Bill to limit lawsuits against Colorado condo builders sees changes as homeowners continue to raise concerns over liability
Lawmakers are reviving an effort to change construction defect laws in a bid to boost the construction of more middle-income housing
Robert Tann/Summit Daily News
A bill to incentivize the construction of more condominiums in Colorado advanced on Tuesday after proponents adopted several amendments aimed at protecting homebuyers from shoddy development.
House Bill 1272 is the legislature’s second attempt in two years to change the state’s construction defect laws in an effort to reverse the decline in condo development, which used to be on par with apartments.
A February 2024 report by the Colorado Common Sense Institute found the number of active condo developers in the state decreased by 84% from 2007 to 2022. The report states developers face a “higher risk of costly litigation and potential liabilities” because of strict defects laws that make condo construction less appealing compared to other types of housing developments.
To reduce that risk, House Bill 1272 aims to prevent lawsuits from happening by putting more guardrails around construction that can grant immunity to builders.
The measure, which passed its first committee hearing Tuesday in a 12-1 vote, has bipartisan support from lawmakers and the backing of Gov. Jared Polis, who see it as a way to bring back starter homes to the housing market.
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“For the last 20 years, the cost to own a home has continued to climb out of reach for too many Coloradans,” said bill sponsor Rep. Shannon Bird, D-Westminster, during Tuesday’s hearing before the Transportation, Housing and Local Government Committee.
“Condos have been historically the most affordable homeownership opportunity,” Bird said. “The bill before you incentivizes construction of higher quality homes with warranties and creates a faster, less expensive process for homeowners to resolve problems that might occur.”
The bill would require builders to have third-party inspectors check in on the home’s construction throughout the building process. It would also mandate builders provide warranties for different aspects of the home, ranging from one year for workmanship to six years for major structural components.
In exchange, builders can receive immunity from a lawsuit in certain situations. Homeowners could still sue for several reasons, including issues that impact a home’s functionality or are a safety risk, but they would first need to work with the builder to try and fix the issue.
The bill faces pushback from a homeowners advocacy group over concerns that it doesn’t go far enough to protect homebuyers. Members of Build Our Homes Right held a news conference Monday to share how defects have led to costly court battles and emotional distress.
Fraser homeowner Kathy Eckert said her property was riddled with issues after being built in 2017. Those included 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.
After her builder “refused to fix obvious problems,” Eckert said she had no option but to file a lawsuit that led to a “complicated, stressful, drawn out and expensive process.”
She said she paid tens of thousands of dollars in attorney fees that she was unable to recover. She added that a doctor recently told her she has “significant levels of mold in my system” after developing a health issue before discovering the black mold in her home.
“Buying a home is usually the biggest investment people will make in their lifetime, and our laws need to protect homeowners — especially those who are working and middle class,” she said.
Advocates had backed a different bill introduced by Rep. Jennifer Bacon, D-Denver, which sought more protections for homeowners facing construction defects. Bacon, however, pulled the bill on Tuesday after sponsors of House Bill 1272 agreed to include some of its proposals in their legislation through a series of amendments.
Those included removing a provision that gave builders protection during litigation so long as they had secured a certificate of occupancy from a local government. Another change bars builders from inserting language into contracts, including for homeowners associations, that contradicts existing law.
Currently, HOA boards need a simple majority vote in favor to file a claim over a defective home. House Bill 1272 would raise the threshold to a 65% majority.
“So, if the law says you need a 65% vote to go into a lawsuit, you can’t put into your contract that you need 90%,” Bacon said.
Still, she is continuing to negotiate with the other bill’s sponsors to include more of her proposals, including one that would change the timeline for when a homeowner could sue. Under her proposal, the statute of limitation for homeowners to file a claim would begin when they discover an issue related to the defect, not just when the defect itself happens.
Build Our Homes Right says it is encouraged by some of the changes to House Bill 1272 but wants to see more requirements for who can be a third-party inspector and continues to raise concerns over builder immunity.
“It is an exchange between homeowners’ rights and what builders will do, and that’s why it makes people nervous,” Bacon said. “So that’s why we’ve been working with (bill supporters) and, I do believe, that’s why they’ve been open to talking with us.”
House Bill 1272’s prime sponsors are Bird, Rep. Andrew Boesnecker, D-Fort Collins, as well as Sens. Dylan Roberts, D-Frisco, and James Coleman, D-Denver. It heads to the House floor for a full chamber vote.
