Colorado’s Housing Crisis: How S.B. 25-131 Could Be a Step in the Right Direction

The cost of housing in Colorado has been an ongoing concern for homeowners, tenants, and developers alike.  Senate Bill 25-131 (S.B. 25-131) seeks to address some of these issues by modifying laws related to construction defect claims, landlord-tenant relationships, and local energy code requirements.  This bill, scheduled for its first hearing on March 4th at 2:00 PM in the Senate State, Veterans, & Military Affairs Committee, represents a significant step toward balancing protections for homeowners and developers while fostering an environment for lower housing costs.

Key Provisions of S.B. 25-131

Construction Defect Claims

One of the most significant barriers to affordable home construction in Colorado has been the prevalence of construction defect litigation.  Over the past two decades, this legal environment has dissuaded builders from undertaking multi-family and condominium developments, fearing costly lawsuits that can emerge years after project completion.  Senate Bill 25-131 seeks to restore balance by clarifying when construction defect claims can proceed and limiting litigation that hampers development.

Under the proposed bill, construction defect claims will only be permitted if they result in:

• Actual damage to real or personal property caused by the violation of a building code, manufacturer’s instructions, or industry standards.
• Actual loss of use of the property.
• Bodily injury or wrongful death.
• An imminent and unreasonable risk or threat to life, health, or safety.

By implementing these standards, the bill ensures that legitimate claims — where real harm or property damage has occurred — are addressed, while eliminating costly, speculative lawsuits that drive up insurance premiums and discourage new construction.  Developers may be more willing to build new housing, including condominiums, which have all but disappeared from the market due to legal uncertainty, if the homeowners are not able to sue of technical building code violations that do not impact the performance of a home.

To learn more about “The Great Fallacy,” i.e., “if builders would just build it right in the first place, there would be no construction defect litigation,” please read this post.  In short, the problem with this argument is that the standard applied to construction defects in a residential setting is that it is impractically high.  New homes built in Colorado are the only things constructed using hundreds of thousands of parts, most of which are made of natural and imperfect materials, designed and built by human hands, in the elements, over a period of months, where the standard applied is that of perfection.

Ensuring Cost-Effective Energy Codes

In an effort to balance environmental responsibility with economic feasibility, S.B. 25-131 introduces a requirement that any new energy codes adopted by municipalities or counties after January 1, 2026, must be cost-effective.  This means that local governments will need to demonstrate that the long-term financial savings of any new energy regulations outweigh the upfront costs imposed on builders and homeowners.

For years, stringent energy code updates have significantly increased the cost of construction, with mandates for specific materials, efficiency measures, and technologies that can add tens of thousands of dollars to the price of a new home.  While sustainability is an important goal, these requirements have sometimes outpaced economic reality, placing an undue financial burden on builders and buyers alike.

By requiring a multi-year economic analysis of new energy efficiency mandates, S.B. 25-131 ensures that future energy code changes are both environmentally beneficial and financially practical.  Homeowners will not be saddled with unnecessary costs, and developers will have clearer guidelines for incorporating energy-efficient practices in a way that does not deter new construction.

 Landlord-Tenant Law Changes

While much of the attention on S.B. 25-131 has been on construction defect claims and energy codes, the bill also makes notable changes to landlord-tenant laws.  These changes are aimed at clarifying landlord responsibilities and restoring balance in rental agreements.  While this post primarily focuses on construction and regulatory impacts, it is worth acknowledging that the bill includes important provisions in this area as well.

Why S.B. 25-131 Matters

Colorado has faced a well-documented housing affordability crisis.  The combination of litigation costs, regulatory burdens, and tenant-landlord law complexities has made it increasingly difficult for builders to construct affordable housing.  S.B. 25-131 represents an opportunity to:

• Reduce unnecessary legal expenses that stifle new development.
• Encourage the construction of more attainable housing options.
• Ensure energy efficiency measures are cost-effective rather than needlessly expensive.
• Create a more predictable legal environment for builders.

 How You Can Support S.B. 25-131

The first hearing for S.B. 25-131 is scheduled for March 4th at 2:00 PM in the Senate State, Veterans, & Military Affairs Committee.  To ensure that this bill advances, it is crucial that Coloradans voice their support to their elected officials.

Use the Find My Legislator tool (Colorado Legislature) to contact your State Senator and Representative.  Urge them to support S.B. 25-131 as a means of fostering a more sustainable and affordable housing market in Colorado.

Conclusion

Senate Bill 25-131 is a pragmatic approach to reducing housing costs by addressing some of the state’s most pressing legal and regulatory challenges.  Whether you are a developer, homeowner, landlord, or tenant, this bill has implications for the future of housing in Colorado.  Your voice matters — reach out to your legislators today and help ensure that Colorado moves toward a more balanced and cost-effective housing policy.