Construction Defect FAQs
As Construction Defect Lawyers we are here to help with typical questions raised by single-family, condominium and town homeowners, regarding problems with their Colorado homes. Our law firm regularly represents these individual homeowners, as well as town home and condominium associations, along with commercial property owners in Colorado. Because the issues involving commercial property owners are often more complex and fact-specific, the sorts of problems commercial property owners face are not addressed in as much detail here.
- Unresponsive Builders. I am having problems with my home, and my builder is not being responsive. Do I need to hire a lawyer and file suit?
- Is My Home Warranty My Only Recourse? Why should I consult with an attorney when my builder has given me a written warranty?
- Expired Home Warranties. My builder-developer says that I have no remedy for problems I am having with my home because they are not covered by my written warranty and the time to make a claim under that warranty is expired. What should I do?
- What's a Defect? My builder says that I am being too picky about the condition of my home, that no home is perfect. When does a problem become a "defect" and my builder become responsible to fix it?
- Second Owner. I am not the original owner of my home. Do I have any remedies against the builder-developer for construction defects?
- Triple Damages. I understand that homeowners are allowed to recover triple damages against builder-developers for defects. Is this true?
- Arbitration. My builder tells me that if I do not like the way it is responding to my complaints, there is an arbitration clause in my purchase contract that requires me to arbitrate my claims, and that I have given up my right to a jury trial. Is this true?
- Small Print in My Home Warranty. Every time I tell my builder's warranty department that I was promised something by the salesman who sold me the home and that promise has not been kept, the warranty manager says, "If it isn't in the limited warranty agreement, it's not our problem." Is this true?
- Statutes of Limitation. A friend of mine said that in Colorado I only have two years to sue those responsible for construction defects. Is this true?
- Damages. What sorts of damages and other relief am I allowed due to construction defects in my home?
- Homeowner Associations. Who has the right to make a claim against a builder-developer for a problem with a town home or condominium?
- Single-Family vs. Multi-Family Owner Rights. How do my rights differ if I am a condominium or town homeowner rather than the owner of a single-family home?
- Class Actions. What is a class action?
- Property Values. Will a lawsuit hurt my propertys value and make it difficult to sell my home?
- Hiring a Lawyer. What information should I be ready to provide if I decide to hire a lawyer?
- New Laws. I heard that Colorado has passed two Construction Defect Action Reform Acts. What do these laws say and how do they affect my rights as a homeowner?
- Special Interest Legislation. Is there anything Colorado homeowners can do to protect themselves against the further stripping away of their rights due to special interest legislation backed by wealthy development and insurance company interests?
1. I am having problems with my home, and my builder is not being responsive. Do I need to hire a lawyer and file suit?
A lawsuit should always be the option of last resort. We strongly believe that a builder-developer should be given every reasonable chance to stand behind its product and make things right, especially because of the delays, expense and uncertainty of court action. Because of extremely tight time limits that apply to bringing construction defect lawsuits, because what appears to be a minor problem may be the symptom of a major problem, and because it takes some time to put a lawsuit together, early consultation with a lawyer is advisable just to understand your legal rights and any potential suit deadlines that may be approaching.
Uncertainty arising from changes in the law following passage of the Construction Defect Action Reform Acts of 2001 and 2003 makes attorney consultation even more advisable. Remember, assurances by a builder or other person that the problem is only minor, or that the problem will be fixed or will surely stabilize on its own, are no guarantee that a deadline for filing suit or making a claim will not pass in the interim, preventing the homeowner from ever seeking legal relief.
For a more technical discussion of the Construction Defect Action Reform Acts of 2001 and 2003, you can read the following law journal articles written by the firm's attorneys: Sandgrund, Sullan, and Achenbach, "The Construction Defect Action Reform Act ," 30 The Colorado Lawyer 121 (Oct. 2001), Sandgrund and Sullan, "The Construction Defect Action Reform Act of 2003 ," 32 The Colorado Lawyer 89 (July 2003), and Sandgrund, Sullan and Seidman, "The Homeowner Protection Act of 2007," 36 The Colorado Lawyer 7 (July, 2007).
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This is a difficult but important question. Any of the following issues may come up with regard to a written warranty that may make consulting with a lawyer important:
- As discussed in more detail in response to question No. 9, very strict deadlines may apply to bringing suit against those responsible for problems with a home or in a condominium or town home complex. While you spend a lot of time submitting required warranty paperwork and slowly working your way through the maze that often accompanies warranty claim processing, these deadlines may pass, barring not just legal claims you may have against your builder, but also claims you may have against others responsible for your homes problems.
