720.770.3457 What is Colorado Construction Defect Law’s Newest Version?
Posted May 08, 2025 in Commercial Litigation, Construction Defect, Construction Law
Introduction
Colorado’s housing market has been throttled by a paradox: sky-high demand, but developers apparently less and less willing to touch condominium projects with a ten-foot beam. Why? Well some say the risk of construction defect litigation has made the math not worth doing. HB25-1272—the construction defect & housing reform bill passed on May 6, 2025—aims to shift that equation.
Let’s walk through what the new law actually says, how it impacts builders, HOAs, and homebuyers, and what you should be thinking about if you’re building, managing, or buying in Colorado’s housing market.
Why This Law Exists (and Why It Matters)
If you’ve ever wondered why there aren’t more condos going up in Denver, the answer isn’t just material prices. Colorado has long had one of the most litigious environments in the country when it comes to construction defects. Developers fear years-long lawsuits, massive legal costs, higher insurance premiums, and HOA claims filed without full buy-in from actual homeowners.
HB25-1272 is the state’s latest attempt to create a better balance: it seeks to protect homeowners, but offers incentives for builders to come back to the table. As someone who advises both sides of the construction and real estate aisle, I think this bill is worth some attention. It will impact and change both the pre-litigation and litigation processes.
The Multifamily Construction Incentive Program
At the heart of the bill is a voluntary program—builders don’t have to participate, but if they do, they get valuable protections. In exchange, they commit to:
- Warranties:
- 1 year: workmanship and materials
- 2 years: mechanical, plumbing, and electrical systems
- 6 years: structural integrity
- Third-party inspections during the build.
- Recording participation in county records (so buyers and HOAs can’t claim surprise).
If a builder follows the rules in the new law, they get a reduced statute of repose (6 years) and can assert certain legal defenses in the event of a claim.
Key Legal Changes You Should Actually Care About
Let’s talk specifics:
- Statute of Limitations:
- Reduced to 6 years if you meet program requirements.
- Duty to Mitigate:
- Homeowners have a legal duty to take reasonable steps to reduce the impact of a defect before suing.
- Duty to use Warranty:
- warranty claim exhaustion as pre-requisite to lawsuit.
- Builder’s Response Obligation:
- Builders must respond to defect notices with an offer to settle or a written explanation saying why no repair is needed. Ignoring a claim is no longer a viable strategy.
- HOA Litigation Rules:
- 65% of unit owners (not just the board) must approve any defect litigation.
- Any damages awarded must first go toward repairs—not attorneys’ fees or windfalls.
- Procedural Rules:
- Certificate or Review rules that are more stringent and immediate.
- Requirement for construction professional to make pre-litigation document disclosure
- Attorney Fee Shifting and Immunity:
- fee shifting and claim immunity for rejection of reasonable offers to settle.
- Affirmative Defenses:
- enumerated affirmative defenses for builders.
What This Means for the Real World
- Builders: You now have a different path forward. It’s not a free pass, but it’s a more predictable one requiring more robust dispute resolution. Perhaps we will see improvements to insurance general liability coverage and more clarity in managing risk. This new law will take some time to adjust to and will cost you more in legal fees in the short term.
- HOAs: You’ve got more responsibility. Getting 65% of owners to vote on anything is tough, but this raises the bar for litigation and puts focus back on fixing the problem.
- Homebuyers: You still get warranties and now benefit from mandatory inspections. You’re not being left behind—this just tries to make homebuilding more viable and less costly for construction professionals. However, be aware of more strict pre-litigation and pleading requirements!!! This bill will also cost you more in terms of legal fees up front to ensure compliance.
- Attorneys: when the governor signs this into law, review it in comparison with the pre-existing CDARA statute and be prepared to counsel your clients accordingly.
What to Watch
There are still open questions. Some are asking:
- Will the fee-shifting provisions discourage valid claims?
- How will courts treat the “affirmative defenses” builders can now assert?
- Will smaller builders be able to afford the inspections required for participation?
At Volpe Law, we’ll be watching all of this unfold closely and advising our clients accordingly.
Bottom Line
This isn’t a silver bullet for the housing crisis—but it’s a legitimate attempt to bring back the people we need to build homes. HB25-1272 attempts to give contractors a little breathing room while keeping safeguards in place for homeowners.
If you’re building, buying, or managing real estate in Colorado and want to make sure you’re aligned with the new law—or want to use it to your advantage—give us a call.
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The information contained on this website is provided for informational purposes only. It is not legal advice and should not be construed as providing legal advice on any subject matter. Laws frequently change and therefore this content is not necessarily up to date, nor comprehensive. Contact us or another attorney with any legal questions specific to your matter. You may contact us by completing our complimentary discovery call.