In Colorado, construction defect litigation is regulated through the Colorado Construction Defect Action Reform Act, also known as CDARA. CDARA imposes several requirements for construction defect litigation with the intent to control the number of construction defect lawsuits while also preserving the rights of property owners.
CDARA was passed in 2001 to address the increasing numbers of construction defect lawsuits in Colorado while preserving the “adequate rights and remedies” for property owners initiating construction defect litigation. Colo. Rev. Stat. Ann. § 13-20-802. CDARA creates a mandatory pre-litigation procedure to ensure a smooth resolution of construction defect lawsuits. § 13-20-803.5. CDARA also restricts claims for negligence on the sole basis of technical violations of building codes, § 13-20-804, creates a statute of limitation for construction defect claims, § 13-80-104, and enumerates what damages can be pursued in a construction defect lawsuit. § 13-20-806.
Notice and Pre-Litigation Requirements
CDARA mandates that notice requirements be complied with before a lawsuit can appropriately be filed for a construction defect claim. § 13-20-803.5. Subsection (1) requires that notice be given to construction professionals in actions against them no later than seventy-five days before the action is filed. Id. However, notice of construction defect actions against commercial properties must come no later than ninety days before the action is filed. Id. Notice must be given via certified mail, return receipt requested, or by personal service. Id.
A plaintiff must provide the construction professional—and its contractors or agents—with reasonable access to the plaintiff’s property. Id. The purpose of this reasonable access is to allow inspections to be made during normal working hours, and the inspections shall be completed no later than thirty days after notice has been given. Id. The statute allows for an inspection to be completed within forty-five days in actions against commercial properties. Id.
This section of the statute also allows for construction professionals to offer settlement terms to the plaintiff or to agree to remedy the defect enumerated in the plaintiff’s complaint. Id. A settlement offer, or offer to fix the defect, must be a written offer and it must include the scope of the inspection, the findings of the inspection, a description of additional construction work necessary to remedy the defect, and a timetable for the completion of the remedial construction work. Id. Any offer to settle or fix will be deemed to have been rejected unless it is accepted by the plaintiff within fifteen days of the delivery of the offer. Id. If a plaintiff finds a settlement offer agreeable, written notice of acceptance must be delivered no later than fifteen days after receiving the offer. Id. If the offer is to remedy the defect, a plaintiff must send a written agreement within fifteen days of receipt of the offer, and the remedial construction work must be completed in accordance with the timetable listed on the offer to remedy the defect. Id.
Restrictions on Negligence Claims
CDARA imposes several limitations on construction defect negligence cases. § 13-20-804(1) states that “[n]o negligence claim seeking damages for a construction defect may be asserted in an action if such claim arises from the failure to construct an improvement to real property in substantial compliance with an applicable building code or industry standard.” Colo. Rev. Stat. Ann. § 13-20-804 (West 2003). However, the Act allows those claims if there is actual damage to real or personal property, actual loss of the use of real or personal property, bodily injury or wrongful death, or a risk of bodily injury or death to—or a threat to the life, health, or safety of—occupants of the residential real property. Id. This section is not to be construed as a prohibition or limitation on the assertion of tort claims other than negligence, the assertion of contract or warranty claims, or the assertion of claims that arise from the violation of any statute or ordinance other than claims of building code violations. Id.
Statute of Limitations
Colorado law imposes a statute of limitations on claims for construction defects. No action against any contractor, architect, engineer, et cetera, can be brought more than two years after the cause of action accrues. Colo. Rev. Stat. Ann. § 13-80-102 (West 2014). In cases where the construction defect arose from the improvement of a property, the statute of limitations allows for a suit to be filed no later than six years after the substantial completion of that improvement. Colo. Rev. Stat. Ann. § 13-80-104 (West 2017).
C.R.S. § 13-20-805 allows for the statute of limitations for construction defect actions to be tolled, or legally suspended. That section states, “[i]f a notice of claim is sent to a construction professional in accordance with section 13-20-803.5 within the time prescribed for the filing of an action under any applicable statute of limitations or repose, then the statute of limitations or repose is tolled until sixty days after the completion of the notice of claim process described in section 13-20-803.5.” Colo. Rev. Stat. Ann. § 13-20-805 (West 2003).
CDARA states that a construction professional cannot be liable for more than what the actual, proven damages are. Colo. Rev. Stat. Ann. § 13-20-806. CDARA will allow for an award of more than the actual damages if a plaintiff can prove the construction professional violated the Colorado Consumer Protection Act, as well as one of two additional conditions. If a plaintiff can prove a violation of the Colorado Consumer Protection Act and either a settlement offer was given for less than eighty-five percent of the amount awarded to the plaintiff, or the reasonable cost to remedy the defect is less than eighty-five percent of the amount rewarded to the plaintiff, then a plaintiff may recover more than the actual damages. Id.
A plaintiff may be entitled to three times his or her actual damages if a construction professional does not substantially comply with the terms of an accepted offer to remedy or settle. Id.; Colo. Rev. Stat. Ann. § 6-1-113 (West 2017). However, those “treble damages” may not exceed $250,000.00. Id. Treble damages under the Colorado Consumer Protection Act is not available for claims of personal or bodily injury as a result of a construction defect. Id.
CDARA also caps noneconomic and derivative noneconomic losses in claims of personal or bodily injury as a result of a construction defect at $250,000.000. Id.
If you believe you are the victim of substandard construction practices that have caused you damages, contact the Olson Law Firm, LLC to see if we can help.