By John R. Lucero
September 17, 2026
Colorado has spent years debating why relatively little new condominium housing is built, even as demand continues for more attainable ownership options, including townhomes and other attached for-sale housing.
Construction-defect liability is an important part of that discussion, particularly for condominium and other attached ownership projects. But it is not the only part.
Insurance availability and cost, HOA operating expenses, financing conditions, land and construction costs, and the economics of smaller attached units all affect whether a project can move from concept to sale.
That is why recent construction-defect reforms should be viewed as one component of a broader housing-production strategy rather than a single solution.
Colorado Changed the Construction-Defect Framework
House Bill 25-1272 created a Multifamily Construction Incentive Program for builders of attached multifamily housing who choose to participate by providing specified warranties, using third-party inspections, and recording notice of participation before units are offered for sale.
For participating projects, the law narrows certain construction-defect claims and establishes additional procedures. More broadly, the enacted legislation establishes a duty to mitigate alleged defects, requires additional information exchange, raises the owner-approval threshold for an HOA construction-defect action from a majority to 65 percent, and directs successful associations to use net proceeds first to repair the defect.
The act also prohibits an insurer from cancelling, denying, or reducing existing liability coverage merely because a construction professional offered to repair or settle a covered defect claim.
The Policy Goal Is More For-Sale Multifamily Housing
The connection to housing supply is explicit. The law links state affordable-housing assistance to local fast-track approval processes for for-sale multifamily condominium projects.
The policy premise is straightforward: if risk can be managed more predictably, developers and insurers may be more willing to participate in attached ownership housing.
Insurance Still Matters
Even a better legal framework does not make the insurance problem disappear. Developers, contractors, design professionals, HOAs, and eventual homeowners operate within overlapping insurance markets, each with its own pricing and coverage constraints.
For a condominium project, those costs affect development feasibility before construction begins and affordability long after buyers move in. Higher association insurance premiums and deductibles eventually become part of the homeowner’s monthly carrying cost.
That means an attainable sales price can still produce an unaffordable monthly payment when mortgage costs, taxes, insurance, and HOA assessments are combined.
Ownership Housing Has to Pencil at More Than the Sale Price
Policy discussions about attainable ownership often focus on the initial price of the unit. Buyers experience housing cost differently. Their real monthly obligation includes principal and interest, property taxes, homeowner insurance, HOA assessments, utilities, and sometimes mortgage insurance.
For developers, the same project must absorb land, construction, financing, insurance, entitlement, infrastructure, marketing, and warranty costs before a unit reaches the buyer.
If any of those components move materially, the feasible product can change.
Why the Missing Middle Still Matters
Colorado needs more choices between detached single-family homes and large rental apartment buildings. Condominiums, townhomes, stacked flats, smaller ownership units, and other attached formats can use land efficiently while creating entry points into ownership.
But producing that housing requires more than zoning permission. The legal, insurance, financing, and operating environment must also support it.
Lucero Perspective
Construction-defect reform matters because development decisions are made around risk. When risk is difficult to price, capital becomes more expensive or leaves the product type entirely.
Colorado’s recent reforms are an attempt to make that risk more predictable while preserving remedies for legitimate defects. Whether they materially increase condominium production will depend on what happens next in the insurance market, lender underwriting, local approvals, and actual project economics.
The measure of success should not simply be fewer lawsuits. It should be whether more well-built, insurable, financeable ownership housing reaches the market at monthly costs that middle-income households can reasonably carry.
For attainable ownership, legal reform is part of the strategy. Insurance is part of the strategy. Financing is part of the strategy. And as with every complex development challenge, those pieces have to work together.
Sources & Further Reading
Colorado General Assembly. HB25-1272 – Construction Defects & Middle Market Housing (enacted). https://www.leg.colorado.gov/bills/HB25-1272
Colorado General Assembly. HB25-1261 – Consumers Construction Defect Action. https://www.leg.colorado.gov/bills/hb25-1261