- Most written warranties contain strict limitations on the remedies they offer in response to problems, as well as many warranty coverage exclusions. These limited remedies may supply a "band-aid" repair, such as patching or painting over cracks in a wall, when the real problem is more serious, such as the failure of your foundation system and movement of your homes structural elements. While the "band-aid" repair may seem to solve the problem, all it may do is cover it up. The problem may re-appear because the real cause was never dealt with and, by then, your warranty may have expired and the deadline to file suit long passed. Changes in the law following passage of the Construction Defect Action Reform Acts of 2001 and 2003 require homeowners to allow their builder or developer "one last chance" to make things right. Unfortunately, if the builder or developer technically satisfies this "right to offer a cure" process, even though it does not fix the problem, it obtains complete immunity from treble damages under Colorados Consumer Protection Act despite the fact it defrauded you in the first place.
- As discussed in more detail in response to question No. 3, you may have legal claims other than those for breach of warranty (such as negligence claims) that may offer you additional remedies not available under your warranty. These other remedies may solve your home's problem, while the remedies afforded by your warranty may merely cover it up.
- Many 10-year "structural" warranties are written so unfairly that obvious structural problems with a home are routinely turned down. These sorts of knee-jerk claim denials can be attacked and sometimes overturned.
- Many builders and warranty companies hire so-called "independent" engineers to analyze home problems and suggest repairs. No fair-minded person could fairly characterize these engineers as "independent" when most of their earnings come from the building industry and these engineers are aware that if they recommend necessary repairs that are "too expensive" from the builders standpoint, they may not see many more referrals. Most so-called "independent" engineers have, in the past, refused to release to or discuss with homeowners their investigations results without their clients -- the builders -- permission. Under the Construction Defect Action Reform Act of 2003, however, the disclosure of such investigative results is mandatory under many circumstances.
There are many other reasons why the existence of a written warranty may not solve all problems affecting your home and why your builder's investigation into your warranty complaint may be biased.
However, such warranties, when issued by honest builders who apply them in a fair manner, can provide a reasonably fast and efficient method to deal with typical home problems. Too often, however, many builders do not adequately staff their warranty departments and do not respond in a timely fashion to complaints. In some cases, when builders see their warranty "reserves" (i.e., money set aside for future warranty claims) being depleted by an unexpectedly high incidence of problems, claim processing delays and claim denials increase.
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3. My builder-developer says that I have no remedy for problems I am having with my home because they are not covered by my written warranty and the time to make a claim under that warranty is expired. What should I do?
When a builder-developer tells you what your legal rights are, remember that the builder-developer is not a lawyer, and that the builder-developer is viewing these issues through the lens of self-interest.
Homeowners' legal rights against those responsible for construction defects arise from many sources, and the written warranty that some builder-developers provide is just one of those sources. Among the many legal theories that homeowners might rely on are:
- "tort" claims, such as negligent construction, supervision, coordination and quality control; accidental or fraudulent misrepresentation or non-disclosure; and, violation of building codes;
- contract claims, such as breach of a written contract; breach of an oral promise; breach of express, written warranties; and, breach of implied warranty (i.e., unwritten warranties concerning homes and land imposed by Colorado courts as a matter of law);
- statutory claims, such as violation of Colorado's Consumer Protection Act; violation of Colorado's Soils Disclosure Statute; violation of Colorado's Common Interest [Condominium/Townhome] Ownership Act; and, violation of the federal Interstate Land Sales Full Disclosure Act; and,
- equitable claims, such as rescission (i.e., the "undoing" of a contract due to misrepresentation), and restitution.
In addition, if the problem is due to the fault of someone in addition to or other than the builder-developer, you may be able to bring some of the claims described above against that person. These other parties may include a potentially liable subcontractor who fails to obtain the proper grade around your home, the engineer who specified an incorrect foundation system, or a material supplier who provides windows that leak, bricks that spall or shingles that blow off in moderate winds.
If the problem involves a "product," then recovery may possibly be obtained against the manufacturer of that product under Colorado's product liability laws or for violation of the federal Magnuson-Moss Warranty Act. Sometimes, your homeowners or other insurance policy, or a third-party "2-10" structural warranty, may cover a loss.
Even if the only claim available to you is contained in a written warranty, the builder-developer does not have the last word on whether you can recover under that warranty: the courts or an arbitrator usually decide this question. Also, just because your problem has continued beyond the warranty period does not necessarily mean you cannot bring the claim. If you gave notice of the problem during the warranty period and the builder-developer failed to resolve the problem, or if the builder-developer assured you the problem would eventually stabilize, or if the builder-developer made repairs that did not solve the problem, you may still be able to obtain relief under the warranty even beyond the warranty period.
In addition, standardized clauses in purchase contracts and warranty documents restricting your rights to just the written warranty may be void or of limited effect due to statute (i.e., written laws passed by the legislature), misrepresentation, or the failure of the remedies provided for in the warranty to provide any effective relief. Colorado's Homeowner Protection Act of 2007 voids many contract disclaimers and liability limitations.
