Thought Leaders: Condominium construction and the Construction Defect Action Reform Act
By Berg Hill Greenleaf Ruscitti - Berg Hill Greenleaf Ruscitti LLP —
Many Colorado communities are in desperate need of affordable housing for their residents. Condominiums are an affordable alternative for homebuyers. However, there is a shortage of condo units across the state and new condo developments are rare despite demand for them. Experts have identified the comparatively high insurance costs and risk of litigation associated with building condominiums as deterrents to new construction. Some state legislators and industry groups think Colorado’s Construction Defect Action Reform Act (CDARA) needs to be amended to fix the problem.
CDARA governs all actions for damages, indemnity, or contribution in connection with alleged construction defects. Under CDARA, property owners cannot file a lawsuit against a builder without first giving the builder written notice and an opportunity to repair the defect or make a settlement offer. If that process does not resolve the issue, the property owner may then file a lawsuit or arbitration proceedings against the builder. CDARA restricts some construction defect negligence claims, limits the time in which an action may be brought against a builder, limits the amount of certain damages that a property owner may claim, and regulates insurance policies issued to construction professionals.
Two competing bills—SB24-106 and SB24-112—were introduced by lawmakers during the 2024 Legislative Session aimed at amending CDARA in hopes of jump-starting condominium construction. Among other things, these bills sought to make it more difficult for condominium unit owners’ associations to file lawsuits against builders. Although neither of these bills passed, it is anticipated that lawmakers will try again to amend CDARA to address these issues in the next legislative session. In the meantime, Colorado communities will continue to grapple with the need for more affordable housing options.
Developers and construction professionals with questions about CDARA and condominium construction should contact BHGR’s Construction Group.
This article is informational only. The presentation or use of this information does not in any manner constitute an attorney-client relationship between BHGR and the website user. While the information on this site concerns legal issues, it is not intended as legal advice and is not a substitute for particularized advice from your own legal counsel.
Condominiums are an affordable alternative for homebuyers. However, there is a shortage of condo units across the state and new condo developments are rare despite demand for them.
