The theory has been that builders were building apartments to get around the 7-year statute of repose. This statue allows condo homeowners to sue the builder for 6 year. IF the lawsuit starts in year 5 or 6, then that time frame goes to 8 years. They would convert the apartments to condos at that time, thinking they were now outside of that law, but there is still too much uncertainty about whether this is the case or not and few are willing to test the waters. The concern is that this conversion work would start that clock over again.
Conversion generally happens when a market’s home prices are higher than what a first-time buyer can afford. It certainly seems like this is the case in Denver, or is it? Urban demand and supply numbers show this still isn’t the case. Having said that, we are certainly in desperate need of affordable and attainable housing in Denver.
Conversion is not an easy or cheap process.
- Approvals need to be sought from necessary state and municipal authorities so appropriate
entitlements can be put in place
- Usually the entire building and each unit will need to go through a full rehab as well as the
consideration of additional services and amenities
- There are more units and more amenities in apartments that would be costly to condo developers to convert as well.
- It’s hard to say if investors and developers will find this appealing, but if so, the price points could
possibly be more affordable for buyers
As mentioned above, the main concern seems to be whether this conversion will start the statute of repose clock over again, which means the same concerns about builder defect lawsuits would remain at the forefront.
Right now, it seems to be a better investment for multi-family apartment owners and investors to remain where they are with the prices of rent being where they are as well.
For more information on condo buying, selling and investing in Denver, please reach out to us at:
DENVER HIGH-RISE LIVING
Denver High-Rise Living