New Colorado law expected to spur more condo construction

A new Colorado law that reforms how construction defects are treated by the courts is expected to spur more condo and townhouse development in the state.

The new legislation is intended to foster high-quality home construction while protecting developers from extensive legal risk due to claims of construction defects. That risk "has kept developers from construction of an entire category of entry-level housing—condominiums and town homes," according to a report by Ark Valley Voice.

Beginning January 1, 2026, the law creates the Multifamily Construction Incentive Program. Builders will be able to opt into this program if they offer a warranty for any defect and damage and hire a third-party inspector to periodically review the construction during the building process. In exchange, builders will receive additional protection against construction defect actions.

Colorado has a shortage of over 100,000 homes. First-time buyers and lower-income buyers have largely been shut out of the housing market, legislators say.