What to Know About Colorado Construction Defect Law Reform

Posted July 28, 2025 in Construction Defect, Construction Law, Litigation, Uncategorized

Colorado Construction Defect Law Reform (HB25-1272): What Developers, Builders, and Property Owners Need to Know

On May 12, 2025, Governor Polis signed House Bill 25-1272 — now known as the Colorado American Dream Act — into law. This sweeping legislation brings significant changes to Colorado’s construction defect laws, aiming to encourage the development of multifamily housing by recalibrating the balance between homeowners’ rights and construction industry protections. While the law creates opportunities for builders who opt into a new Multifamily Construction Incentive Program (MCIP), it also introduces new procedural challenges for property owners, developers, contractors, and HOA boards.

Our Colorado construction lawyer is here to help you understand this new law, how it may affect you, and what steps you may need to take. With over 35 years of combined experience and a 10.0 Lawyer Rating on Justia’s peer-review system, you can trust our team to assist you. Contact Volpe Law LLC today.

What the MCIP Is

At the heart of HB25-1272 is the MCIP, an opt-in program designed to incentivize the construction of for-sale multifamily housing units, such as condominiums and townhomes. Developers who elect to participate in the MCIP must record their participation in county property records before any units are sold. They are also required to offer specific warranties: one year for workmanship and materials, two years for systems like plumbing and electrical, and six years for major structural components.

Another key component of MCIP participation is the mandatory third-party inspection requirement. These inspections must be completed during the course of construction and comply with stringent criteria, including inspector independence and documentation. If done properly, MCIP offers certain legal shields and procedural defenses in the event of a future construction defect claim.

Who This Law Affects

While the MCIP targets multifamily developers, the law has broader implications. Builders of single-family or build-to-rent homes, as well as commercial developers and builders, may also be impacted by new requirements under the Notice of Claim (NOC) process. Changes to disclosure obligations, certificate of review procedures, and affirmative defenses may be interpreted to apply more broadly than originally intended. This ambiguity creates real legal risk for any party involved in construction projects, whether or not they participate in MCIP. Our dedicated team of attorneys can help you understand the implications of this new law, if they affect you, and how to take action if they do.

Key Legal Changes

Under the revised NOC process, construction professionals must produce extensive documentation — including plans, specifications, subcontractor lists, and insurance records — within tight deadlines. Failure to comply can result in loss of defenses and procedural penalties, and on its face, regardless of whether the builder opted into MCIP. For claims involving  design professionals under MCIP, a Certificate of Review must now be filed at the outset of litigation. Defendants who wish to designate an architect or engineer as a nonparty at fault must also submit a certificate at least 45 days prior to trial. These changes add new layers of complexity for both plaintiffs and defendants.

Perhaps the most contentious change involves offers and counteroffers. Builders must respond to defect notices with a settlement offer, a denial based on standards, or a scope related objection. If the homeowner rejects the offer but fails to win more in court, they may be required to pay the builder’s attorney fees. Claimants must also submit a formal counterproposal within 30 days — another procedural hurdle with financial consequences.

What Property Owners and HOAs Need to Know

For property owners, investors, and HOA boards, this law adds significant legal risk to filing construction defect claims. Claimants are now required to certify that they took reasonable steps to mitigate damages. Missing disclosure deadlines or failing to file the right documents could mean losing your case — or worse, being forced to pay the other side’s legal fees. In addition, the Colorado Common Interest Ownership Act (CCIOA) now requires a 65% vote of unit owners before an HOA can initiate a construction defect lawsuit. Any funds recovered in such lawsuits must first be used to repair the defect — not to pay attorney fees or fund general reserves.

Limitation Periods and Strategic Takeaways

The statute of limitations for most defect claims remains two years, with a six-year statute of repose. The law also includes new tolling provisions during warranty repair or mitigation efforts — but only for up to one year. Given these tight and sometimes confusing timelines, parties need to act quickly and deliberately.

Our firm believes that this legislation signals a clear shift: claims that might once have been settled informally or procedurally forgiven now require surgical precision and more risk. Whether you’re developing, managing, or buying into a new property, the best way to protect yourself is to get legal advice early — before deadlines start running or opportunities to fix problems are lost. We think this law makes the constructive defect pre-litigation and court process more expensive and riskier for everyone involved. More than ever before, it is important to call your attorney prior to taking any action in a construction dispute. The stakes just got higher. 

Contact Our Construction Lawyer Today

Our construction attorney advises Colorado developers, owners, and investors on how to stay compliant and protected under this new law. From contract review and compliance strategies to defect litigation and risk mitigation, we’re here to help you navigate the new normal. 

Don’t wait until you’re sued — or worse, stuck with no remedy. Contact Volpe Law LLC today to schedule a discovery call and understand how the new rules apply to your specific project.

DISCLAIMER

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.