Colorado could see a surge in condo and townhome construction by this time next year

After years of debate, Colorado state lawmakers have passed a bill aimed increasing development of condos and townhomes by decreasing lawsuits between builders and homebuyers. Developers say those lawsuits are costing them up to $40,000 more per unit in insurance and driving builders out of state.

A study by Common Sense Institute found there were 146 condominium developers here in 2007 and today there are just 23.

Construction of condos and townhomes has dropped 80% since 2008, and they now make up less than 5% of new home starts.

"There are a lot of people who work hard, save their money and they are stuck forever living in an apartment and that had to change," says state Rep. Shannon Bird, who has led the fight for reform for the last two years.

She says developers were building an equal number of apartments and condominiums in Colorado before 2009 and now they're building 14 apartments for every one condominium.

She says she kept hearing stories of people leaving Colorado because they didn't want to rent for the rest of their lives.

"This bill is for those people. Our bill encourages and incentivizes builders to build right in the first place," Bird said.

The bill creates an incentive program that builders could opt into if they provide a written warranty with specific protections, disclose things like soil reports, and hire a third party to make inspections throughout construction.

In exchange, if there is a problem, a homeowner would have to mitigate the damage, and both the homeowner and builder would have to offer a fix before any litigation. If their offer isn't reasonable, they could have to pay the other's attorney fees.

Homeowners would have six years after discovering a problem to file a lawsuit and an HOA would need approval from 65% of owners to sue and would need to use most of any settlement to make repairs.

"We all need a place to lay our head down at night and with this policy, it will create more options of affordability for housing," said Senate President James Coleman, co-sponsor of the bill. "I believe this is one of the most important bills of the legislative session."

Tyrone Adams, CEO of the Colorado Association of Realtors, says it can't come soon enough.

"We're coming into a new era," he said.

Adams says there is a lot of pent-up demand after condo construction dropped from 3,000 units a year to just 600.

"And those condos are at the higher end. They're not the affordable, attainable ones. We feel like there are a lot of teeth in this bill that will help move the needle," he said.

A similar bill by Bird failed last year, but she persevered, holding more than 80 meetings with stakeholders. While the groups that represent both homeowners and builders don't support the bill this year, they don't oppose it either and it passed both the House and Senate almost unanimously.

"For anybody who wishes they could afford to buy a quality home, we hear you. We are passing a bill to make sure you can buy your first home and become homeowner in Colorado," Bird said.