By Jeff Kerrane, Kerrane Storz, PC

Across the United States, families are being priced out of homeownership. Rents have spiked, mortgage rates have risen, and inventory is at record lows not simply in Colorado, but nationwide. Zillow estimates a 4.5-million-unit gap in affordable housing, a shortage built over decades rather than caused by any single law or lawsuit. Restrictive zoning, high material and insurance costs, and slow permitting cycles have driven today’s crisis.  Colorado’s shortfall in affordable housing is at least 100,000 homes—a small fraction of the national shortage.

 

For years, developers and insurance companies have pushed a narrative that if Colorado weakens construction defect and consumer protection laws, condominium construction will return and affordability will follow.  But that premise was always too simplistic. Condominium and affordable housing shortages are a national trend. And Colorado already had some of the most developer-friendly construction defect laws in the country, long before condominium construction plummeted. 

HB25-1272: What It Does and Why HOAs Should Pay Attention

In May 2025, Colorado enacted HB25-1272, branded the Colorado American Dream Act, creating a voluntary framework where multifamily builders can receive limited legal protections if they provide third-party inspections and limited warranty coverage. The bill was marketed as a way to revive for-sale condominium construction, which historically has offered a critical entry point for first-time buyers, young professionals, and aging homeowners looking to downsize.

The new law requires developers who choose to participate in the program to submit their projects to third-party inspections in addition to those normally conducted by the municipal building departments.  The law also requires builders opting in to provide a limited warranty (1 year workmanship, 2 years “systems,” 6 years major structural).

Builders who participate in the program receive legal protections, such as more detailed pre-filing requirements for claims against architects and engineers, additional limitations on claims, a rebuttable presumption that construction defects do not exist, and enhanced affirmative defenses.

Additionally, the bill increases the homeowner vote required to file a construction defect case from a simple majority to 65% and requires HOAs to spend lawsuit recoveries on making repairs.  

Perhaps the most significant aspect of the program that could actually reduce litigation is the possibility of having attorneys’ fees awarded against any party who is deemed to have acted unreasonably in the pre-litigation notice of claim process.  

Several Front Range Cities Just Proved that Construction Defect Reform Was Never About Affordability

For nearly a decade, Front Range cities pushed the narrative that construction-defect reform was necessary to bring back condominium development and expand affordable housing.  HOAs were told that weaker consumer protections were necessary to achieve affordability, and that homebuyers would ultimately benefit.

But when the bill finally passed, municipal behavior told a very different story.

In 2025, as HB25-1272 was being celebrated as an affordability solution, Denver cut $18 million from its affordable housing program—nearly a quarter of its proposed funding. If affordability was truly the driving force behind construction defect reform, this is where cities should have doubled down, not pulled back.

Even worse, the cities of Arvada, Aurora, Glendale, Greenwood Village, Lafayette, and Westminster banded together to sue the State over zoning reforms designed to increase density, eliminate mandatory parking minimums, and allow more affordable housing near transit. If their stated goal was more attainable ownership, this lawsuit does the opposite.

Governor Polis’ office said it plainly: “It’s clear this lawsuit is about preventing more housing from being built that Coloradans can afford.”

As the National Low Income Housing Coalition points out, NIMBYism (Not in My Back Yard) frequently blocks affordable developments, particularly in high-opportunity areas.  “Experts overwhelmingly agree that relaxing zoning laws is one of the best ways to improve affordability.  …  Even adding a modest amount of density in the country's biggest markets could create millions of new homes.”

If cities genuinely cared about affordability, they wouldn't slash housing budgets or fight zoning reform while cheering for legal protections for builders. They would be funding affordable projects, embracing density, and supporting smart growth policy, not litigating against it.

Even with HB25-1272 in effect, local governments are not satisfied and are pushing even more restrictions on homeowner rights.  On November 18, 2025, Douglas County introduced an ordinance that would limit HOA’s ability to amend their governing documents to remove one-sided arbitration provisions, and would give developers the unilateral right to enter a homeowner’s property to make repairs (even over a homeowner’s objection to the repair scope or methodology), and limit breach of contract and warranty claims. 

New condos and more affordable housing will come from zoning reform and public investment, not from restricting homeowners’ legal rights.  If cities want affordability, they must prove it with budgets and policy.

What HB25-1272 Does	What HB25-1272 Does Not Do
Creates a voluntary program for builders	It does not require builders to participate in the program
Requires builders to provide a 1-2-6- year warranty (shorter than most current residential warranties)	It is not limited to affordable housing developments
Protects architects and engineers by adding additional pre-filing requirements	It does not provide any financial incentives for affordable development
Gives builders enhanced affirmative legal defenses	It does not make improvements to zoning laws to encourage higher density, transit-oriented development
Increases the required homeowner vote to bring a claim to 65%	It does not guarantee that additional affordable housing will be built.
Awards attorneys’ fees against parties who do not reasonably settle cases in the pre-litigation process	It does not allow homeowners and HOAs to recover their attorneys’ fees in projects that do not opt into the program

Construction defect claims are time-sensitive and governed by specific legal deadlines. If your new community is experiencing construction concerns, consulting with a reputable construction defect attorney can help you understand your rights, the applicable statutes of limitation and repose, and how timing may affect your ability to pursue claims and hold the developer or builder accountable.

Jeff Kerrane is a shareholder with the law firm Kerrane Storz, PC, which represents property owners and community associations in construction defect litigation.  He brings more than 30 years of experience representing property owners and community associations in construction defect cases. He is a dedicated advocate for homeowners and community associations in Colorado and Texas.