Colorado House passes bill to reduce lawsuits against condo builders in bid to boost development of starter homes
Measure now heads to the Senate after seeing additional tweaks to ensure homeowners are protected from shoddy builds
Ryan Spencer/Summit Daily News
The Colorado House on Monday passed a bill aimed at incentivizing more condominium development by reducing the risk of lawsuits against builders.
Lawmakers voted 59-5, with one excused vote, to approve House Bill 1272, which now heads to the Senate. It is the legislature’s second attempt in two years to pass what they’ve called construction defect reform.
Proponents point to the rapid loss of condo developers in Colorado as a potential reason for the state’s escalating cost of housing.
Between 2007 and 2022, the number of active condo developers in the state decreased by 84%, with developers facing a “higher risk of costly litigation and potential liabilities” because of strict defect laws, according to a report last year by the Colorado Common Sense Institute.
Condos are often seen as an affordable option for buyers looking to break into the housing market, but prices have been steadily increasing for years. Lawmakers hope that by limiting the number of lawsuits brought against builders, they can revive development and boost the supply of starter homes.
“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, a House sponsor.
Over the past 15 years, statewide median condo prices have risen from below $200,000 to over $400,000, according to the most recent data from the Colorado Association of Realtors. In rural resort areas, the median cost of condos and townhomes has eclipsed $1 million
“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, also bill sponsor, “but there’s not any stock available, any housing available to make those purchases.”
While high-end condos and townhomes are being built in mountain towns, Roberts said he hears from developers who say the cost of insurance to protect against litigation has dissuaded them from building starter homes.
“And so that’s why you see a lot of our affordable housing projects in the mountain communities … are all rental product because it’s cheaper to build,” he said. “We need that, too, but we also need a healthy mix, which includes affordable and attainable homeownership opportunities.”
Under House Bill 1272, builders would be largely shielded from construction defect lawsuits so long as they meet several requirements.
That includes requiring a third-party inspector to check in on the home throughout the construction process and mandating warranties for homeowners for different aspects of the home, ranging from one year for workmanship to six years for major structural components.
Homeowners could still sue for several reasons, such as issues with a home’s functionality or safety, but they would first need to prove that they worked with the builder to fix the issue and took steps themselves to mitigate any problems.
The bill also raises the threshold for homeowners associations to file a lawsuit against a developer. State law currently allows for a simple majority vote. House Bill 1272 would require a 65% majority in favor for a lawsuit to move forward.
Originally, the bill was aimed only at middle-income condos but was later expanded to include condos at every price point.
Other changes to the bill were made to ease concerns from a homeowner’s rights group, which sought more certainty from lawmakers that the measure wouldn’t pave the way for developers to turn a profit on poorly built homes.
Members of the advocacy group, Build Our Homes Right, have shared personal stories of dealing with shoddy developments that they say have cost time, money and emotional distress.
Fraser homeowner Kathy Eckert spoke during a news conference last month about how her 2017 Grand County property has been mired in problems, including flooding in the garage as a result of poor slab grading, an improperly attached back deck, and black mold in the basement due to a damp subfloor.
Eckert said she was forced to spend tens of thousands on a lawsuit after her builder “refused to fix obvious problems.”
In a statement following House Bill 1272’s passage, she said, “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 and while protecting homeowners’ right to the quality of a safe, well-built home for their families.”
The bill’s language was amended before leaving the House to tighten the requirements around who can be a third-party inspector, ensure problems found during inspections are resolved by the builder, and clarify that warranties will cover defects and damages at no expense to the homeowner.
Still, the advocacy group is seeking additional amendments to ensure contracts are respected between builders and buyers for issues outside of defects or damages, like providing the amenities that were promised, such as the correct windows and countertops.
Build Our Homes Right said in a statement that Colorado’s current construction defect laws “are among the weakest in the nation for homeowner protection.”
The group called out the state’s “short six-year statute of repose,” meaning the time frame to discover construction problems before filing a lawsuit.
House Bill 1272 would boost the timeline to eight for homes built by developers who don’t provide warranties. If they do, however, the statute for a homeowner would remain at six years.
Bird expects remaining issues with the bill, such as around contract langauge, will be addressed in the Senate, adding, “We should have all the major policy ironed out at this point.”
The bill is currently awaiting a Senate committee hearing.
Revered zoologist visits Aspen to discuss cheetah conservation
It’s been over a year since Colorado reintroduced wolves, and ranchers, residents, and local communities continue to learn how to coexist with the new predator on the landscape. While novel to the state, the situation is familiar to people a continent away.
