Colorado's Condo Defect Law, HB25-1272: The Agent Checklist for Denver Condos and Townhomes

Jerad Larkin

11 minutes ago

9 min read

What does Colorado's condo construction defect law (HB25-1272) change for real estate agents?

HB25-1272 raised the HOA vote needed to sue over construction defects to 65% of owners, and since January 1, 2026 it lets condo builders opt into a warranty program with a shorter claims window.

Most agents I talk to know Colorado had a condo problem. Fewer know the legislature did something specific about it in 2025, and almost nobody has turned it into a checklist for the listing appointment. That is what this post is.

Denver has a lot of condos and townhomes right now, and a lot of them are either brand new or sitting in older buildings where somebody on the board has said the word "defect" out loud. If you are listing one, or writing an offer on one, this law changes a few questions you should be asking.

I am a title guy, not an attorney, so I am going to stick to what the law says, where I could confirm it, and where I could not. Anything that turns into a legal question goes to the client's attorney.

What HB25-1272 actually changed, and when

The bill was signed in May 2025. It was written to make it less risky to build for-sale condos and townhomes, because Colorado's old construction defect rules were widely blamed for keeping builders out of that market. Lawmakers cited a shortage of more than 100,000 homes statewide and reported that the number of condo developers in Colorado fell 84 percent between 2007 and 2022, according to the bill's signing announcement from House Democrats.

Two pieces matter to agents:

The 65% HOA vote. An HOA board used to need a simple majority of owners to bring a construction defect claim. Now it needs approval from 65% of owners. Any money the association wins has to go to repairing the defect first. The Colorado Division of Real Estate's 2025 HOA Forum legislative summary lists an effective date of August 6, 2025, and says it covers both CCIOA and pre-CCIOA communities.
The Multifamily Construction Incentive Program. Starting January 1, 2026, builders of attached condo projects can opt into a program that gives buyers a warranty and a third-party inspection process in exchange for extra protection from defect lawsuits. This one is voluntary for the builder.
Everything else is detail. Claims get narrower, owners have to try warranty repairs first, and the statute of repose shrinks for builders who opt in. I cover those below.

Sources do not agree on every date. One law firm summary says the 65% vote starts January 1, 2026, while the Division of Real Estate and the Colorado Association of Home Builders both say August 6, 2025. I went with the state agency. If a date matters to a specific claim, get it from the attorney.

Change one: the 65% vote

This one affects older buildings, and it is the one agents will run into first.

Say you are listing a unit in a 1990s building and the board minutes mention water intrusion, a failing deck, or a stucco problem. In the past, a simple majority of owners could authorize the board to pursue the builder. Now the board has to get to 65% of all owners. For a building with a lot of investor-owned or absentee units, that is a harder number to hit.

Here is my interpretation, and it is only that. A higher bar means fewer associations will file, and more will be deciding between negotiating, repairing out of reserves, or levying a special assessment. I have not seen data on how it is playing out in Denver, so treat that as something to ask about, not something to assume.

What you can say with confidence: if an association does win money, the law requires it to go to the repair first. That matters to a buyer who is worried a settlement could get spent on something else.

If the building has any defect story at all, pair this with the HOA document deadline post, because the documents are where this shows up. Board minutes, the budget, and the reserve study will tell you more than the listing remarks ever will.

Change two: the builder warranty program

This one is for new construction condos and townhomes, and it is brand new. The program only exists for projects where the builder chooses to opt in.

Here is what the program requires, based on summaries from Woods Aitken and a JD Supra legal analysis of the American Dream Act:

A written warranty on a 1-2-6 schedule. One year for workmanship and materials, two years for plumbing, electrical, and mechanical systems, and six years for structural components.
A third-party inspector. The builder hires an independent licensed or certified inspector who has no tie to the builder to review construction as it goes.
A recorded notice. To opt in, the builder records a notice of election in the real property records. That is a public record, which matters for the checklist below.
Warranty first. Owners and associations have to pursue the warranty remedies before they file a defect claim.
A shorter window. For builders who opt in, the statute of repose drops from 10 years to 6 years, according to the JD Supra summary.
Settlement offers have teeth. If a builder makes a reasonable repair or settlement offer and the claimant unreasonably turns it down, the court can shift attorney fees to the claimant. The reverse applies if the builder makes no reasonable offer.

The tradeoff is easy to say in plain English. The buyer gets a warranty and an inspection record they might not have had before. In exchange, the buyer's ability to sue later is narrower and faster to expire. Whether that is a good deal depends on the building, which is why it belongs in your buyer conversation and not in a footnote.

For more on how builders are competing for buyers right now, see my post on using new construction builder incentives. The warranty program is a new line in that conversation.

What I could not confirm

I would rather tell you what I do not know than guess. Three things I could not pin down from the sources I read:

How many Denver projects have opted in. I did not find a public count. Do not tell a buyer a building is in the program unless you have seen the recorded notice.
Whether the warranty passes to a resale buyer. The summaries I read describe the warranty for the original purchaser. If you are representing someone buying a unit from the first owner, get the answer from the builder in writing.
Exactly when the notice must be recorded. One summary says before the final certificate of occupancy. Another says before units are offered for sale. The statute controls, so have counsel confirm.

