide additional grounds for builders to escape liability
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25. Require Disclosures
of Unknown Information
• Under many of these ordinances, Associations must disclose:
– Nature of action and the relief sought
– Expenses and fees BOD anticipates will be incurred, including potential liability
if the HOA is not the prevailing party
– Estimated cost of repairing defect, or, if unrepaired, impact on unit value
– Impact upon marketability of units, including impact on ability to refinance
– Manner of funding the costs of the action
– Anticipated duration and likelihood of success
– Whether builder has offered to, and made, repairs
– Steps taken by builder to address defect (including inspections)
– Date by which claims must be filed to be timely under SOR and SOL
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26. Disclosures Must Be Given
60 Days Before Notice of Claim
• Disclosures are required to be made 60 days
before serving a notice of claim
• If an Association is close to a deadline for
statute of limitations or repose, this 60-day
“waiting period” could end up serving as a bar
to the Association’s claims under the statute
of limitations or repose
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27. Non-Negotiated
Arbitration Clauses
• Local ordinances prohibit amendments to
Declarations/CC&Rs related to arbitration provisions
– One jurisdiction (Fort Collins) actually made it a crime to
attempt to amend a Declaration
• As a result, builders can put whatever onerous
requirements it desires into the Declarations, and the
HOA will have no ability to avoid complying with them
– In some instances, these requirements could ultimately
serve as an effective bar to all construction defect claims
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28. Exemplar Onerous
Arbitration Clauses
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29. Ability to Control HOA Business
Long After Transition
• Some ordinances prohibit amendment of
Declaration arbitration provisions without builder
consent
– Irrespective of whether transition has occurred,
builder is out of business, builder no longer owns
units, and is no longer on the BOD
• Allows the builder to exert control over operation
of the HOA long after the property is complete
and they have left the community
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30. Questions?
Thank You!
CAI Rocky Mountain Chapter
2016 Spring Showcase
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