"Would I do it again? Hell no."
A house divided
Bill targeting suits over home defects splits builders, owners
By Mark P. Couch
Denver Post Business Writer
denverpost.com
Sunday, February 09, 2003 - One year after Bob Schneider moved into his $202,000 condominium in central Denver, the outside walls of the building began to crack, water streaks stained the hallways and mold grew on the stairway walls.
Post / Jerry Cleveland
Bob Schneider, president of the Villa Riva Condominium Association, points to a ceiling that still leaks after repairs were made. The association has fought with the builder over such problems.
In her new Aurora house, Angela Simmons' hot-water heater takes up to five minutes to pump warm water to the taps - far longer than anyplace else she's ever lived.
The foundation of James Danyo's new Highlands Ranch house cracked so badly that an engineer told him that it would cost $55,000 to fix it.
Colorado lawmakers are reviewing a bill that could change how these homeowners and others like them pursue claims that they are victims of faulty construction.
Homeowners say the existing system protects them by allowing them to collect damages from homebuilders that fail to follow basic construction procedures. Builders claim the threat of lawsuits drives up housing costs for everybody.
"I don't cry and shout obscenities very often," Simmons said. "But my builder has seen me do both. I could not believe the words coming out of my mouth, but now when I call Richmond American Homes to do something, they do it."
The Simmons method of demanding home repair could become more common if Colorado lawmakers pass the Construction Defect Action Reform Act.
The bill - already approved by the House and scheduled for debate in the Senate this week - would change the rules for when owners can sue and limit how much they collect from homebuilders.
Homeowners and plaintiffs' lawyers want to preserve the existing law that allows them to sue builders for faulty construction of new homes. They say they need the threat of a lawsuit to get builders to deal promptly with problems.
"It's unconscionable," said Danyo, who sued Sanford Homes over the cracked foundation in his house. "The builder is saying it's just a cosmetic issue. It's just unbelievable how they will stall."
Danyo, a 53-year-old military retiree, bought his house in 1995 and sued his builder about two years ago. He said the case has not been resolved.
"After chasing my builder on other warranty issues and seeing how they behaved, a lawsuit was the only option," Danyo said.
Perry Cadman, executive vice president with Atlanta-based Beazer Homes USA Inc., which acquired Sanford in 2001, said his company would make the cosmetic changes it says is necessary if Danyo would let them.
"Our intent is not to fight with home buyers," Cadman said. "Our intent is to get it fixed. Litigation is sometimes prohibitive in getting it done."
Builders contend that they need better protection from frivolous lawsuits and ever-increasing insurance premiums. They claim insurance rates are rising because homeowners can sue for up to three times the cost of making repairs. A builder who makes a mistake faces the same risk as a builder that commits fraud.
"Insurance companies are so terrified that they are quick to settle," said Sen. Andy McElhany, R-Colorado Springs, one of the sponsors of the bill. "That is reflected in the premiums charged to builders, and it's impacting the price of housing."
Builders call it the "tort tax." They claim they are besieged by ruthless lawyers who sue for the slightest problems, driving up construction costs for everybody else.
To avoid the risk of legal settlements, many big insurers won't sell policies to homebuilders who construct a small number of houses each year. Zurich North America, for example, discontinued selling builder's liability insurance in the United States.
With fewer companies selling insurance, builders complain that their bills have skyrocketed.
McStain Enterprises Inc. of Boulder paid a $500 premium for each house it built in 1998. In 2003, the best rate it can get is $3,000 per house, and the company rarely has filed claims on its policy, said McStain chief financial officer Bruce Valentine.
Post / John Prieto
Angela Simmons says she has to run the kitchen faucet for several minutes before getting hot water in her new Aurora home.
Homebuilder Craig Austin said his Greenwood Village-based company will pay $130,000 for insurance this year whether it builds one house or 10 - a premium rate that has tripled in recent years. And the policy excludes riskier claims that could result from unstable soil or mold.
Homeowners say the existing system is a better way to protect their interests.
For example, Denver resident Schneider said he and his fellow residents in the Villa Riva condominiums in the 1500 block of Vine Street have struggled to get repairs to a cascading series of water-related problems in the 3-year-old, 24-unit complex.
Exterior passageways connecting the condos are pocked with cracked faux stucco. The patchwork ceiling on the second floor reveals partially repaired damage. Some rusting balcony railings hang loosely.
Schneider said he stopped repair workers to prevent them from hiding structural problems.
"Painting over the mold is covering up the symptom, but it's not curing the problem," Schneider said.
Villa Riva developer Bryan Barnes blames the problems on a construction contractor and claims he is also a victim. He still owns all or part of five units in the building.
Barnes said that Schneider and the condo board are making it impossible to repair the damage.
"If there wasn't a big lottery at the end, the repairs would have been made," Barnes said.
Last week, Simmons learned that her method of home repairs - cursing and crying - wasn't working as well as she originally thought.
An inspector's report, conducted in advance of the one-year anniversary of living in her house, found that several of the repairs promised by the company had not been made.
In a written statement, executives from Richmond American said: "Richmond's contract with each homeowner for the purchase of their home includes an arbitration provision and, if the homeowner requests it, Richmond American will accept arbitration."
Simmons said she expects to take her homebuilder to arbitration. And she has made a vow.
"I bought my house from Colorado's largest homebuilder, Richmond American Homes," Simmons said.
"Would I do it again? Hell no."
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