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4. My builder says that I am being too picky about the condition of my home, that no home is perfect. When does a problem become a "defect" and my builder become responsible to fix it?
Our experience has been that homeowners are reasonable folks, but that if matters involving their home have reached the point where they feel the need to seek out a lawyer or consider filing a lawsuit, the problem is not trivial and probably involves a defect that demands investigation and professional consultation. In one case, the Colorado Court of Appeals said that a "defect" is something that spoils the appearance of or causes weakness or failure in an improvement to real property. Courts also have found that a defect is an inherent fault or flaw, or a want or absence of something necessary for completeness, perfection, or adequacy in form or function. Under Colorado's Defet Action Reform Act , a defect likely includes any constructed condition that leads to: (a) actual damage to real or personal property; (b) actual loss of use of property; (c) bodily injury or wrongful death; or (d) a risk of bodily injury or death to, or a threat to the life, health, or safety of, the occupants of the residential real property.
Colorado has not adopted a "bright-line" test for what sorts of construction defects may or may not be the subject of suit. However, any construction element (windows, roofs, floors, foundations, water systems, etc.) that is not reasonably constructed to serve its purpose probably will provide the basis for a claim. In the case of "common interest" condominium and town home developments, these construction elements may include development roadways, underground utilities and other, similar "common areas" and "common elements."
Construction defect claims generally fall into four, broad categories:
- Soils and Slope Instability and Geologic Hazard Problems. Colorado's expansive and collapsing soils, and its many hillside and mountainous communities, present significant challenges to builders and developers. Adequate, timely and full disclosure of the risks associated with these conditions, as well as disclosure of the various construction techniques employed (or that could have been, but were not, employed) in the construction of a home to deal with these conditions, is appropriate. Because Colorado's building industry exerts enormous economic influence over the engineers that it uses, review of the soils report and recommendations specific to your home by an engineer of your own choosing may be prudent. Sometimes, a builder's soils engineer determines that it may not be "cost-beneficial" for the builder to use a certain construction technique that will better solve a problem presented by site conditions, without a serious analysis of the ultimate, future cost to the homeowner due to the failure to use this technique, and without full disclosure of the risk of not using the alternate construction method.
- Design Errors. Structures and systems are sometimes designed so that, as a practical matter, they do not work or do not work adequately. This can include the deficient design of septic, heating, sanitary, plumbing, ventilation, roof, exterior siding, building envelope and irrigation systems, as well as flooring systems, among other parts of a home.
- Poor Workmanship. Perhaps the most common homeowner complaint is poor workmanship, especially in a seller's market, where home construction has trouble keeping up with demand, and unqualified, inexperienced, or unsupervised laborers or "low-ball bid" subcontractors are sometimes employed. Most, reputable builders recognize that some poor workmanship may find its way into a home and, as a result, these builders allow homeowners to develop remedial work "punch lists" for the builder to perform before closing, and for a reasonable period afterwards, often per a limited warranty.
- Building Material Failures. From time to time, structural components and building materials fail. Sometimes this is due to errors in the manufacturing process, sometimes it is due to improper construction methods or application, and sometimes it is due to the interaction of the components or materials with environmental conditions. Leaking and prematurely deteriorating roof, plumbing, window and door systems, and degraded or rotted flooring, siding and exterior surface systems, are just some of the examples of building products and systems that have failed on a massive scale. Significant problems have been identified with many real and artificial (EIFS) stucco installations here in Colorado. Sometimes new (and cheaper) building products are rushed to the market with an eye towards saving the builder-developer and home-buying public money, but before adequate laboratory and field testing and quality control has been employed.
5. I am not the original owner of my home. Do I have any remedies against the builder-developer for construction defects?
Yes, you very well may, as well as against others who may bear legal responsibility for the problems with your home, such as subcontractors, engineers and material and product suppliers. Colorado courts long ago rejected "privity" requirements with regard to many claims, that is, the requirement that that the owner of the home or condominium be a party to contract (i.e., in "contractual privity") with the person they are suing for damages due to construction defects. And, in some cases, even though you are not a party to the contract or warranty, the original owner's rights may have been assigned or are otherwise transferable to you under the law. Under the right circumstances, homeowners may be able to assert misrepresentation and concealment claims even if they are secondary purchasers and never dealt with or spoke to the original builder or seller of their home, such as where the builder or seller fails to disclose important, unfavorable information about the homes construction or the soils underlying the home at the time of sale. If you live in a townhome or condominium community, your homeowner association may have rights it can exercise on your behalf or for your benefit.
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6. I understand that homeowners are allowed to recover triple damages against builder-developers for defects. Is this true?
