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Construction Defect Claims

What Constitutes a Construction Defect Claim?

A construction defect claim is a "claim for damages or loss to, or the loss of use of, real or personal property or personal injury caused by a defect in the design or construction of an improvement to real property." In other words, when a construction or design professional fails to adhere to the standard in the industry when performing their work resulting in a defect that causes damages. Or simply: negligent work.

What Statute Applies?

The Colorado Construction Defect Action Reform Act ("CDARA"), C.R.S. sec. 13-20-801, et. seq., governs construction defect claims. The Colorado legislature promulgated CDARA after determining "changes in the law are necessary and appropriate concerning actions claiming damages, indemnity, or contribution in connection with alleged construction defects." The CDARA statute imposes a pre-litigation notice of claim process and limits the damages available to claimants. More on CDARA here.

What if there is a Contract?


CDARA does not extinguish the obligations of the contract between the parties. Indeed, often the easiest path toward resolution is the submission of a warranty claim. More on warranty claims here. However, Colorado has recognized an independent duty to perform construction work in a good and workmanlike manner, regardless of the existence or limitations of a contract. Accordingly, construction defect claims are permitted in parallel with contract and warranty claims, with some limitations imposed by the ever-evolving economic loss rule. 

Who is Liable?


All "construction professionals" involved in the construction or design leading to the defect are liable for the damages. The CDARA statute specifically defines "construction professionals" as follows: "an architect, contractor, subcontractor, developer, builder, builder vendor, engineer, or inspector performing or furnishing the design, supervision, inspection, construction, or observation of the construction of any improvement to real property." However, each party is only liable for its pro rata share of the responsibility. More on that here.

Does Insurance Cover the Claim?


It depends. Most commercial general liability ("CGL") policies cover damage to the property caused by the negligent work, but not the work itself. And these policies almost never cover breaches of the contract unrelated to negligent construction. Many owners are surprised to learn how little of the scope of work is actually covered by a contractor's insurance. More on insurance issues here.

What is the Statute of Limitations for a Construction Defect Claim?  

The statute of limitations for a construction defect claim is two years from the date of discovery of the defect. The date of discovery is the date the claimant observed the "physical manifestations" of the defect. The statute of limitations is tolled by the notice of claim process. For these reasons, the statute of limitations deadline can be a moving target. More on the statute of limitations here.

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