There is also a drafting issue worth knowing about. The Colorado Association of Home Builders reports that the early disclosure requirements for construction professionals apply to all construction defect claims, not just program claims, and says a follow-up bill would be needed to fix it. I did not verify whether that bill passed. If it comes up in a deal, ask the attorney.

The agent checklist for condos and townhomes

If you are listing a condo or townhome

Ask the seller about any defect history. Water intrusion, structural repairs, a past or pending claim against the builder. Colorado agents already know a seller's known material facts do not get hidden, so ask early and document the answer.
Pull the board minutes for the last 12 to 24 months. Search for the words defect, claim, attorney, litigation, assessment, and engineer.
Read the budget and reserve study together. A thin reserve plus a known repair is the combination that leads to a special assessment.
Check whether the HOA voted on anything. A 65% vote that is underway or failed is a data point your buyer will want.
Order the HOA documents early. The clock on those documents is where deals get tight, and I wrote about it in the HOA document deadline post.
Think about the lender. Condo project approval is its own hurdle, and I covered the shift in Fannie Mae retiring Limited Review. Pending defect litigation is the kind of thing that can complicate it, so ask the buyer's lender what they need.

If your buyer is looking at new construction

Ask the builder in writing: did you opt into the Multifamily Construction Incentive Program, and where is the notice of election recorded?
Ask for the warranty document and read the 1-2-6 coverage against what the builder is advertising.
Ask for the third-party inspection records that the program requires.
Have your buyer's attorney review what they give up in exchange for the warranty, including the shorter repose period and the warranty-first requirement.
Ask your escrow officer to look at the recorded documents on the project early, before the buyer is emotionally committed.

If your buyer is looking at an older building

Ask whether the board has discussed a defect claim and where it stands.
Ask for any engineer's report the association has commissioned.
Look for special assessments that have been approved or proposed, and how the board plans to fund repairs.
Remember the 65% number. A building that wants to sue now needs more owners to agree than it used to.

What to say to a seller or buyer

You do not need a legal lecture. You need two or three sentences that show you know the rules changed.

To a condo seller: "Colorado changed the rules on defect claims in 2025. Before we list, I want to look at your board minutes and reserve study so we know what a buyer's lender and attorney are going to see, and so we are not surprised mid-contract."

To a buyer looking at new construction: "Some builders can now opt into a state warranty program. If this one did, there should be a recorded notice and a written warranty. Let's ask for both before we write an offer, and have your attorney look at what you are agreeing to."

To a buyer looking at an older building: "Before we get serious, let's find out whether the association has ever looked at a defect claim. The vote needed to sue went up, so a known problem might get handled through assessments instead."

Where title fits

As an Account Executive with Chicago Title of Colorado, I work with Denver Metro agents on the paper side of this every week. The notice of election is a recorded document, and recorded documents are exactly what a title search looks at. If you have a new condo project in front of you, ask your escrow officer to pull the recorded documents on the project early. It is a good habit, and I wrote up four other problems that surface in a similar way in The Pre-Listing Title Check.

Also, if the project is in a metro district, that disclosure is its own conversation. See Metro District Disclosure in Colorado.

For the original text, the bill page is at leg.colorado.gov. This post is education, not legal advice. Anything specific to a building or a claim should go to the right attorney.

How to use this on your next condo appointment

Print the checklist above and put it in your listing or buyer consult folder.
Ask the three builder questions on any new construction condo or townhome.
Pull board minutes on any older building before you price it.
Add one sentence to your condo listing presentation that mentions you know the 2025 law changed the rules.

FAQ

What is Colorado's condo construction defect law?

It is House Bill 25-1272, signed in May 2025. It raises the HOA vote needed to bring a defect claim to 65% of owners and creates a voluntary builder program, starting January 1, 2026, that pairs a warranty and third-party inspections with added protection from defect lawsuits.

How many owners does an HOA need to sue over construction defects in Colorado?

Under HB25-1272, 65% of owners must approve. It used to be a simple majority. The Division of Real Estate summary lists an effective date of August 6, 2025, and says any money the association recovers must go to repairing the defect first.

What is the Multifamily Construction Incentive Program?

It is an opt-in program for builders of attached condo projects. Builders who join provide a warranty (1 year workmanship, 2 years for systems, 6 years structural), use a third-party inspector, and record a notice of election. In return they get added protection from defect claims, including a six-year statute of repose.

Does this law apply to older Denver condo buildings?

The 65% HOA vote applies to associations generally, including pre-CCIOA communities, according to the Division of Real Estate summary. The builder warranty program applies only to projects whose builder opted in.

Should agents give clients legal advice about construction defect claims?

No. Agents can ask the right questions and request documents, but how the law applies to a specific building or claim is a question for the client's attorney.

One more thing

If you have a condo that has been sitting and you want a second set of eyes on how it is positioned, or you are looking for marketing ideas to get it in front of the right buyers, reach out to me. Want more tools, tactics, and resources like this? Subscribe to my weekly emails at milehightitleguy.com.