Colorado has been one of the fastest-growing states in the nation, and this growth has led to a flood of construction projects. With a “boom” in construction inevitably comes an increase in lawsuits related to construction defects.
In 2001, Colorado implemented a statute defining construction defect and design actions and claims, called the “Construction Defect Action Reform Act” (“CDARA”). See § 13-20-801, et seq. CDARA was enacted with the goal of addressing valid construction defect and design claims, while also protecting construction companies from frivolous or obsolete claims.
CDARA governs most actions brought against a construction professional where there is a claim of defect in the design or in construction upon real property. The definition of “construction professional” is broad, and includes but is not limited to, architects, contractors, subcontractors, developers, builders, builder vendors, engineers, and inspectors. See § 13-20-802.5.
CDARA aims to provide a faster and more efficient resolution to construction defect cases. By following the CDARA provisions, consumers are provided with a quick and fast offer of resolution while the construction professionals are provided the opportunity to inspect the alleged defect without a court order. Further, by following CDARA, construction professionals have less exposure because the damages are limited.
The goal of the timeline under CDARA is to resolve the claim quickly and efficiently. To make a construction defect claim, the first step is providing a pre-litigation Notice of Claim Process (“NOC”). The NOC must describe the defect, and must be provided to the construction professional at least 75 days prior to filing a lawsuit (or 90 days in the case of a commercial property).
The construction professional is then provided an inspection period where they are permitted to physically inspect the alleged defect. The inspection period begins 30 days after receipt of the NOC and lasts for another 30 days.
After the inspection period is closed, the construction professional is given 30 days (or 45 days for a commercial property) to make an offer of settlement. The person claiming the defect is given 15 days to accept or decline the offer. If the offer is declined, a lawsuit may be filed.
If the person claiming defect fails to give a NOC, the court will pause the lawsuit and require that the process be completed. On the other hand, if the construction professional fails to provide an offer, comply with any settlement agreement, or the person claiming defect rejects a settlement offer that is below the cost to fix the defect, CDARA denies the construction professional some of the liability protections under CDARA.
CDARA LIMITED DAMAGES AND CLAIMS
CDARA allows for negligence lawsuits to be brought against construction professionals. However, CDARA limits negligence claims where the construction professional failed to comply with building codes and standards to only those claims that result in some sort of injury, put the occupants at risk, threatens safety, or make the property unsafe to be used.
CDARA limits the damages that can be paid to a person claiming a defect. In most cases, the damages that can be sought are the lesser of the following:
- Fair market value of the real property without the alleged defect;
- Replacement cost of the real property; or
- Reasonable cost to repair the defect, together with any relocation costs.
Damages can be increased for a variety of reasons, such as when the construction professional violates the Colorado Consumer Protection Act, or fails to comply with a settlement agreement.
CDARA STATUTE OF LIMITATIONS
Generally, any person claiming a defect must bring their claim within two (2) years of when they noticed or should have noticed the defect. Under certain circumstances, the statute of limitations can be longer or shorter, be sure to speak with an attorney to assess the statute of limitations.
CDARA STATUTE OF REPOSE
In addition to the statute of limitations, Colorado also has a “statute of repose” for most construction defect cases. Unlike the statute of limitations that starts when the person noticed or should have noticed the defect, the statute of repose begins when the construction is substantially completed. In Colorado, the statute of repose is six (6) years, but can be extended to eight (8) years under limited circumstances.
At Burnham Law, we provide construction defect representation for both consumers and professionals. CDARA is constantly being debated and litigated in Colorado. Our attorneys at Burnham Law know the requirements under the CDARA and follow any trends and changes in legislation.