Under Colorado's Consumer Protection Act, if you can establish by clear and convincing evidence that a prohibited deceptive trade, sales or advertising practice intentionally, willfully, fraudulently or knowingly caused you injury, you may be entitled to recover triple damages and attorney fees against the person or persons responsible for the practice. Changes in the law following passage of the Construction Defect Action Reform Acts of 2001 and 2003 now require homeowners to allow their builder or developer "one last chance" to make things right. Unfortunately, if the builder or developer technically satisfies this "right to offer a cure" process, even though it does not fix the problem, it obtains complete immunity from treble damages under Colorado's Consumer Protection Act despite the fact it defrauded you in the first place.
Our law firm's philosophy is, however, that the most reasonable goal in a homeowner lawsuit is to obtain a recovery that makes the homeowner whole, and that persons who are interested in pursuing litigation simply in order to secure triple damages are mistaken in their goals and are pursuing litigation for the wrong reasons.
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7. My builder tells me that if I do not like the way it is responding to my complaints, there is an arbitration clause in my purchase contract that requires me to arbitrate my claims, and that I have given up my right to a jury trial. Is this true?
This may be true, but arbitration before a neutral, professional and experienced arbitrator (preferably a former judge) may, under some circumstances, allow you to obtain a fair resolution of your claim. Unfortunately, too many arbitration provisions can result in a very unfair resolution of your claim.
Our firm has been very involved in trying to educate Colorado home owners and condominium owners about the pitfalls of some forms of arbitration and the use of some arbitration services. We believe that standardized arbitration clauses, requiring homeowners to waive their right to a jury trial and their right to most avenues of appeal before the nature and extent of the problem with the home or condominium is understood, and often requiring homeowners to submit their claims to an arbitration service that is biased in favor of builders and developers, are unconscionable.
Attorneys Ron Sandgrund and Scott Sullan of Sullan², Sandgrund, Perczak & Nuss P.C., have testified before Colorado's legislature against proposed anti-consumer and anti-homeowner legislation. They are working to support homeowner rights and due process legislation intended to minimize the evils of the current arbitration system in Colorado. If you have had an unsatisfactory experience with arbitration, we would like to know about it. Please e-mail us (email@example.com) your comments and indicate whether you would be willing to testify before the legislature on this issue if necessary.
Some of the more serious problems that have developed regarding arbitration include the following:
- The Unfairness of a Pre-Dispute, "Boilerplate" Waiver of a Consumer's Right to a Jury Trial. Almost all businesses are requiring consumers (and nearly all builders are requiring homeowners) to waive their right to a jury trial up front in purchase or service contracts, before a dispute has even arisen and the consumer or homeowner knows what the nature and significance of the dispute is, and whether arbitration makes sense or whether a jury trial with court-supervised discovery is more appropriate.
- The "Repeat-Player" Syndrome Favors Business Interests. Because businesses tend to be repeat customers of arbitration service companies and arbitrators, while homeowners and consumers are not, the desire to get this repeat work means that arbitration service companies tend to populate their panels with arbitrators whose philosophy is aligned with that of the business interests. For example, our law firm regularly obtains lists of proposed arbitrators in our homeowner cases that consist solely of construction industry defense lawyers and industry employees!
- The Playing Field Needs to be Releveled. Because businesses tend to be repeat customers of arbitration service companies and arbitrators, while consumers are not, business interests keep track of the record of various arbitrators and can either blacklist certain arbitrators whose decisions they do not like, or select those arbitrators who have taken positions on important issues in previous cases with which positions those business interests agree. After a notable arbitration award was handed down in 1998 by a former Court of Appeals Judge, in which case the Judge rendered a nearly two million dollar award to two families our firm represented against a prominent homebuilder, it became well-known that no builder would allow any future disputes to be handled by that Judge. The building industry destroyed a large part of this Judge's livelihood, and every other arbitrator in town is now afraid of the consequences flowing from any significant ruling he or she makes that goes against building industry interests. Consumers do not have access to the same kind of historical information regarding an arbitrator's prior decisions or track record that business interests and their lawyers have access to.
- Some Arbitrations Have Become More Expensive Than Litigation. The current arbitration system often can be much more expensive than litigation. Consumers usually must pay half the expense of the arbitrator, plus the arbitration service provider's administrative costs and filing fees. These administrative costs and filing fees can easily equal $3,000-$5,000 in a typical homeowner case involving structural problems. Compare these figures to the usual court filing fee of less than $250. Most arbitrators charge between $150 and $300 an hour for their time. Since some leading arbitration service companies require three arbitrators, a one-day hearing (eight hours) will cost between $3,600 and $7,200! Even a small case will cost a consumer many times what it would have cost to bring the matter before Colorado's small claims or county courts.
