Insurance denies Club Valencia’s claims for fires that displaced residents

ARAPAHOE COUNTY, Colo. — About half of all the residents at the Club Valencia condominium complex in Arapahoe County are still waiting to return home, after two fires in three months made roughly 160 units uninhabitable.

The first major fire occurred in November 2022, and is still under investigation. The second one sparked on February 1 due to a cooking accident.

Asbestos contamination and smoke damage are among a list of reasons the county has deemed the impacted units unsafe, prohibiting residents from returning. But as Denver7 exclusively learned, the extended delay in repairs now, unfortunately, makes sense.

The Club Valencia homeowners’ association (HOA) board revealed to Denver7 for the first time Friday that their two insurance claims for the fires were denied, and they are tied up in a back-and-forth exchange with the insurance company in an effort to resolve the matter.

Displaced residents like Gabryela Newton-Bustamante are growing even more frustrated as they wait to return home.

“It feels like I lost my freedom in a way. I’m with a co-worker right now, staying with them,” said Newton-Bustamante, who’s been displaced since February. “The most difficult part in navigating through this is knowing what is to be expected and how to move forward and the best steps going forward.”

Residents who may want to sell their condos and move face a huge hurdle ahead of them.

“Now with two fires, it’s probably going to be really hard to make a sale,” Newton-Bustamante said. “Banks just won’t trust this building anymore to write loans on it.”

Both Club Valencia’s HOA and Joy Dysart, a real-estate agent, confirmed this.

“The main people who insure mortgages will not insure these types of housing when they’ve had trouble, like in this particular situation,” Dysart said. “A conventional loan, FHA, VA, they will not loan on this type of property. If [residents] want to move about, they’re going to have difficulty. The only way they could find someone to buy their place is to pay cash or go through a private lending.”

Denver7 also obtained a South Metro Fire Rescue correction notice issued on February 7 to LCM Property Management, Inc., the company that has managed the property since 2012. The notice asks property management to install “a manual fire alarm system throughout the building,” just one day after SMFR documented several fire code violations at the property, which included:

  • Open electrical junction boxes in boiler rooms
  • Storage of combustible material and oily rags in all elevator equipment rooms
  • The building is missing a manual fire alarm system that activates the occupant notification system
  • Inability to verify if boilers in clubhouse have been inspected within the last year
  • Missing fire extinguisher on second floor near 1306 entrance
  • All fire extinguishers in boiler rooms are past due to annual inspection. Tags indicate the last inspection was in 2018
  • None of the corridor fire doors or stairwell fire doors latch securely when closed
  • Holes in ceilings and walls throughout the building on all floors
  • Propane tank being stored in electrical room 1305 entrance
club valencia notice. PNG


According to the HOA, the property has made progress in remedying several of these violations.
“It makes it hard to imagine a future with this place, and it makes it hard to imagine a beneficial situation coming from this,” Newton-Bustamante said.

Denver7 was unable to reach LCM Property Management, LLC. for comment Friday.

Their relationship with Club Valencia may soon be coming to an end. The HOA told residents in a recent committee hearing that they are in the process of self managing the property.

As the HOA attempts to resolve the insurance matter amid denied claims — which may involve future litigation — leaders are using money from their reserves to pay for repairs and abatement in the meantime.

Abatement for areas impacted by the November fire started about six weeks ago and may take between two to three additional months to complete. Abatement and major repairs for the February fire have yet to begin.