Committee Approves Construction Defects Reform Bill
DENVER, CO – The Senate Local Government and Housing Committee today approved legislation to reform Colorado’s construction defects laws and accelerate the development of condominium and townhome units to create more affordable housing options.
Sponsored by Senate President James Coleman, D-Denver, and Senator Dylan Roberts, D-Frisco, HB25-1272 would encourage condo builders to work with third-party inspectors to help identify and correct any construction issues upfront, establish clear guidelines for construction defect claims, and adjust the statutes of limitation for construction defect claims.
“HB25-1272 will make fair and balanced reforms to our construction defects laws, ensuring that high-quality homes are built, problems are fixed before sale and excessive costs that deter development can be reined in,” said Coleman. “This bill is a proactive solution that incentivizes responsible development, making it a win-win for homeowners and builders alike. It’s intended to meet the demands of our communities, respond to changing demographics, and provide housing that is adaptable to different housing sizes and needs. With this legislation, we can create more attainable housing opportunities and ensure that more Coloradans can achieve the dream of homeownership.”
“In Colorado’s mountain and rural communities, there are teachers, police officers, small business owners, nurses, and other crucial working folks who desperately want to be able to buy a home and put roots down, but there’s not any housing available for them to purchase,” said Roberts. “For years, construction defects laws have stunted the development of condos and townhomes, generally more affordable housing options for first-time buyers. This legislation will change that and help ensure that we have a healthy mix of housing units, allowing more Coloradans to achieve their dream of homeownership.”
The bill would create the Multifamily Construction Incentive Program and allow builders to opt in to the program if they offer a warranty for defects and damage and hire a third-party inspector to periodically review the construction throughout the building process. In exchange for providing these additional safeguards upfront, participating builders would receive additional protections against construction defect claims, which are costly for both sides to litigate and discourage condo development.
Under HB25-1272, a homeowner who purchases a property built under the program would have six years to bring an action for damages if the builder provides a warranty that meets minimum coverage requirements. The homeowner would have a duty to mitigate damage caused by an alleged defect and notify the builder, who must offer a fix to any defect claims. When a participating construction professional receives a claim, they must provide documentation to the claimant related to building plans, soil reports, maintenance recommendations, and insurance. If the issue is not resolved through this warranty process, the homeowner may proceed with a defect claim.
The bill would exempt a construction professional participating in the program from liability for a damage or defect if they can prove the damage or defect was caused by:
Certain weather conditions, an act of war, terrorism or vandalism,
A homeowner’s unreasonable failure to timely mitigate damages or complete ongoing home maintenance, or
Misuse, abuse, or neglect after the sale to the claimant.
From 2007 to 2022, the number of condo developers working in Colorado declined by 84 percent in part due to the potential for expensive lawsuits. Meanwhile, the median age of first-time homebuyers in Colorado rose from 35 to 38 in the past year. Despite the downturn in condo construction, consumer demand remains high.
HB25-1272 now heads to the Senate floor for further consideration. Track its progress HERE.