- The Little Guy Gets Hurt Under Current Law. If several homeowners or consumers have the same problem, (for example, they believe they were overcharged one hundred dollars a year for a particular service), they could all join together in one lawsuit to obtain a refund from the service provider, and share the cost of that lawsuit. This ability to "share" makes it economical for them to pursue recovery of the refund; without it, they would have to file separate suits and it would cost each consumer more money to pursue this refund than they could hope to recover. There currently is no right for consumers or homeowners in this situation to join together in the arbitration setting unless the party they are suing agrees to such joinder. Because business interests win by adopting a "divide and conquer" philosophy, they insist on separate arbitration proceedings.
- Big Business is Beginning to Run the Arbitration Business. Businesses have been setting up their own, affiliated arbitration service companies and populating their panels of proposed arbitrators with people from their own industry.
- The Current System Does Not Effectively Uncover Arbitrator Bias and Prejudice Up Front: Such a Process Would Save Time and Money. Under the current system, there is no process in place requiring arbitrators and arbitration service providers to affirmatively disclose all potential biases up front. Instead, the parties are required to wait until they have spent substantial time, money and resources on an arbitration tainted by an arbitrator who is biased, and then file a second suit in the District Court to try to get the decision overturned.
- Arbitrators Should be Required to Follow the Law. Colorado does not require that arbitrators follow or apply the "law," even important consumer-protection laws.
- Market Forces Will Not Solve the Unfairness Presented by Arbitration to the Typical Consumer. Some argue that market forces will prevent businesses from benefiting from arbitration clauses at the expense of the ordinary consumer. This argument ignores the reality that most consumers do not appreciate the legal ramifications of agreeing to arbitrate disputes and waiving their right to a jury trial before the dispute has even arisen, and that an informed decision cannot occur until after the dispute has arisen and the nature of the dispute and the amount at issue is known.
- Conclusion. We need an arbitration system where the fundamental rights of all persons are protected, ensuring that: (a) home owners and consumers are not required to waive their right to a jury trial or to go to court before the nature of the dispute and the amount at issue is known; and, (b) procedures are put in place ensuring that arbitrators are fair and impartial, and will follow and enforce Colorado law.
It is important that homeowners and consumers can believe that whatever forum hears their grievances, those grievances will be taken seriously, that the laws of Colorado will be applied, and that the decision-maker will be fair and impartial. The current arbitration system is being distorted and manipulated, not necessarily maliciously, but due to the fact that business interests are better organized, more powerful, more sophisticated, and better financed than ordinary consumers. Firm attorneys Scott Sullan and Ron Sandgrund worked closely with state legislators in attempting to craft and pass the Arbitration Fairness Act in 1999. Although this legislation was defeated, attorneys Sullan and Sandgrund remained closely involved in the Colorado legislatures review and adoption of significant amendments to Colorado's Uniform Arbitration Act in 2004, giving voice to the needs and concerns of Colorados home buyers and other consumers.
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8. Every time I tell my builder's warranty department that I was promised something by the salesman who sold me the home and that promise has not been kept, the warranty manager says, "If it isn't in the limited warranty agreement, it's not our problem." Is this true?
"Integration clauses" are frequently hidden in purchase contracts making it difficult for homeowners to obtain relief for misleading statements made to them by salespeople. These clauses are used by some unscrupulous builders or their sales people to allow them to say one thing, but to contradict what they said in the fine print of the written contract. Colorado's Homeowner Protection Act of 2007 voids many contract disclaimers and liability limitations.
Colorado courts will not necessarily turn a blind eye towards such practices, and relief often can be found, sometimes under Colorado's Consumer Protection Act. An attorney can analyze your contract documents and the circumstances surrounding the misrepresentation or non-disclosure and help you determine whether the law allows you relief despite suggestions by your builder-developer to the contrary.
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9. A friend of mine said that in Colorado I only have two years to sue those responsible for construction defects. Is this true?
The time limits within which to bring a lawsuit (or demand arbitration) vary depending on who you are suing, the nature of the activity giving rise to your claim, and the legal theory you are pursuing. Some warranties and contracts have additional, and very strict, time limits for giving notice of a claim or for instituting suit. Colorado's "builder-contractor" statute of limitations and statute of repose are complicated and difficult to apply their application depends on the precise facts underlying your claim, when the problem became known, the nature of the problem, etc. There is almost never a simple answer to the question of what is the exact date before which you must file suit or demand arbitration or be forever barred from bringing a claim in Colorado due to construction defects.
The various deadlines for making a claim or filing suit should be explored with an attorney as soon as you recognize a problem. Special statutes of limitations may apply to homeowner association claims against builder-developers who appointed members to the board of directors of the homeowners association, and some of these time limits may be extended beyond when "declarant control" ends.
