BY FREDA MIKLIN
The September event of the Engineering-Architecture-Construction-Trades (En.A.C.T.) group of the South Metro Denver Chamber, held at Rodizio Grill DTC, featured T.J. Carvis, AIA, LEED AP, with Gresham Smith architecture and engineering. His topic was the “history, impacts, and potential future revisions of Construction Defects legislation in the State of Colorado.”
According to burnhamlaw.com (Burnham), “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.”
Carvis told the En.A.C.T. group, the “Construction Defect Action Reform Act” (“CDARA”) was first enacted by the state legislature in 2001, then amended in 2003, and again in 2007, 2010, 2017, and 2021.
According to Burnham, the original goal of the legislation was, “to address valid construction defect and design claims, while also protecting construction companies from frivolous or obsolete claims.”
CDARA allows a claim to be brought against a “construction professional” for any defect in the design or construction of a structure. One issue is that the definition of a construction professional includes individuals from a wide variety of fields, including architects, contractors, subcontractors, developers, builders, builder vendors, engineers, and inspectors.
Although crafted with good intentions, CDARA has a complicated timeline and claims and court cases have raised so many questions about how this law is to be applied, that few for-sale multi-family products are built in Colorado, exacerbating the housing shortage, because the average single-family home in our state costs $600,000, a figure well out of reach for most first-time homebuyers. If condos are not available as an alternative, many would-be buyers are forced to rent.
A construction defect claim begins with the Notice of Claim (NOC) which describes the problem. The professional against whom the NOC is filed must inspect the claimed defect in the property between 30 and 60 days after receiving it, if it’s residential property. After the 60 days, the party accused of causing the defect has 30 days to offer a way to settle the issue. Then the property owner has 15 days to accept the offer. If the offer isn’t accepted, a lawsuit can be filed. If the property owner wins the suit, CDARA provides how damages are calculated, depending on the circumstances.
If that timeline isn’t complicated enough, the rules around the statute of limitations will suffice. They require a claim to be brought within two years of when the defect was detected or should have been detected.
But wait, there’s more. Colorado law also provides a “statute of repose,” which begins when construction is substantially completed. It runs for six years but can be extended to eight years under some conditions.
Colorado Lawyer (cl.cobar.org) raises the question, what if the owner of a multistory residential structure notices a potential construction defect early in the construction of the building, and the subcontractor and the architect blame each other? Should the owner stop the building mid-construction to begin the 75-day NOC process before beginning repairs so as to preserve his right to have the problem fixed? Is it worth the cost and potential lost time on the project?
That brings up the question of whether a construction defect only falls under CDARA when the building is substantially completed, since that is the stage of construction on which the law seems focused.
According to Colorado Lawyer, “Two district courts have held that CDARA’s NOC applies to claims against a construction professional arising during the course of construction, while a third district court reached the opposite conclusion.”
En A.C.T.’s speaker, T.J. Carvis, explained the problem with the construction defects law this way: “Anyone can sue anyone for anything at anytime.”