Q. What is a construction defect?
A. Colorado statutes do not define the term “construction defect.” However, “construction defect” typically includes any failure to construct a home or building in a reasonably workmanlike manner, including errors in the construction, design, planning, supervision, inspection, or observation which result in physical damage or an inability to perform in the manner reasonably expected by the buyer. Common examples include concrete cracking and heaving from poor drainage and expansive soils, water intrusion, mold, and omitted firestopping.
Q. Who is responsible for construction defects?
A. Typically, the developer, general contractor, subcontractors, and designers can all face liability for damage from construction defects. In some cases, a material manufacturer or supplier can have liability for construction defects as well. However, since developers are generally liable for their own acts as well as for the acts of their subcontractors, homeowners often bring suit solely against the developer, unless issues of insurance coverage or the developer’s solvency warrant bringing claims against other parties as well.
Q. Who can make a construction defect claim?
A. The owner of the damaged property will typically be the “real party in interest” for a construction defect claim, though a tenant may also be able to recover damages in some situations. The owner need not necessarily be the original owner of the home, and in certain cases, prior owners or tenants may have claims. Additionally, a homeowner association may bring construction defect claims on behalf of itself or two or more unit owners on matters affecting the community.
Q. How did my home pass inspection?
A. Many homeowners wonder how a home with construction defects can pass a city inspection. The reality is that budget restraints severely limit the amount of time building inspectors can spend on any particular job site, and cities simply do not have the manpower to keep up with the pace of construction. As a result, most inspectors focus their attention on life-safety issues and rely on the builder for structural issues and general standards of workmanship. For more information, see Doug Benson’s article, I have Construction Defects? How Did My Home Ever Pass Inspection?
Q. What is a “Notice of Claim” in Colorado?
A. Before any construction defect lawsuit or arbitration can be filed, a homeowner must serve a “notice of claim” on the builder. This notice must provide details sufficient to determine the general nature of the construction defect, including a general description of its location and resultant damage. The builder must then be given an opportunity to inspect the property, after which he can present an offer to repair the construction defect or pay a settlement. If the builder chooses to offer repairs, he must turn over the findings and results of his inspection to the homeowner. The process should take no more than ninety days, during which time the statutes of limitation and repose are tolled.
Q. What are the time limits to bring a claim for construction defects?
A. Colorado has one of the most stringent statutes of limitations in the country, requiring homeowners to file suit within two years after they see manifestations of a construction defect, even if they do not appreciate the significance of what they observed. Under this standard, a puddle of water may start the clock running even if the homeowner does not realize that this minor inconvenience is a harbinger of a serious construction defect. To mitigate this harsh result, Courts will sometimes extend the statute of limitations where a homeowner relies on a builder’s promise to make repairs. Claims for breach of warranty, breach of fiduciary duty, and deceptive trade practices may also be subject to longer statutes of limitations under certain circumstances.
Statutes of repose are distinguishable from statutes of limitation in that they specify the absolute time during which a cause of action can arise. Under Colorado’s statute of repose, the time to bring a claim may expire before the homeowner even learns of the problem. An exception exists, however, if the manifestation of a defect is discovered during the fifth or sixth year after substantial completion of the house. Then, the owner has two additional years after that date to bring the action.
Many times a homeowner association may learn of construction defects in the community but cannot bring the claim because the developer is still in control of the Board. When this is the case, the statutes of limitations will likely not begin to run against the developer until the Association has transitioned to homeowner control. The time periods, however, may continue to run as to other potential defendants.
Ultimately, this area of law is extremely complicated and application often turns on very subtle distinctions in the facts. If you suspect that your property has construction defects, you should not delay in speaking with a construction defect attorney.
Benson, Kerrane, Storz & Nelson, P.C.
Construction Defect Attorneys
Benson, Kerrane, Storz & Nelson represents property owners and community associations faced with construction defects. Construction defects can be devastating, jeopardizing their financial security and even their health in some cases. Our construction defect attorneys have years of successful representation of property owners and community associations with construction defect claims against developers, contractors, and subcontractors—as well as their insurance companies. We are committed to effective, aggressive representation of our clients through settlement negotiations, and if necessary, litigation and trial. Benson, Kerrane, Storz & Nelson attorneys have recovered more than $250 million in verdicts and settlements for their clients.