Go to the mobile version of this Web site.

Login | Contact Us | Site Map | Paid archives | Electronic edition | Subscription Questions | Extras

Builders pay the price

By John Rebchook, Rocky Mountain News (Contact)

Published July 29, 2008 at 9:25 p.m.

Text size  
Sue Small lives at Central Park Townhomes in Aurora. Defects in her house included leaks, among other things. "I was sitting here on the phone one night and thought, 'Wow, it's really raining hard. Oh, that's because it's raining on the inside,' " Small said.

Photo by Brian Lehmann / The Rocky

Sue Small lives at Central Park Townhomes in Aurora. Defects in her house included leaks, among other things. "I was sitting here on the phone one night and thought, 'Wow, it's really raining hard. Oh, that's because it's raining on the inside,' " Small said.

Rebchook on Real Estate

Click here to read John Rebchook's blog.

More Real Estate

More stories »

When Sue Small paid about $175,000 for her townhome in the Central Park development in Aurora in 2003, she was thrilled.

"I was looking at a lot of single- family homes, but I kept going back and decided I should just buy it," she recalled.

"It has a lovely layout. It is very warm and homey."

But her dream soon turned into a nightmare.

The front porch started to settle and sag, roof columns were separating and her front window leaked so much it was like a waterfall inside her home during a heavy rain.

Improper drainage was causing flooding in many of the basements in the 74-unit complex.

So when lawyer Chris Rhody recently called and told her that the Central Park Townhomes Condominium Association had won an $8 million construction defects settlement against the builder, ending two years of litigation, she was thrilled again.

"I let out a shriek," she said. "I literally jumped up from my desk. Now we will have the money to get this fixed right."

In March, a jury had awarded the association slightly more than $5 million, but earlier this month the settlement was amended to $8 million, said Rhody, of McKenzie Rhody & Hearns.

In another recent case, another law firm won $11.7 million for homeowners in Westminster.

The law firm that won the Westminster case, Sullan, Sand grund, Smith & Perczak, won a $39.5 million case about two years ago in Rock Creek in Superior, believed to be the biggest ever in Colorado.

All these cases involved homes built during the construction boom in the late 1990s and early 2000s, when builders couldn't construct homes fast enough to sate the demand from buyers.

Industry officials contend they had trouble hiring qualified subcontractors, which is playing a big role in recent cases alleging shoddy construction.

Rhody said that his victory against Central Park Town homes LLC and general contractor Fairfield Construction Co. sends a message to builders.

"The case shows that Colorado juries take construction defects very seriously," Rhody said. "It also means builders can expect similar judgments if they fail to follow the standard of care during the construction process."

Lawyer Dan Fowler, one of the attorneys representing the homebuilder, said they don't plan to appeal.

Fowler said builders constructing homes during the housing boom in the 2000-2001 era "had a difficulty in finding qualified subcontractors and were forced to hire people who were basically carpetbagging from place to place."

That was a time when many people were taking their money out of the stock market and putting it into homes.

Asked if unqualified subcontractors caused the problems at Central Park Townhomes, Fowler said, "There were a number of subs who wound up getting replaced."

Said Rob Nanfelt, of the Colorado Association of Home Builders, "I think that was probably a pretty fair assessment of what had been going on."

He said that construction lawsuits had been declining for about five years, when legislation was passed in 2003 to address the growing number of lawsuits.

Lately there are indications that lawsuits may have started to spike a bit, he said.

But Scott Sullan, whose firm has won a number of lawsuits against builders, said that the number of lawsuits has dropped substantially.

He said builders "learned their lessons from the late '90s," and are now being more responsible.

He said John Laing Homes recently voluntarily agreed to pay about $12 million to fix homes and that Richmond American Homes voluntarily agreed to spend about $18 million.

Also, builders increasingly are retaining third-party quality control specialists to make sure work is done properly, Sullan said.

Lawyer Carrie A. Rodgers, of Moye White LLP, said the "big ones catch everyone's attention," but argued that the $20 million in recent awards to homeowner associations in two cases doesn't indicate a trend.

Big defects

Some of the largest construction defect cases in recent years.

* The Summit at Rock Creek vs. D.R. Horton Inc.: A $39.5 million settlement for construction defects, foundation issues and moisture intrusion for Boulder County homeowners association on behalf of the owners of 226 units.

* Carriage Gate HOA vs. Carriage Gate, LLC: A negotiated $18 million settlement for moisture intrusion and construction defects for Arapahoe County homeowners association on behalf of more than 56 condominium owners. Obtained a separate $1.48 million settlement with stucco/EIFS (Exterior Insulation and Finish Systems ) applicator.

* Heritage Greens at Legacy Ridge: A $11.7 million jury verdict for damages for negligent construction and misrepresentation, breach of implied warranty and breach of fiduciary duty claims against the developer and the builder on behalf of Adams County homeowners association.

