Lawmakers are reviving a bipartisan proposal from last year that sought to reduce lawsuits over construction defects that they say have hurt condo development
Colorado lawmakers will again try to pass legislation to reduce lawsuits against condominium developers in a bid to spur more construction of multifamily housing throughout the state.
House Bill 1272 is the legislature's second attempt in as many years to pass what lawmakers are calling construction defect reform.
The bill seeks to ensure homes are being built to an appropriate standard to avoid litigation that lawmakers say has dissuaded condo development and contributed to a deficit of affordable housing.
"The goal is to incentivize construction of condominiums because we know, historically, condominiums have been the most affordable homeownership option," said Rep. Shannon Bird, D-Westminster, during a press event introducing the bill Wednesday.
While condo construction used to be on track with that of apartments, in recent years development has fallen off. According to a February 2024 report by the Colorado Common Sense Institute, the number of active condo developers in the state decreased by 84% from 2007 to 2022.
"In Colorado, for every 14 new apartments that are built only one new condo is built," Bird said. "Couple this with the change in Colorado's overall housing shortfall of at least 10,000 homes and it becomes clear that our state has too few housing opportunities for Coloradans who want the security of owning their own home."
Along with Bird, the bill's primary sponsors are Rep. Andrew Boesnecker, D-Fort Collins, and Sens. Dylan Roberts, D-Frisco, and James Coleman, D-Denver.
The bill also has more than two dozen co-sponsors from both parties as well as the backing of Gov. Jared Polis.
"The biggest cost to a Coloradan's experience is housing, whether they experience it as rent, whether they experience it as mortgage," Polis said. "This bill will do something about it by helping build more housing that can be sold and help people build that nest egg and build wealth over time."
Housing remains a dominant issue at the Capitol, with lawmakers last year passing a major overhaul of local land-use codes that forces cities to allow for denser development.
That legislation focused on populous Front Range municipalities and excluded rural resort towns. The construction defects bill, however, will impact the whole state, including the High Country where the average price for condos has climbed into the millions in some areas.
Still, the changes in House Bill 1272 would only apply to "middle market housing" meaning it would not affect luxury developments.
Under the bill, condo developers would be required to have third-party inspectors review a home throughout the construction process, with the developer responding to problems found during the inspection.
It would also raise the bar for homeowners to sue a developer in several ways, including bolstering immunity for developers for certain kinds of damaged issues and increasing the majority approval needed by a homeowners association to file a claim. Currently, HOA boards need a simple majority in favor to file a claim. House Bill 1272 would increase that to 65% in favor.
If a developer is sued, the bill gives them the presumption during legal proceedings that if a home has a certificate of occupancy from a local government, it means the home has no construction defects.
A similar measure failed last legislative session amid pushback from more progressive Democrats and consumer protection groups.
In a statement, a Colorado-based advocacy group called Build Our Homes Right raised concerns about this year's bill, which it said would "make it harder for working and middle-class families to hold builders and developers accountable for shoddily built homes."
The group is instead endorsing an alternate bill this session which seeks to give homeowners more protections when taking action over construction defects.
House Bill 1261 would prohibit developers from adding language to contracts that weakens a homeowner's rights, such as the ability to reject inadequate repair offers. It also changes the start of a homeowner's two-year statute of limitations on a claim to when they discover a serious construction problem rather than the symptom of a problem, among other measures.
Asked if that proposal would conflict with the other construction defects bill, Bird said there are "a lot of perspectives on this issue" but was not prepared to comment on House Bill 1261.
Both bills are awaiting a House committee hearing.