The Colorado House has approved House Bill 1272, a measure designed to encourage more condominium construction by reducing the risk of lawsuits against developers.

Lawmakers voted 59-5, with one excused vote, sending the bill to the Senate. This marks the legislature’s second attempt in two years to address construction defect reform.

Supporters argue that strict defect laws have contributed to a drastic reduction in condo development, exacerbating Colorado’s housing crisis. Between 2007 and 2022, the number of active condo developers fell by 84%, with many deterred by the “higher risk of costly litigation and potential liabilities,” according to a Colorado Common Sense Institute report.

“At the end of the day, having more homes that people can afford will happen when we have more supply,” said Rep. Shannon Bird, D-Westminster, one of the bill’s sponsors.

Addressing Affordability and Expanding Homeownership Opportunities

Over the last 15 years, the median condo price in Colorado has surged from under $200,000 to over $400,000, while in resort areas, prices have exceeded $1 million. Lawmakers hope that by limiting liability exposure for developers, they can increase the number of affordable condo units and starter homes.

“In our mountain communities, we have people who desperately want to be able to buy a first-time home and start building generational wealth and put roots down in our communities,” said Sen. Dylan Roberts, D-Frisco, a co-sponsor of the bill. “But there’s not any stock available, any housing available to make those purchases.”

Roberts added that while high-end condos are being built in resort towns, many developers avoid constructing entry-level homes due to the high cost of insurance against litigation.

“We need that too, but we also need a healthy mix which includes affordable and attainable homeownership opportunities,” Roberts said.

Key Provisions of House Bill 1272

Under the proposed law, builders would be shielded from many construction defect lawsuits, provided they meet certain quality and inspection standards, including:

• Third-party inspections throughout construction to ensure compliance with safety and quality requirements.
• Mandatory warranties, covering workmanship for one year and major structural components for six years.
• Higher thresholds for HOA lawsuits, requiring 65% of homeowners in a development to approve litigation, up from the current simple majority.

Homeowners could still sue for issues related to safety and functionality but must first demonstrate that they attempted to resolve disputes with the builder.

Balancing Builder Protections with Homeowner Rights

The bill initially applied only to middle-income condos but was later expanded to cover all price points. Lawmakers also made changes to address concerns from homeowner advocacy groups.

“While the bill has improved, I want our senators to keep working on it so we thread the needle on finding a way to build more homes in our state while protecting homeowners’ right to the quality of a safe, well-built home for their families,” said Kathy Eckert, a homeowner who has dealt with construction defects.

Eckert shared her experience of dealing with serious structural issues in her Grand County home, including flooding, black mold, and improperly attached fixtures. She was forced to spend tens of thousands of dollars on legal action after her builder “refused to fix obvious problems.”

In response to concerns, amendments were added to ensure:

• Stricter oversight of third-party inspectors.
• Mandatory defect resolution by builders.
• Expanded warranty coverage for homeowners at no extra cost.

However, advocacy groups still seek additional changes to ensure builders fulfill contractual obligations beyond defects, such as delivering promised amenities like specific countertops or windows.

The bill would also extend Colorado’s statute of repose from six years to eight for developers who don’t offer warranties. For those who do, the timeline would remain six years.

House sponsor Rep. Shannon Bird expects remaining issues to be addressed in the Senate. “We should have all the major policy ironed out at this point,” she said.

The bill is now awaiting a Senate committee hearing.

Originally reported by Robert Tann in Vail daily.