Colorado Condo Construction Defect Bill Signed Into Law
After years of failed attempts, legislation aiming to reduce risk to contractors becomes offical
New law provides incentives for contractors in an effort to jumpstart construction of much-needed multifamily housing.
Photo by Jennifer Seward/ENR
Colorado Gov. Jared Polis (D) on May 12 signed a bill into law that incentivizes builders to construct much-needed multifamily housing through a program that makes construction defect liability insurance more attractive by lowering their premiums.
The 2025 law creates a warranty program that contractors can opt into that covers defects at no cost to the homeowner for a minimum of one year for work quality and materials, two years for plumbing and electrical work and six years for major structural components. It also requires a third-party inspection during construction that will result in a certificate of occupancy and provide for various remedies in case a defect is discovered.
Prime bill sponsor Rep. Shannon Bird (D) said the legislation aims to address the need for an increased supply of multifamily homeownership opportunities. "The bill we passed this year is intended to incentivize construction of higher-quality homes and to improve the dispute resolution process when a construction defect has been identified," she said. "These mechanisms together will give more builders confidence in their litigation risk assessments. We believe that this is an important step towards giving more consumers the opportunity to buy a quality home at an affordable price."
Condominium construction in Colorado has been stymied since the 2001 Construction Defect Action Reform Act set up a process for homeowners to sue builders when they found defects that could range from minor complaints about finishes to serious structural or HVAC issues. As a result, high construction defect litigation costs had all but halted middle market condo construction in the state for years.
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