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An effort to encourage condominium construction in Colorado by reducing the chance of lawsuits over building errors failed in a state House committee Friday evening, a sign of how complicated and politically fraught the issue is.
Senate Bill 106, the so-called construction defects bill, was unanimously rejected by the House Transportation, Housing and Local Government Committee at the request of one of the legislation’s main sponsors, Rep. Shannon Bird, a Westminster Democrat. Bird said the bill didn’t have enough votes to pass the House, the legislature’s more liberal chamber, and there was no path to compromise with such little time left in Colorado’s legislative session, which ends Wednesday.
“We have run out of time,” Bird said, vowing to bring the issue back to the Capitol in 2025.
The measure, which was watered down in the Senate, was seen by proponents — including developers and the business community — as a way to prompt construction of more homes that middle-income Coloradans can afford. The median sale price of a single-family home in Colorado was about $625,000 in November, according to Redfin, while the median sale price of a condo was about $450,000.
However, opponents — including the state’s trial lawyers and progressive Democrats in the legislature — feared it would leave homeowners more susceptible to inferior construction.
The bill would have changed state law to prohibit a construction defects lawsuit in cases where shoddy building prompts a “verifiable danger” to occupants. Right now, such lawsuits can be filed where there is a risk of bodily injury or death or to the health or safety of occupants.
The measure also would have required that homeowners associations get the approval of 60% of their members before filing a construction defects claim, up from a simple majority. The bill would have made HOAs obtain written consent from each member voting to proceed with a lawsuit acknowledging that they received certain disclosures and are aware of what defects they would have to disclose when selling their property.
Construction defects legislation has been a political third rail in Colorado for years. The last major change to the state’s construction defects laws was made in 2017. But rising housing costs and the failure of other affordable housing measures has thrust the issue back to the forefront. Even Gov. Jared Polis has expressed interest in changing the state’s construction defects laws to limit lawsuits against developers.
Apartment building construction has outpaced condo-building projects in Colorado since 2008.
A view of the city and mountains from the 10th floor penthouse community lounge in the Art Studios apartment building at 1200 Lincoln St. in downtown Denver. (Kathryn Scott, Special to The Colorado Sun)
From 2018 to 2022, condo construction in the Denver metro area fell to about 600 new units per year, down 80% from the five-year period from 2002 to 2006, when an average of 3,000 new units were built per year, according to data gathered by Zonda.
But it’s not just Colorado. Condo construction is at a historic low across the U.S., according to the Urban Institute, a policy think tank based in Washington, D.C.
Another construction defects measure debated in the legislature this year, House Bill 1230, is destined to fail. That bill would have made it easier to sue developers over construction errors, including by extending the statute of limitations for when a claim can be brought to 10 years from six and starting the limitation at when a homeowner identifies the underlying cause of a construction error instead of its symptoms.
House Bill 1230 passed the House but has languished on the Senate floor for weeks. Sen. Lisa Cutter, a Jefferson County Democrat and main sponsor of the bill, says it almost certainly won’t be debated before the end session and will die on the calendar.
“We had hoped to find some compromise on homeowner protections,” Cutter said, “but (it) looks like we’ll have to come back next year.”
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