Colorado Construction Defect Law

1 Colorado Construction DefectLawBy Mark NeiderHarris, Karstaedt, Jamison & Powers, E. Dry Creek Road, Suite 300 Englewood CO 80112(720) Harris, Karstaedt, Jamison & Powers, , Copyright is not claimed as to any part of the original work preparedby a government officer or employee as part of that person s official duties. UPDATED OF CONTENTS1 overview OF Colorado LAW.. Law .. Law .. 22 Construction PROFESSIONALS SUBJECT TO Construction LITIGATION.. Contractor / Custom Builder .. and Third Party Claims.

2 Professionals .. Liability Burdening Agents of Construction Professionals and the ApparentAuthority Doctrine .. 43 THEORIES OF RECOVERY.. of Contract .. of Express Warranty .. of Implied Warranties .. Loss Rule Versus the Independent Duty.. or Concealment .. Disclosures .. Consumer Protection Act ( CCPA ) .. Conspiracy .. 114 DEFENSES.. Defect / Bodily Injury .. of Limitations/Repose .. Accrual .. Year Statute of Limitation .. Year Conditional Statute of Limitations.

3 Year Statute of Repose .. Doctrine/Equitable Tolling .. Day Statutory Tolling of Third Party Claims .. Protection Act Statute of Limitation .. of Warranty Statute of Limitations .. Liability Act .. Clauses / Waiver .. to Mitigate .. 16ii5 DAMAGES.. Law Measure of Damages .. Measure of Damages / Actual Damages .. Damages .. of Damages .. Damages Under the CCPA and CDARA .. / Exemplary Damages .. Fees .. Interest .. 206 Colorado COMMON INTEREST COMMUNITY ACT / HOA DERIVATIVE MEMBERSHIP STANDING.

4 217 ALTERNATE DISPUTE RESOLUTION / ARBITRATION.. of Claim Procedure .. Defect List .. 248 INSURANCE.. Occurrence/Trigger and Time On Risk .. an Occurrence That Gives Rise to the Insurer s Duty to Defend .. for Known Losses/ Montrose Clauses .. Business Risk and the Work Product Exclusion .. Insured Coverage for Construction defects .. 269 CONCLUSION.. 27 TABLE OF AUTHORITY.. 2811 overview OF Colorado LAWMany of the standards and rules governing Construction Defect law in the State ofColorado arise out of the public policy that a builder is in a better position than the consumer toensure that the Construction of a residence is suitable.

5 In the case of Sloat v. Methany, 625 , 1033 ( ) the Colorado Supreme Court remarked as follows:the rule of caveat emptor .. was based upon an arms-length transaction betweenthe seller and buyer and contemplated comparable skill and experience, whichdoes not now exist; they are not in an equal bargaining position and the buyer isforced to rely on the skill and knowledge of the builder. The position of thebuilder-vendor, as compared to the buyer, dictates that the builder bear the riskthat the house is fit for its intended rationale for the rule is to inhibit the unscrupulous, fly-by-night, orunskilled builder and to discourage much of the sloppy work and jerry buildingthat has become perceptible over the on the disparity of expertise and bargaining power between builder and home buyer.

6 Colorado law has developed a number of mechanisms to manage the disputes arising out ofresidential Construction . Unlike residential Construction , the duties owed between parties to acommercial Construction project are dictated by contractual relationships where no dutyindependent of the contract is owed. See BRW, Inc. v. Dufficy & Sons, Inc. 99 66( )(holding design professional did not owe steel subcontractor any duty independent ofcontract). Despite this strict contractual approach, Colorado has also devised certain statutoryschemes that govern rights between parties to a commercial or public works discussed below, the letter of the law governing Construction Defect litigation arisesboth out of common law and statute enacted by Colorado s General Assembly.

7 While many ofthese laws are fairly straightforward, many more are open to ongoing debate as to how theseconcepts should be applied to achieve fair and equitable results. This survey is intended toprovide a simplified overview of how Construction Defect laws operate for the benefit ordetriment of builders, contractors and consumers alike. LawThe common law governing Construction Defect litigation in Colorado has beendeveloped through decades of legal precedent. Over time, Colorado has come to recognize that aconstruction dispute may arise based on claims of negligence, breach of the implied warranty ofhabitability, breach of express warranties and breach of contract.

8 The operation of these theoriesof recovery as well as applicable affirmative defenses are discussed in further detail below. LawBased on the increasing liability builders face in the State of Colorado from dynamicgeotechnical conditions and the harsh alpine environment, Colorado s General Assembly haspassed laws in an attempt to regulate claims regarding builder liability for Construction defects . One of the first such laws, passed in 1984, was the soils disclosure statute. Under the soilsdisclosure at , a builder must provide its consumers a summary report of anyimpact expansive soils may have on residential structure and a publication detailing constructionmeans and methods used to address the unique hazards presented by those soils.

9 The Colorado Construction Defect Action Reform Act at 13-20-801, et seq.( CDARA ) passed in 2001 was a landmark development in Construction Defect law. CDARAwas initially enacted by a coalition interested in preserving adequate rights and remedies forproperty owners who bring and maintain claims of Construction defects . 13-20-802, Under the original Act, an owner was required to provide contractors a list of defects for whichdamages were sought within sixty days of commencement of suit. 13-20-803, Aclaimant could only recover damages for actual or probable damages to real property, loss of useor bodily injury.

10 13-20-804, It also changed the law to state that builders could reserveon claims against third-party subcontractors or design professionals until after settlement orjudgment so they would not risk losing their claims under the statute of limitations. 13-80-104, Finally, the initial Act amended the Colorado Common Interest Ownership Act at , ( CCIOA ) to require homeowner associations to disclose claims ofconstruction defects it asserted in litigation to its members and any prospective buyers of unitswithin the association.