New-Home Construction Defects in Colorado: Buyer's Rights Against the Builder

Finding defects in your newly built Colorado home? Time to look into your legal remedies.

Imagine that you’ve just purchased a new home in Denver, Colorado from a builder or developer. The developer will make certain representations about the house that it will build for you. You will pay a certain price, and in exchange, expect, for example, a three-story townhouse with a swimming pool, a deck, and a state-of-the-art kitchen.

Now imagine that you show up at the site of the home to fine a two-story house with no swimming pool, a deck that cracks as soon as you put furniture onto it, and a kitchen that looks like it was made in the 1950s.

Clearly, you have not gotten the home that you bargained for. Your Colorado builder not only made material misrepresentations – about the state of the kitchen and the height of the home, for example – but also performed shoddy construction on the deck. Fortunately, Colorado law will allow you to sue the builder in order to recover the lost value of your home.

Claims Against a Colorado Builder for Breach of Contract

When you arranged to buy your new Colorado home, the builder or developer likely gave you a stack of written materials describing the home. The materials told you how big it would be, what the floors would look like, whether there would be a garage, and what light fixtures and major appliances would be installed. You probably signed a contract, outlining your payment and the builder’s promise to construct the home according to certain specifications.

Now you’ve discovered that those specifications have not been met. By definition, if your builder delivered to you a house that is different from (and worse than) what was promised in those contractual documents, it breached this agreement – it failed to construct the house as agreed upon.

Here, all of the materials the builder gave you, including photos, plans and descriptions of the home, and emails describing the work, will be useful in demonstrating your rightful expectations at the time you entered into the contract.

For example, if the various documents clearly show that you thought you were getting a home with a basement, but the home as built contains a crawl space you can't even stand up in, this demonstrates the builder’s breach.

Colorado has a three-year statute of limitations for breach of contract claims under state law, C.R.S. § 13-80-101. This means that homeowner claims based on a contract with the builder must be brought within this period, or they are barred.

An exception to this would be when a homeowner could not have reasonably discovered the existence of the breach until after the period – for example, if the windows must be replaced after nine years because the builder installed them improperly, allowing dry rot, and the homeowner couldn’t have reasonably known.

Claims of Negligence Against a Colorado Builder

Imagine that the builder installed the electrical system in a shoddy manner. Months later, after you move in, an electrical fire destroys part of the home and many of your possessions. This could give rise to a claim for negligence against your builder.

Negligence offers an alternative legal theory to breach of contract when suing a Colorado builder. The builder might have delivered the house as promised, but with negligent construction mistakes that resulted in damage to the property. Negligence in the context of construction defects is said to be the builder’s failure to exercise the correct standard of care.

To establish a claim for negligence in Colorado, a party must establish that 1) state law imposed a duty on the defendant builder; 2) the builder failed to conform to that standard; 3) there was a causal link between the failure to meet the standard of care and the resulting construction defect; and 4) you sustained actual economic damages due to the injury to your home.

Colorado courts hold that builders have an implied duty to perform services required by their contract with homeowners in a skillful, careful, diligent, and workmanlike manner, even without a written agreement. Colorado has a three-year statute of limitations for property damage caused by basic negligence under C.R.S. § 13-80-101(n).

Shortened Limitation Created By Colorado’s Statute of Repose

Statutes of limitations can be extended in certain cases – particularly if the homeowner could not have reasonably discovered a construction defect within the statutory period. Colorado has a Statute of Repose, however, which creates an absolute bar of six years from the date of construction for any claims against your builder. This cannot be extended, even by a sympathetic judge.

Under C.R.S. § 13-80-104, homeowners have six years in which to file suit after substantial completion of the construction project. A homeowner who waits until the builder has been “off the job” for seven years is probably barred from filing suit for the alleged construction defect, regardless of when the defect was discovered.

Homeowners must be vigilant to ensure that they do not get blocked by the statute. If you see any signs of trouble with the construction of your new home, investigate further rather than waiting for it to fully manifest! A small leak or other problem could be a sign of something larger lurking beneath or within. The six-year window of the statute of repose begins to run regardless of whether the homeowner could have known about the defect in construction.

Check for Mediation, Arbitration, and Shortened Claim Periods in Your Construction Contract

Before filing your lawsuit, check your contract to see whether other steps must be taken first. Many construction contracts, in Colorado and elsewhere, contain a dispute resolution clause. That clause may provide that the homeowner is required to go to mediation with the builder or developer before filing suit.

Mediation, in this situation, means a facilitated negotiation for settlement, led by a third-party neutral individual. Often, that individual will have related experience; perhaps in construction law, engineering, or building development.

Your contract may also have an arbitration clause. This clause would require that you go to arbitration against the builder or developer instead of suing in court. In arbitration, either one or three individuals – again, typically with some experience in construction matters – will issue a final determination on your dispute.

The advantage of arbitration is that it is usually quicker than litigation, saving you money on legal fees. A potential disadvantage, however, is that the arbitrator's decisions are in most cases final, that is, not subject to appeal or further court proceedings.

Finally, take note of any aspects of the contract that shorten your statute of limitations or ability to make claims. It is not uncommon for construction contracts to shorten the amount of time that the homeowner has in which to file a legal claim against the builder. An attorney with experience in construction defect litigation in Colorado will be able to carefully review the document for these sorts of limitations and tell you whether they can be enforced against you.

Colorado’s Homeowner Protection Act

Colorado recently passed a Homeowner Protection Act, which limits a developer’s ability to disclaim liability in construction contracts. Under C.R.S. § 13-20-807, a developer is generally precluded from putting “fine print” in a building contract for a new home that essentially allows them to evade liability for breaching the implied warranty of habitability and performing negligent construction work.

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