{"id":904797,"date":"2025-09-16T15:00:39","date_gmt":"2025-09-16T21:00:39","guid":{"rendered":"https:\/\/www.myconstructionexpert.com\/blog\/?p=904797"},"modified":"2025-09-16T15:00:44","modified_gmt":"2025-09-16T21:00:44","slug":"construction-defect-litigation-colorado-american-dream-act","status":"publish","type":"post","link":"https:\/\/www.myconstructionexpert.com\/blog\/construction-defect-litigation-colorado-american-dream-act\/","title":{"rendered":"Colorado American Dream Act: Condominium Construction Defect Procedures"},"content":{"rendered":"\n<p>Bob Burton, Will Smith and Kristi Stotts | <a href=\"https:\/\/www.winstead-realestate.com\/2025\/09\/05\/colorado-american-dream-act-condominium-construction-defect-procedures\/\" target=\"_blank\" rel=\"noreferrer noopener nofollow\">Winstead<\/a><\/p>\n\n\n\n<p>Colorado\u2019s housing shortage\u2014particularly in the for-sale condominium market\u2014has been driven in part by the high cost and unpredictability of <a href=\"https:\/\/www.myconstructionexpert.com\/blog\/10-ways-avoid-construction-defect-litigation-colorado\/\">construction defect litigation<\/a>. In 2025, the General Assembly enacted House Bill 25-1272, the Colorado American Dream Act, to address these barriers and encourage new condominium development. The Act creates a voluntary Multifamily Construction Incentive Program (MCIP) that offers developers a clearer, more predictable framework for addressing construction defect claims in exchange for meeting defined quality, inspection, and warranty standards.<\/p>\n\n\n\n<p>The MCIP is effective on January 1, 2026. On and after January 1, 2026, developers of attached condominium developments consisting of 2 or more units can voluntarily opt in to this program by:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Recording an Opt-In Notice.<\/strong>\u00a0Recording a notice of election into the MCIP in the real property records before offering units for sale;<\/li>\n\n\n\n<li><strong>Provide 1\/2\/6 Limited Warranty.<\/strong>\u00a0Providing a written limited warranty to unit owners at closing, which covers workmanship and materials for 1 year, electrical, plumbing, and mechanical systems for 2 years, and structural components for 6 years; and<\/li>\n\n\n\n<li><strong>Hire an Independent Inspector During Construction.<\/strong>\u00a0Hiring an independent third-party inspector\u2014licensed or certified and unaffiliated with the developer\u2014to inspect project components and confirm compliance during construction.<\/li>\n<\/ul>\n\n\n\n<p><strong>Key Benefits of Opting In<\/strong><br>Developers who opt into MCIP gain several procedural safeguards and substantive protections, making defect litigation more structured and predictable:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Statute of Repose Reduction.<\/strong>\u00a0The statute of repose, i.e., the period of time during which a claim may be brought, is reduced from 10 to 6 years.<\/li>\n\n\n\n<li><strong>Mandatory Warranty First, Litigation Later.<\/strong>\u00a0Unit owners and the association must pursue all warranty-based remedies before filing a defect claim.<\/li>\n\n\n\n<li><strong>Clear Limits on Claim Types.<\/strong>\u00a0Narrows the scope of claims to actual property damage or loss of use, bodily injury or death, failure of a component to perform its intended function, and safety risks to occupants.<\/li>\n\n\n\n<li><strong>Certificate of Review Rule (for Architects &amp; Engineers).<\/strong>\u00a0Claims against design professionals require a certificate of review (signed expert opinion) to be filed with the initial complaint\u2014not after\u2014ensuring early and stricter scrutiny of claims.<\/li>\n\n\n\n<li><strong>Structured Claim Response Process.<\/strong>\u00a0Developers must respond to claims within defined timelines\u2014either by offering a settlement (money or repairs) or providing a formal explanation with applicable standards, which creates transparency and promotes early resolution.<\/li>\n\n\n\n<li><strong>Attorney Fee Shifting.<\/strong>\u00a0If a settlement offer is unreasonably rejected, the court may award attorneys\u2019 fees to the developer. Conversely, if the builder fails to make a reasonable offer, the unit owner of the association may recover fees.<\/li>\n\n\n\n<li><strong>Affirmative Defenses Expressly Available.<\/strong>\u00a0Developers may assert defenses and avoid or limit liability for defects not caused by them, such as extreme weather or natural catastrophes, acts of war, terrorism, or vandalism, a unit owner or association\u2019s neglect, misuse, or failure to mitigate damage, and circumstances where repairs previously made under the program successfully addressed the defect.<\/li>\n\n\n\n<li><strong>Insurance Protection.<\/strong>\u00a0Developers are protected from the risk of insurers denying or canceling liability coverage merely because they made a repair or settlement offer, so long as it\u2019s within the claims process.<\/li>\n<\/ul>\n\n\n\n<p><strong>Other Changes<\/strong><br>Whether a developer elects to opt into MCIP or not, the Act includes the following new benefits.<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Higher Approval Requirement Before Initiating a Claim<\/strong>. An association must now obtain 65% owner approval (up from a simple majority) to initiate a construction defect claim.<\/li>\n\n\n\n<li><strong>Settlement Used to Repair Defects.<\/strong>\u00a0Any settlement or judgment proceeds must be used first to repair defects before other uses.<\/li>\n\n\n\n<li><strong>Duty to Mitigate.<\/strong>\u00a0A claimant must take reasonable steps to mitigate damage before filing a claim. If they don\u2019t, any damages attributable to that failure may be barred.<\/li>\n<\/ul>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<p><strong>When one of your cases is in need of a construction expert, estimates, insurance appraisal or umpire services in defect or insurance disputes &#8211; please call Advise &amp; Consult, Inc. at 888.684.8305, or email <a href=\"mailto:experts@adviseandconsult.net\">experts@adviseandconsult.net<\/a>.<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Bob Burton, Will Smith and Kristi Stotts | Winstead Colorado\u2019s housing shortage\u2014particularly in the for-sale condominium market\u2014has been driven in part by the high cost and unpredictability of construction defect litigation. In 2025, the General Assembly enacted House Bill 25-1272, the Colorado American Dream Act, to address these barriers and encourage new condominium development. The&hellip; <a class=\"more-link\" href=\"https:\/\/www.myconstructionexpert.com\/blog\/construction-defect-litigation-colorado-american-dream-act\/\">Continue reading <span class=\"screen-reader-text\">Colorado American Dream Act: Condominium Construction Defect Procedures<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false},"version":2}},"categories":[14,4,172],"tags":[9895,120,12,229,19],"class_list":["post-904797","post","type-post","status-publish","format-standard","hentry","category-construction-2","category-construction-defects","category-construction-law-2","tag-advise-consult","tag-colorado","tag-construction","tag-construction-defect-litigation","tag-construction-defects-2","entry"],"jetpack_publicize_connections":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v25.0 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Colorado American Dream Act: Condominium Construction Defect Procedures - Advise &amp; 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