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New legislation supports home buyers

Vicki Fields bought a lemon. Unfortunately, the lemon wasnít a car, but her newly purchased house in Falcon.Because of a job, Fieldsí husband moved to Colorado ahead of the rest of the family in March 2006. After she and her four children joined her husband that May, they began to notice issues with the 11-year-old home. The inspection completed before the house sold did not uncover any of the issues.The inspector, recommended by their real estate agent, uncovered superficial flaws, but nothing to halt the sale of the home, Fields said. Cracks in the sidewalk, the water heater, a faulty garage door safety mechanism and detached patio stairs were a few of the visual problems. Fields said they decided to buy the $254,000 house because at the time not many houses were on the market.Fields said the sellerís agent told her that a disclosure statement was not given to them because the house was not occupied by the owners at the time, and they couldnít attest to the exact condition of the house.ìYou are supposed to have my best interest, and you donít and you didnít,î Fields said of the parties involved with the sale.Although RE/MAX Properties Inc. was not involved with the sale, Falcon managing broker Jim LaFever said, ìWhen a homeowner has a problem, they should first go to the buyerís agent, then to the builder and finally a small claims court.îHe said a disclosure statement from the listing party is not required in the sale of a home. With new construction, LaFever said builders have different guidelines throughout the state, but a warranty program is usually in place.It is also the buyerís responsibility to hire an inspector. The inspection must happen before a deadline, which is written into the contract.More problems appeared for the Fields, including mold, water damage, faulty electrical wiring, uneven walls and rooms that were not up to the building code.After a building permit was acquired, Fields said she noticed the square footage of the home did not match the permit. It was estimated at 1,800 square feet, rather than the 2,500 square feet the previous owner claimed. The discrepancy resulted because the sellers finished the basement without a permit, Fields said.Fields said she contacted numerous agencies for assistance with the matter, including lawyers, to no avail.LaFeverís advice to buyers is to have a solid and reputable agent. ìUse a real estate agency,î he said. ìIt will save time and effort and a lot of anguish down the road.îFieldsí family has since moved back to Arizona ñ again because of her husbandís job. They are living with relatives to recover from their financial losses incurred as a result of the ìlemon.îTheir Falcon house is on the market, and Fields said they will provide full disclosure to potential buyers.Although Fields and other buyers of older homes have little legal recourse, new Colorado legislation supports buyers who encounter problems with newly constructed homes.Scott Hente, Colorado Springs City Council member, said Gov. Bill Ritter signed the Homeowners Protection Act of 2007, or House Bill 1338, into law April 20.In an April Denver Post article, Sen. Jennifer Veiga, D-Denver, said with Colorado Senate House Bill 1338, the Homeowners Protection Act of 2007, home builders would be barred from requiring contracts with buyers that free them of liability for construction.Veiga, sponsor of the bill, said it would force builders to stick to the terms of the Construction Defect Reform Act of 2003, which capped the damages courts can award in defect cases.The Denver Post article quoted Veiga: ìWe said, ëYou have a defect in your house, youíll get it fixed.í Since that time builders have been putting provisions into their contracts that do not allow for buyers to get recourse. Thatís wrong.îHente, also a home builder, testified at the Colorado State Legislature against the bill on behalf of both the city council and home builders.ìI fear the worst for the next couple of years, with an increase in litigation, an increase in insurance premiums and a decrease in available insurance companies,î Hente said.He said builders are required to carry construction liability insurance, which is renewed annually to keep their building license current.Liability insurance companies have to settle or pay claims when there is a court case; therefore, the premium goes up for the builder, resulting in insurers leaving the market. Builders are then forced to look for new insurance.Hente said he fears litigation will discourage insurance companies from offering liability insurance in Colorado; thus, the increased cost of being uninsured will be rolled into the price of the home, resulting in higher home prices.The Construction Defect Reform Act of 2003 stated home owners still have the right to sue, but they have to go to the builder first to give them a chance to fix the problem. If a builder does not comply, then the owner has legal recourse.Hente said lawsuits declined because builders were given the opportunity to fix the problem before homeowners went to court.Before House Bill 1338 was passed, builders offered homeowners an explicit warranty, he said.Hente said now an implied warranty is offered. With an implied warranty, courts have discretion in interpreting what is included in the warranty, and the warranty could be overturned. ìIt destroys the relationship between the builder and the buyer, which should be strong,î he said. ìPreviously, the builder had an understanding of the terms of a warranty, but now there is no understanding.îSome builders leave the multi-family housing market because court damages are so high, Hente said, adding that this will decrease the amount of available multi-family residences, which is a source of affordable housing.ìThis will work against that.îEditorís note: Sen. Veiga was contacted for an updated quote on the new legislation; however, we were unable to speak with Sen. Veiga.

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