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What You Should Know About Colorado's Construction Defect Law

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Posted by Colorado Real Estate Staff on March 07, 2017

 

Most home builders are making sure they are constructing homes without cutting corners, but when the demand for new homes is outpacing supply, certain builders might try to take advantage of the surplus of demand. That's why you need to understand and be familiar with the limitations of Colorado construction defect law, especially if you are thinking of purchasing a newly constructed home in Colorado.

Construction business is booming in Colorado!

Colorado is seeing a huge boom in construction in recent years. The average residential property price is well north of $350K, and the Colorado real estate market itselfis over $20 billion per year. And growth in the market over recent years has been running in the 10-15% per year range. Real estate ownership is on the rise.

It's no secret that where there is money, there will be people trying to cash in on it. A hot market brings all sorts of folks to the table. Some will be legitimate, but may cut a few corners trying to keep profits up, or may have trouble hiring and keeping competent and skilled workers on their crew. Even the most conscientious company will be under pressure to complete projects rapidly and get on to the next project. Other builders may be less concerned with doing quality work, simply maximizing profits in any way that they can. Either way, Construction Defect Claim Law in Colorado can be critical to protecting your investment.

The Construction Defect Action Reform Act, or CDARA, limits the window for making Construction Defect claims

The first thing a home buyer in a recently constructed home needs to know is that the CDARA limits the time for homeowners and homeowners associations to bring lawsuits for construction defects against “construction professionals,” which is, speaking generally, anyone concerned with the design, construction, and inspection of a new home, including contractors and sub-contractors. That time-window is within two years “after the claim for relief arises.” That means that a two-year clock is started, most of the time, the first time evidence of a Colorado construction defect is observed (The 7 Most Common Construction Defects). In fact, it is not even strictly necessary that the defect is observed, since the law states that the window for a claim is 2 years after the homeowner "reasonably should have" become aware of the problem. Thus, if a homeowner sees something like a leak or a crack in the wall, and doesn't think it's a big deal, but it clearly becomes a big deal later on, a court may find that the clock started when the problem was first detected, not when the homeowner realized it was going to become a problem, later on.

A claim for relief under the CDARA exists when the homeowner becomes aware (or reasonably should have become aware of it). Often times, the issue is that what appears to be a small, "nuisance" problem can become a very big problem at some later time, but the 2-year clock started when the homeowner didn't think it mattered a great deal.

What this Means to Homeowners

In practice, the two-year statute of limitations on defective construction claims can have significant real-world consequences. One danger is that something which doesn't seem like a serious issue at first can become very serious over time, either due to the severity of the problem becoming worse, or because the effects of the problem are not fully realized in the early stages. It's easy to be complacent about minor issues that may seem to have relatively easy fixes. But if that minor issue is merely a symptom of a much bigger issue, a homeowner will wish he had gotten the builders on the problem right away, before much harm was done--and if it becomes expensive, better to address it before that statute of limitations runs out.

Another issue that might arise is that some problems only show up seasonally. For example, a problem with drainage is likely to show up when there is rain, or melting snow. Suppose a home is purchased during a dry year, at the driest time of year. Months later, the homeowner becomes aware there is a drainage problem, but it doesn't seem severe. Still , the homeowner mentions it to the builders, who decide to correct the problem a couple of months later. It may be another year before the homeowner detects that the "fix" didn't solve the problem, and moreover, that in wet years the problem is MUCH more severe. That homeowner is already nearing the end of the two-year statute of limitations, and must act fast to beat the deadline. (If you live in an HOA, check out, "What Your HOA Must Know About Construction Defects.")

Even worse, suppose the defect creates a liability issue for the homeowner? Perhaps a neighbor suffers damage, and files suit for compensation? That suit is likely to fall on the homeowner, who may not now have the ability to pass along the liability to the builders, who made the error in the first place. 

 

In a busy and growing marketplace, there is greater opportunity for mistakes in planning, design, or actual construction. Buyers of newly-constructed homes are advised to be diligent, both in observing and assessing their new homes over the first years, and in acting on issues they discover immediately, however minor they might appear at first glance.

Topics: Real Estate Management and Ownership

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