Colorado Construction Defect Law Reform Bills Raise Concerns Over Increased Costs
Written by: Marianne Partisan
Two bills aimed at reforming Colorado's construction defect law have advanced in the Legislature, but concerns are being raised about potential cost implications, particularly for builders.
The bills, one focused on spurring condo development and the other aimed at providing homeowners with more protection, are drawing criticism from Republicans who argue that they could drive up costs and hinder construction.
House Bill 24-1230, which received preliminary approval from the House, seeks to extend the timeline for bringing a construction defect lawsuit from six to 10 years.
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It also allows similarly situated homeowners to bring a claim together, even if they are not part of a formal homeowner association. While proponents argue that this bill provides homeowners with greater recourse against shoddy construction, Republicans and builders are opposed to it.
One key sticking point is a provision in the bill that would require builders to pay homeowners a 6% prejudgment interest on claims.
Critics argue that this would impose an additional financial burden on builders and potentially lead to higher construction costs. Republicans are concerned that the bill could deter builders from taking on new projects and limit housing options for Colorado residents.
Senate Bill 24-106, which focuses on increasing condo stock, is also facing scrutiny. Supporters, including builders and municipal governments, argue that the bill is crucial for achieving the state's affordable housing goals by reducing the frequency of court claims and lowering insurance costs associated with condo construction.
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Currently, insurance costs for condos account for 5.5% of a project's hard costs, significantly higher than those for multifamily rental construction projects. Critics contend that these increased insurance costs act as a disincentive for condo construction and contribute to the affordability challenges faced by prospective buyers.
READ MORE:
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As both bills continue to progress through the Legislature, the debate over their potential impact on costs and construction activity is intensifying.
Republicans are pushing back against provisions they believe will burden builders and ultimately drive up housing costs. Proponents of the bills argue that they are necessary for protecting homeowners and increasing the availability of affordable housing options. The final outcomes of these bills will have significant implications for Colorado's construction industry and housing market.
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