Construction Defects Law Working For Owners and Builders
By Christopher E. Carter, P.E.
This month marks the four year anniversary of CDARA II – the reformed Construction Defect Action Reform Act which was signed into law on April 25, 2003 by then Colorado Governor Bill Owens. During its debate in the Legislature, and long after its passage into law, this act continues to be controversial. The most significant challenge came in November 2004, when its opponents tried to repeal the law, and replace it with proposed Amendment 34. However, voters turned down the amendment.
Now with a new Democratic governor in office, and his political party in the legislative majority, efforts are under way to change the law. Here are some reasons why CDARA II is a good law for both home builders and home owners:
For Home builders:
- It gives a builder the right to remedy by automatically putting construction defect actions on hold until a notice of claim process is concluded.
- It caps CCPA (Colorado Consumer Protection Act) treble damages at $250,000 for construction defect actions – including awarded attorney fees.
- It eliminates CCPA construction defect damage trebling if a builder complies with notice and response deadlines, properly completes its work under a settlement agreement, and/or offered a repair settlement of at least 85 percent of any claimant’s repair cost award.
- It limits construction defect recovery to “actual damages,” which means doing away with probable damage awards in negligence cases. This includes awards for latent building code violations that do not result in actual damage or loss of use.
- It allows builders to “share the love” with other construction professionals which may have liability for claimed construction defects.
For Home owners:
- It motivates builders to acknowledge and respond to home owner construction defect claims which has historically been a problem in some cases.
- It results in serious consequences for builders who don’t follow the law’s notice and response specifications, or who offer unreasonable settlements.
- It doesn’t interfere with any express warranty the homeowner may have.
- It places the investigation and repair burden on the builder and/or other construction professionals.
- It’s basically an implied construction defect warranty that runs through the statute of repose – typically six to eight years.
Rarely do we get such a law that is a win-win for home builders and home owners. And in my practice, I’ve seen this one work successfully from both sides. It should stay on the books – politics notwithstanding.