The Wall Street Journal's Chris Kirkham looks at why so many condo developers in Denver—one of the nation's hottest housing markets—are sitting on the sidelines.

The threat of a lawsuit stemming from construction defects looms large in Denver, making many projects fizzle before the planning stage. Since homeowner associations can file a suit on behalf of hundreds of households, many developers are wary, to say the least.

“We have a saying here that there are two types of condo projects,” said Mr. Godden, principal of Godden Sudik Architects in Centennial. “The ones that have been sued, and the ones that haven’t been sued yet.”

... developers say several aspects of Colorado’s law make it a tougher environment for them. One provision in particular makes insurers responsible for covering a broad array of problems that could arise on a project—a factor that has made premiums more expensive. Another part of Colorado law prevents developers from having a say in whether claims should be decided by an arbitrator before going to trial.

Read more >