Because there are various laws which limit the amount of time within which certain kinds of claims must be filed in court, or with certain regulatory or administrative agencies, or within which written notice of a claim or demand for arbitration must be given as required by statute or contract, or else be forever barred, we urge homeowners to act promptly in finding a lawyer to help you out if you intend to pursue a claim. As to your builder-developer and its subcontractors and engineers, you may only have the lesser of two years from the date you, or any former owner, first noticed a problem with your home, or six years from the date of substantial completion of your home, to bring a formal claim against those you believe to be responsible for the problem. If the problem first arose during the fifth or sixth year following "substantial completion" of the home, you may have two years from that date to sue. Some courts have found that the date of "substantial completion" of the home is the same date the certificate of occupancy was issued, not later, such as when your home was first sold. It is possible that the lawyer you consult with may determine that a theory of recovery exists which may allow you to sue beyond these deadlines.
In addition, you may only have a year within which to file suit on some unique claims (for example, certain kinds of claims brought under Colorado's Common Interest Ownership Act ), and some claims against governmental entities require that a special notice of claim be delivered within six months of the date of the injury, damage or loss. In 2003, the Colorado legislature passed the Construction Defect Action Reform Act of 2003 ("CDARA II"). Firm attorneys Scott Sullan and Ron Sandgrund were significantly involved in shaping this body of laws in an effort to render it more even-handed and fair to homeowners. CDARA II imposes a mandatory "Notice of Claim" procedure that homeowners and builders must follow before a homeowner or homeowner association can file suit on a construction defect. Because of the complexity of this new law, and the serious consequences that can occur if the Notice of Claim process is not properly followed, consultation with an attorney is advisable.
Colorado's Homeowner Protection Act of 2007 may void a builder's attempt to improperly shorten the suit limitation deadline.
For a more technical discussion of Colorados statutes of limitations, you can read the following law journal articles written by the firms attorney: Sandgrund & Sullan, "Statutes of Limitations and Repose in Construction Defect Cases Part II ," 33 Colo. Law. 67 (June 2004) and Sandgrund & Sullan, "Statutes of Limitations and Repose in Construction Defect Cases Part I ," 33 Colo. Law. 73 (May 2004).
For a more technical discussion of CDARA I and II, you can read the following law journal articles written by the firms attorneys: Sandgrund, Sullan, and Achenbach, "The Construction Defect Action Reform Act, " 30 The Colorado Lawyer 121 (Oct. 2001), Sandgrund and Sullan, "The Construction Defect Action Reform Act of 2003 ," 32 The Colorado Lawyer 89 (July 2003) and Sandgrund, Sullan and Seidman, "The Homeowner Protection Act of 2007," 36 The Colorado Lawyer 7 (July, 2007).
Be careful about claim and suit deadlines!
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10. What sorts of damages and other relief am I allowed due to construction defects in my home?
Depending on the legal theories you pursue, different recoveries or damages may be permitted.
Among the different kinds of money damages and other relief you may be able to recover are (although many of these recoveries have been lost or limited by changes in the law following passage of the Construction Defect Action Reform Acts of 2001 and 2003):
- actual and compensatory damages, including the past and future costs of repairing and restoring your damaged home, and any contents damaged due to the defect (such as carpet and furniture damage due to leaking windows);
- loss of income if you work out of your home and your income stream has been impaired due to the defect;
- fees and expenses of consulting experts (including engineering and construction costs incurred in inspecting your home or condominium, analyzing the problems with your home or condominium, and determining the cause of those problems and the repairs needed to reasonably, permanently remedy those problems);
- diminution in value of your home or condominium, including "stigma" damages; past and future costs of repairing your home and restoring it to the condition warranted, represented and/or promised by your builder-developer;
- compensation for your loss of the use and enjoyment of your home, and for your annoyance, inconvenience, aggravation, and discomfort;
- compensation for the expense of appraisal fees, storage charges, and cleaning costs;
- compensation for the reasonable cost of rental or similar housing during periods of repair or eviction;
- under limited circumstances, exemplary or punitive damages, which damages are intended to punish a defendant and deter particularly malicious or reckless conduct in the future;
- statutory, monetary penalties, such as may be available under Colorado's Soils Disclosure Statute;
- pre-judgment and post-judgment interest on your damages as permitted by law;
- treble damages pursuant to Colorado's Consumer Protection Act; and,
- attorney fees and costs pursuant to statute (such as Colorado's Consumer Protection Act and Common Interest Ownership Act or the federal Interstate Land Sales Full Disclosure Act ), contract or, in rare instances, another legal theory.
Included among the different kinds of equitable relief you may be entitled to obtain is rescission of the sale of your home, whereby purchase monies are returned to you and the home is given back to the builder-developer.
