DENVER, April 1 – A bill designed to revitalize condominium construction in Colorado by reducing litigation risks for builders passed the state House on Monday with a bipartisan 59-5 vote. House Bill 25-1272 is the Legislature’s second attempt in recent years to tackle the decline in condo construction, which has limited affordable housing options for first-time buyers.

Supporters argue that the bill could make homeownership more attainable in a state where the median price of a single-family home reached $640,000 in February, while the average condo cost $424,200, according to RedFin. Condo construction has dwindled significantly in Colorado, with the number of developers plummeting 84% between 2007 and 2022. A report by the Common Sense Institute attributes this decline in part to rising liability insurance costs and frequent lawsuits from homeowners.

"The current course that we are on right now is unacceptable. Our kids and our grandkids, for those of us who are older — they need a better future than (for) their only hope to ever be a forever tenant," said Rep. Shannon Bird, a Westminster Democrat and bill sponsor, before the vote. "That is no way to achieve financial security and stability and to become a permanent member of your community. They need the chance to have home ownership."

How the Bill Works

HB-1272 introduces the Multifamily Construction Incentive Program, which builders can voluntarily opt into. To qualify for the program’s legal protections, developers must:

• Hire a qualified third-party inspector to review the construction process.
• Provide warranties covering workmanship issues for one year and major structural defects for six years.
• Agree to address reported defects before litigation becomes an option.

In return, builders who participate would gain protection from construction defect lawsuits unless the issue affects the home's safety or functionality. This includes situations where the defect makes the property unusable, leads to a failure of a critical building component, or results in injury or death.

Under the program, homeowners would have six years to file a claim, and builders would be required to attempt to fix defects before legal action is pursued. The program aims to create a system where repairs are prioritized over lawsuits, making insurance coverage more accessible and affordable for developers.

"They know that those homes will be built right in the first place, but also that the first mechanism for fixing an issue — God forbid if one exists — isn’t simply litigation," said bill sponsor Rep. Andrew Boesenecker, a Fort Collins Democrat, during a March committee hearing. "In the case of the program, the expectation is that they exhaust the remedies offered to them through the warranty, knowing that if the warranty is insufficient or doesn’t meet the need at stake, a homeowner still has the opportunity to litigate that claim."

Concerns and Amendments

In response to concerns from homeowner advocates and the Colorado Trial Lawyers Association, the bill underwent revisions before its final House vote. Initially, the proposal would have shielded builders from litigation if they obtained a certificate of occupancy from a local government. The revised version adds more consumer protections, including a requirement for builders to provide homeowners with critical documents such as building plans, soil reports, maintenance guidelines, and insurance details.

Despite these changes, some lawmakers remain wary. Rep. Jennifer Bacon, a Denver Democrat, introduced a separate bill that sought additional protections for homeowners, including shifting the statute of limitations so that defect claims would begin when a homeowner discovers a problem rather than when the issue first occurs. However, this provision did not make it into the final version of HB-1272.

"We’re still looking forward to striking a balance where we could confidently say that we have created a program where builders will build, but also the things that were bargained with that have to do with homeowners are not going to leave them in a place where they have to buy at their own risk, and that is incredibly important," Bacon said before the final vote.

Next Steps in the Senate

The bill now moves to the Colorado Senate, where it is sponsored by Senate President James Coleman, a Denver Democrat, and Sen. Dylan Roberts, a Frisco Democrat. Already, six senators, including three Republicans, have expressed support for the measure.

If passed, the legislation could have significant implications for Colorado’s housing market, potentially increasing condo availability while alleviating legal and financial burdens on developers. However, with lingering concerns over consumer protections, the bill is likely to face further scrutiny as it progresses through the Senate.

Stakeholders from both the construction industry and consumer advocacy groups will continue to monitor developments, as the final form of the bill could shape the future of condominium construction in the state for years to come.

Originally reported by Sara Wilson in Colorado Newsline.