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DENVER, CO - The House today advanced a bill on a preliminary vote that would incentivize the development of condominium and townhome units to create more affordable housing options.
“Increasing rents and home prices have created a housing affordability crisis and have made it nearly impossible for first-time homebuyers to enter the market,” said Rep. Shannon Bird, D-Westminster. “Home ownership means everything to people who want to build a better, more secure life and future for themselves and their families. By incentivizing high quality construction and creating a less expensive process to resolve construction defect claims, we’re creating a better environment for the construction of housing that has historically been more affordable.”
“This legislation aims to boost the number of condos and townhomes across Colorado to create more opportunities for homeownership and save people money on housing,” said Speaker Pro Tempore Andy Boesenecker, D-Fort Collins. “Condos are a great entry-level housing option that allows Coloradans to build equity that comes with a single-family home. Those same benefits make it a great option for those looking to downsize and age in place. This bill would help ramp up condo development while ensuring any problems are remedied so we can create safe homes at a price Coloradans can afford.”
HB25-1272 aims to reform construction defect laws by encouraging condo builders to work with third-party inspectors to help identify and correct any construction issues upfront, establishing clear guidelines for construction defect claims, and adjusting the statutes of limitation for construction defect claims.
Beginning January 1, 2026, the bill would create the Multifamily Construction Incentive Program. Builders could opt into this program if they offer a warranty for any defect 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, builders in the program would receive additional protections against construction defect actions, which can be costly to litigate and discourage condo development.
Under HB25-1272, a homeowner who purchased 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 alleged to be caused by a 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.