Changes in the law following passage of the Construction Defect Action Reform Acts of 2001 and 2003 now require homeowners to allow their builder or developer "one last chance" to make things right. If the builder or developer simply participates in this "right to offer to cure" process, the builder or developer may obtain immunity from treble damages under Colorados Consumer Protection Act despite the fact the defect may not be adequately and permanently repaired and despite the fact the builder or developer may have defrauded the homeowner. Sadly, even if the builder ignores its customers complaints and fails to participate in this process at all, these new laws still deny all Colorado property owners rights and remedies they have benefited from for many decades.
Homeowner and property rights representatives have joined together in an effort to restore the rights stripped away by CDARA II, seeking to restore the status quo and leveling the playing field between property owners and those builders who fail to construct real property improvements in a good and workmanlike manner.
For a more technical discussion of CDARA I and II, and the more recent Homeowner Protection Act of 2007, you can read the following law journal articles written by the firm's attorneys: Sandgrund, Sullan, and Achenbach, "The Construction Defect Action Reform Act, " 30 The Colorado Lawyer 121 (Oct. 2001), Sandgrund and Sullan, "The Construction Defect Action Reform Act of 2003, " 32 The Colorado Lawyer 89 (July 2003), and Sandgrund, Sullan and Seidman, "The Homeowner Protection Act of 2007," 36 The Colorado Lawyer 7 (July, 2007).
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11. Who has the right to make a claim against a builder-developer for a problem with a town home or condominium?
Generally, anyone who suffers a legal injury recognized by the law can sue those responsible for causing the injury. Exactly who can sue and for what kinds of damages depends on whether the individual unit or a common element has suffered damage, what steps are necessary to repair the damage to ensure it does not occur again, and the specific language of the homeowner's Purchase Contract and his or her association's governing documents, such as the Declaration of Covenants and HOA Bylaws.
Original and later owners of a home or condominium (including a townhome) generally all have rights of some kind under the law. Often, the homeowners association will join with individual unit owners in the suit; sometimes the homeowners association will sue on behalf of or for the benefit of the individual unit owners, particularly if an identical construction defect is repeated from one unit to the next, or if the defect affects a "common element" owned and used by the homeowners association and the individual unit owners. Careful analysis and investigation must be made into the nature of the problem, potentially applicable suit deadlines and the need for the joinder of individual unit owners and the homeowners association in one lawsuit.
Sometimes the Association is still controlled by the builder-developer. This factor can add another layer of issues that a lawyer must analyze because of the complicated legal issues that may arise under these circumstances.
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12. How do my rights differ if I am a condominium or town homeowner rather than the owner of a single-family home?
In many ways, and sometimes significantly. This area of the law is very confusing. Some legal rights and claims may only be available to the condominium unit owner's homeowner's association, and not the unit owner himself or herself. On the other hand, other legal rights and claims may only be available to the condominium unit owner and not the association. And, sometimes, it is advisable for an individual condominium unit owner and his or her homeowners association to join together in a single lawsuit; in some cases, such joinder may be required by the court. Your lawyer needs to help you make the right choices as to who should bring suit and who should be sued if you are forced to file a lawsuit.
Attorneys Ron Sandgrund and Scott Sullan have written many articles relating to the rights of condominium and town homeowners. For a technical discussion of the tension between a condominium developers self-interest and its obligations to unit owners under the law, you can read the following law journal article written by the firm''''''''s attorneys: Sandgrund & Smith, "When the Developer Controls the Homeowner Association Board: The Benevolent Dictator?" 31 Colo. Law. 91 (Jan. 2002).
13. What is a class action?
A "class action" is a lawsuit brought by a small group of people in their own name, individually, and in the name of other persons similarly situated, "representatively," such as on behalf of persons facing similar construction defect problems. When forty people join together in a lawsuit, this is not a class action. If two people join in a lawsuit, and sue on behalf of themselves and forty other people similarly situated, this is a class action.
While a lawsuit alleging "class action" claims can be filed based on general and still unproven allegations, a lengthy and complicated "class certification" procedure generally must follow, during which certification process proof supporting the factual and legal basis for the class claims must be presented to a Judge. Only if the Judge certifies the case as a class action can the class action claims proceed. There are both significant advantages and disadvantages to class action lawsuits. Every case must be evaluated on its specific facts before the decision is made whether to file a class action, as well as the later decision whether to seek class certification.
In 2005, Congress amended the country's class action laws to curb class action lawsuit abuses. Although these new laws were well intended and badly needed, they contain provisions that now can abused by lawsuit defendants. These new laws, coupled with Colorado's Construction Defect Action Reform Acts of 2001 and 2003, have made it more difficult for homeowners to join together in a class action. If a formal class action is not advisable, it may make sense for a large group of homeowners or condominium owners in a neighborhood or development to get together and retain one law firm to represent them, sometimes known as a "collective action." Great cost-savings often can be achieved, and the strength of a group of homeowners standing together against a builder-developer can be dramatic.
