Although the first condominium in America was built here, this more affordable form of homeownership is becoming a less common option for Utahns looking to buy their first home.
Lawmakers hope a bill passed toward the end of the recently completed general session can change that by addressing liability and insurance cost issues.
SB201, sponsored by Sen. Wayne Harper, R-Taylorsville, focuses mostly on regulating homeowner associations. But he said the “biggest thing” in the measure — if signed by Gov. Spencer Cox — is a section that would require owners to give developers written notice describing a defective design or construction flaw and requesting the developers fix the problem before they could sue.
The developers then would have nine months to complete repairs. If they didn’t, owners could sue — but only after the nine months have passed.
Harper said it’s been challenging for developers to get the insurance they used to repair defects and aid in other potential legal claims.
That’s because of the statute of limitations on construction defect claims, which varies by state and by type of defect. In Utah, that period is six years.
Claims are common on new buildings and have a “chilling effect on a sponsor’s willingness to build for owner-occupants,” according to the Urban Institute, a Washington think tank. That occurs even though many people buying their first home now turn to condos and town homes.
Condos and cooperatives are significantly cheaper than single-family homes in every major city except New York and Philadelphia, according to the institute.
In 2022, counties across Utah issued permits for 6,757 condo and town home units, according to the Ivory-Boyer Construction Database. That database, maintained by the University of Utah’s Kem C. Gardner Policy Institute and the Ivory-Boyer Real Estate Center, does not include information on building permits in eastern Utah’s Daggett County.
The number of permits in 2022 dipped from 2021, when counties issued permits for 7,398 condo and town home units. And it has declined steadily since 2022 — to 6,493 units in 2023 and 5,390 units last year.
Harper credited that cooling off to a lack of ability to repair and avoid a lawsuit.
Condo construction is at a historic low across the U.S., according to the Urban Institute.
Liability insurance costs play a role, experts say, but so do other factors. It’s easier to secure financing for rental apartments, for instance, which developers can sell immediately to investors rather than relying on individuals to buy each condo, which can take years.
Harper said the hope is that giving developers nine months to fix issues will address part of the problem.
Rep. Gay Lynn Bennion, D-Cottonwood Heights, thanked Harper for supporting a way to boost condo construction.
The bill, if signed into law, takes effect May 7.
Megan Banta is The Salt Lake Tribune’s data enterprise reporter, a philanthropically supported position. The Tribune retains control over all editorial decisions.
