Colorado General Assembly enacts reforms for construction defect claims and homeownership

In the heart of Colorado's bustling legislative chambers, lawmakers gathered on April 23, 2025, to discuss a pivotal piece of legislation known as House Bill 1272, aptly titled the "Colorado American Dream Act." This bill aims to address the growing challenges of homeownership in the state, particularly for first-time buyers who find themselves increasingly priced out of the market.

At the core of House Bill 1272 is a comprehensive approach to construction defect claims, a significant hurdle for homeowners and builders alike. The bill establishes a claimant's duty to mitigate alleged construction defects, outlining clear steps for homeowners to follow and the consequences of failing to do so. This provision seeks to streamline the often contentious process of resolving construction disputes, which can delay repairs and exacerbate financial burdens for homeowners.

One of the bill's notable features is the adjustment of the statute of limitations for construction defect claims, extending it to ten years unless a warranty is provided, which would shorten it to six years. This change aims to balance the interests of homeowners seeking recourse for defects with the need for construction professionals to have a reasonable timeframe to address claims. Additionally, the bill introduces a tolling provision during the mitigation process for claims related to middle market housing, ensuring that homeowners are not penalized for taking necessary steps to resolve issues.

The legislation also raises the threshold for homeowners' associations to initiate construction defect claims from a simple majority to 65%, reflecting a desire for greater consensus among owners before pursuing legal action. Furthermore, it mandates that any monetary damages awarded from successful claims must first be used to repair the identified defects, ensuring that the focus remains on rectifying issues rather than financial gain.

As the bill was debated, it sparked discussions among lawmakers and stakeholders about its potential implications. Proponents argue that it could revitalize the housing market by making homeownership more accessible and reducing the legal complexities surrounding construction defects. Critics, however, express concerns that the increased burden on homeowners to mitigate defects may lead to unintended consequences, potentially leaving some without adequate recourse.

Experts in housing policy suggest that while the bill addresses critical issues, its success will depend on effective implementation and the willingness of construction professionals to engage in good faith negotiations with homeowners. The future of the Colorado American Dream Act remains uncertain, but its passage could mark a significant shift in the landscape of homeownership and construction practices in the state.

As the legislative session progresses, all eyes will be on House Bill 1272, a beacon of hope for many Coloradans striving to achieve the dream of homeownership amidst a challenging economic climate.