* St. Andrews at Plum Creek Condominium Association vs. D.R. Horton Inc.: On the eve of trial, the structural defect and moisture intrusion lawsuit was settled for more than $25 million for Douglas County homeowners association on behalf of more than 86 condominium owners.

* Central Park Townhomes Condominium Association vs. Central Park Townhomes LLC and Fairfield Construction Co. Inc.: $8 million settlement for damages, including foundation problems, sinking sidewalks and leaking windows. Also received $250,000 in attorney fees.

Comments

  • July 29, 2008

    11:49 p.m.

    Suggest removal

    windbourne writes:

    PoppyCock. These builder have been hiring the lowest cost ppl, for which many are using illegals. It has been 26 years since I framed and 35 since my family built our own home back in Ill (7500 sq/ conduit wiring adn low voltage switching/R30 insulation,2 fireplaces, etc. etc). Even when I came out here and found out what a real house looks like (romex???? that was a shock; only r15 insulation? wow. no sealing of the outer walls; plastic siding? Fake blocks, etc etc.). But now I look at these houses, their construction techniques, AND the workmanship. The techniques are interesting, but appear to work. But the workmanship? Gads, it is horrible. We now live in a shea that was originally owned by one of the shea foreman. Inspected it closely. Well built (a few shortcuts that I wish he had not taken, but ....) . While most of the sheas that I have seen are decent, I noticed a few that were equivalent to KB, Engel, or Richmond's 4 season; i.e. pure junk. It appears to be more related to the hiring of lousy subcontractors and a lazy foreman.

  • July 30, 2008

    9:39 a.m.

    Suggest removal

    TDW writes:

    How funny that builder's blame the subcontractors for the work that was designed and inspected by the builder's. We used to work on new construction from the mid 1970's until the mid 1990's without one failure. Thats because we believed in quality not quantity (How many can be done per day) Builder's badger the subcontractors about what they are charging, and they try to get the cheapest prices that they can. The purchasing agents are always threatening subs with loosing the projects that they are working on if they do not lower their prices! Most builder's (Not all) believe in quantity not quality and that's one of the biggest problems. We were replaced on a couple of projects (Builder will not be mentioned) because we were $2.00 per house more expensive than another contractor that had just gotten into the type of work we were doing. To say the least we did not have any comebacks or failures on our work, but this new contractor had several! The builder tried to get us to do the repairs, but the builder would not give us back the projects. We told them to give the rest of our projects to the un-qualified sub and we got out of new construction completely. We now repair defects in new homes that are built, and we try to educate the consumers about how to work the warranty people on how to get them to repair these defects! Subcontractors are told how and when to install their work by the builder. There is alot of qualified subs out here, but why should you work for free when the builder is making huge profits. You get what you pay for! If you want quality you need to be willing to pay alittle extra for it, if not this is what you get.

  • July 30, 2008

    1:32 p.m.

    Suggest removal

    kodijack writes:

    I bought a 40 year old house recently because 1) It was in the neighborhood I wanted 2) It was built well (but needs updating) 3) had a real yard 4) My front door is more than fifty feet from anyone else's front door.

    I wouldn't buy most of that highlands ranch crap if you priced it at 50%, and don't get me started on Aurora.

  • July 30, 2008

    5:51 p.m.

    Suggest removal

    Rangerjoe1 writes:

    What a JOKE!!!! Most QUALITY SUB-CONTRACTORS were passed over for low bid companys hiring ILLEGALS, that had to turn in their tool belts after the days work. I added to my small construction business, where I went into brand new homes and fixed them up, some less than 6 months old. The company that built them, (This was in Longmont) tried to hire me to supervise their crews, but offered to pay me a quarter of what I was charging. $10.00 per hour to start. I flipped them off on my way out the door. So I don't want to hear that it was the low quality of sub-contractors that did this crap. It was greedy low rent builders that passed over all of the quality sub-contractors, which there are tons of them in Colorado, but its not just a hobby to them, it is their business. Everyone remember You get what you pay for, I feel NO sorrow for these people that bought trash home, you got what you paid for. P.S. To all those people that went with low ball bidders, I TOLD YOU SO.

  • July 30, 2008

    8:24 p.m.

    Suggest removal

    italiaboy9 writes:

    I have to agree with everyone else. The sub par subcontractors were most likely composed of illegals. This isn't really difficult to figure out.

  • August 11, 2008

    2:56 p.m.

    Suggest removal

    missudpat writes:

    By illegals, I presume everyone is talking of the unskilled labor force that develors hire -oh, I'm sorry- that their sub contractors hire to complete the developers' projects. A New Jersey carpenters' union filed suit last month against D R Horton for illegally misclassifying 'illegals' to avoid labor laws and taxes. Perhaps Colorado's Attorney General should consider doing the same.