Wednesday, August 31, 2016

Purchasing a Home? Know about the Construction Defect Claim Law in Colorado

In June 2015, the state of Colorado reported record sales, with the average residential property being sold for $377,550. That year, the real estate market broke records by posting $20.16 billion in home sales for the year. This reflects an increase of 14.5 percent over 2014, according to a report from the Denver Metro Association of Realtors. “The Denver metro area continues to be the number one real estate market in the country,” said Anthony Rael, a real estate professional familiar with Denver real estate market trends.

The super-hot real estate market spurred significant growth within the construction industry. New construction in Colorado is way up. With that, purchasers should know about the Construction Defect Action Reform Act, or CDARA.

The Statute of Limitations for Construction Defect Claims

CDARA limits the time for homeowners and homeowners associations to bring lawsuits for construction defects against “construction professionals.” A construction professional includes developers, general contractors, builders, engineers, architects, other design professionals, inspectors, and subcontractors.  Specifically, CDARA requires those claiming construction defects to file suit within two years “after the claim for relief arises.”  A claim for relief arises when a homeowner or association discovers, or reasonably should have discovered, a physical manifestation of a construction defect.

The Smith Case

In Smith v. Executive Custom Homes, Inc., the plaintiff homeowner suffered a serious injury when she slipped on ice that had accumulated due to a leaking gutter. When the plaintiff initially noticed the leak she reported it to her property manager, who reported it to the builder.  The builder attempted to repair the gutter, unsuccessfully. The plaintiff did not notice further problems until approximately one year after she first observed the leak when she fell and suffered serious injury.  The plaintiff sued the builder within two years of her injury, but nearly three years after she first learned of the leak. The builder sought to dismiss the case because it was outside the two-year CDARA statute of limitations.

The Colorado Supreme Court dismissed the plaintiff’s claims as untimely under CDARA, reasoning that the two-year statute of limitations started to run when the plaintiff homeowner first observes the physical manifestation of the defect, regardless of a resulting injury.

The builder’s inadequate attempt to make repairs to the leaking gutter was not relevant.  Citing longstanding Colorado case law, the two-year period for bringing a lawsuit was tolled (extended) during the period when repairs were made, but continued running once the repairs were finished.

Effects of the Case

The effects of the Smith ruling might be significant to new construction home buyers. With higher demand for new construction comes demand for completing projects on time. A quicker turnaround allows for more mistakes, making the occurrence construction defects more likely. Thus, those purchasing new construction homes should open their eyes and be on the lookout for construction defects. A plaintiff homeowner’s timeframe to sue a builder or other professional for defects is very tight.

If you are in the real estate business or a home purchaser, contact the Law Offices of Eric L. Nesbitt PC, a firm experienced with Colorado real estate law.



Eric L. Nesbitt, Esq.
Law Offices of Eric L. Nesbitt, PC
Phone 303-741-2354
Email Us
Nesbitt Law Offices Website

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