Colorado amends construction defect action procedures for unit owners

On March 31, 2025, the Colorado State Legislature introduced House Bill 1272, aimed at reforming the procedures surrounding construction defect actions within homeowner associations. The bill seeks to clarify the approval process required for executive boards to initiate legal actions related to construction defects, thereby addressing ongoing concerns about the management of such claims.

The primary provision of House Bill 1272 stipulates that an executive board can only initiate a construction defect action if it receives authorization from at least 65% of the unit owners during a designated voting period. However, the bill also outlines exceptions to this requirement. Notably, if the alleged defect pertains to a facility used for nonresidential purposes and the repair costs do not exceed $50,000, the board can proceed without owner approval. Additionally, if the association is the contracting party for the labor or services related to the defect, approval is not necessary.

Another significant aspect of the bill is the stipulation that any monetary damages or proceeds obtained from a successful construction defect claim must first be utilized for the benefit of the association, ensuring that funds are directed towards necessary repairs or improvements.

The introduction of House Bill 1272 has sparked notable discussions among legislators and stakeholders. Proponents argue that the bill will streamline the process for addressing construction defects, potentially reducing legal costs and expediting repairs. Critics, however, express concerns that the 65% approval threshold may hinder timely action on legitimate claims, particularly in larger associations where achieving such a majority could be challenging.

The implications of this bill extend beyond procedural adjustments; they touch on broader economic and social issues within Colorado's housing market. By potentially facilitating quicker resolutions to construction defects, the bill could enhance property values and improve living conditions for residents. Conversely, if the approval process proves cumbersome, it may lead to prolonged disputes and dissatisfaction among homeowners.

As House Bill 1272 progresses through the legislative process, its outcomes will be closely monitored by both supporters and opponents. The bill's potential to reshape the landscape of construction defect litigation in Colorado could have lasting effects on homeowner associations and the construction industry alike. Further debates and amendments are anticipated as the bill moves forward, reflecting the complexities of balancing homeowner rights with the need for efficient governance within associations.