Over the past decade, Denver’s condominium construction has been very limited. The percentage of new condos has fallen well below that of most major US cities. A new Colorado bill passed this spring looks to jump-start the Colorado condo community, and spark construction of mid-priced condominiums. Over the past few years, new condos construction was primarily limited to higher-end properties. This law may open up the possibility of condominium ownership to a new group of more price-conscious buyers.
Decline of the Colorado condo
Within the 10 years leading up to the bill, condo construction fell from 20 percent to 2 percent of total new housing projects.
Builders claim that this drop in construction was a reaction to laws that made it very easy for condo associations to sue them for building defects. Construction insurance rates had skyrocketed, and it was very expensive for builders to construct condos that were not at risk for litigation.
Changing litigation rules
The new law makes it more difficult for condominium associations to file large defect lawsuits against construction companies. Protected from as many litigation costs, construction companies are expected to start building more condos.
Under the new law, a majority of a community’s condo owners must officially vote to take legal action against the construction company. Additionally, they can only take action after a 90-day election period where lawyers and developers explain the ramifications of pursuing a lawsuit.
Future growth of the Colorado condo
This law is expected to spark the construction of mid-priced condos that Millennials and more financially-sensitive individuals will be able to afford. Politicians also predict that we will see an increase in the number of property insurers entering the market.
If you are a developer, or forming a condominium association, consider contacting an attorney who can walk you through the process and explain how this law may affect you.