Unfortunately, many builders and developers now insert arbitration clauses in their contracts in an effort to destroy the ability of property owners to join forces in a class action or collective action. Adopting such a "divide and conquer" philosophy has proven very effective for the building industry. For other problems related to arbitration clauses, go to question 7.
Here are some links to class actions that may affect Colorado homeowners:
ABS Plastic Pipe: Many older homes may contain defectively manufactured plastic waste pipe from the mid 1980's that is prone to cracking and leaking. See www.abspipes.com.
Cemwood Roof Shakes: Some of American Cemwood's imitation wood shakes may prematurely crack, swell and become discolored. See www.cemwoodclaims.com.
Colorado Slab-On-Grade Floor System Litigation: In the mid- to late 1990's, Vanatta, Sullan, Sandgrund, Sullan & Smith, PC (now known as Sullan², Sandgrund, Perczak & Nuss P.C.) won a series of related, class action settlements against Colorado builders concerning the use of poured concrete, slab-on-grade floors in Colorado homes, particularly homes located over expansive clay soils that can exert thousands of pounds of pressure due to moisture building-up underground. Some of these settlement programs have closed, others are still accepting claims. For detailed information, see http://www.coloradomanagement.com/.
FireFree Roof Shakes: Re-Con manufactured roof tiles composed of 2/3 Portland Cement and 1/3 wood cellulose fiber that may prematurely crack, swell and discolor. See www.firefreeclaims.com.
Louisiana Pacific: The company site has basic information on a hardboard siding class action settlement: go to www.lpsidingclaims.com.
Masonite Siding and Shingles: This site has information concerning masonite hardboard, omniboard, and woodruff shingles class action lawsuits: www.masoniteclaims.com.
Oldach Tiltmaster 2000 and Casement 2010 Wood Windows (Colorado): Vanatta, Sullan, Sandgrund, Sullan & Smith, PC, now known as Sullan², Sandgrund, Perczak & Nuss P.C., brought this leaking windows case to a successful $34 million settlement. The deadline for claim submissions was December, 2005 -- no more claims are being accepted by the court-apponted Claims Administrator.
Omega Sprinklers: For class action settlement information relating to the recall of these fire sprinklers, see www.omegarecall.com.
Polybutelene Plumbing (plastic pipes): Widespread reports of leaks in this usually gray plastic, water-supply piping led to a class action settlement. www.pbpipe.com.
14. Will a lawsuit hurt my propertys value and make it difficult to sell my home?
A lawsuit intended to obtain money from negligent builders and subcontractors to fix construction defects should have no greater affect on property values than the existence of those defects already has had on property values since it is likely that the owner of a home or other real property is required to disclose to prospective purchasers the existence of known defects in the property, particularly "hidden" defects not readily detectable. In the case of a condominium owner, he or she may be required to disclose the existence of defects in other portions of their development even if they do not physically affect his or her home because all owners may share financial responsibility for the cost of repairing these defects. Such disclosure is just as likely to affect an owner's ability to sell his or her home as the existence of a lawsuit directed at getting those defects repaired. Some believe that a homeowner who has or whose homeowner association has taken legal action to get home defects repaired has a more saleable home than an owner who has not taken these steps.
Colorado's Common Interest Ownership Act , which Act governs most condominium and other multi-family developments, requires additional disclosures.
Consultation with a competent real estate broker can provide additional insights into the answer to this question.
15. What information should I be ready to provide if I decide to hire a lawyer?
If you are the owner of a single-family home, bring with you all paperwork relating to: the marketing and sale of your home; the closing on your home; any problems with or repairs to your home; all closing documents; warranty booklets and enrollment forms; any home inspection reports and property disclosure statements; your homeowners'''''''' insurance policy; all soils and engineering reports; all correspondence between you and the developer/builder and any contractors.
If you are an owner of a condominium or townhome, then in addition to the materials just described, also bring your homeowner association's Declaration of Covenants, Bylaws, and Rules and Regulations, and any correspondence between you and your homeowner association.
If you are a homeowner association board member, then in addition to all the materials described above, bring everything you have relating to the developers turnover of board control to the unit owners, as well as all board minutes pre- and post- turnover, and all correspondence with the developer-declarant relating to any construction defects.
If you are not the original purchaser of your home, then bring any paperwork the person you bought from gave to you; all your closing documents; and, any other documents that appear to relate to the problem at hand.
16. I heard that Colorado has passed two Construction Defect Action Reform Acts. What do these laws say and how do they affect my rights as a homeowner?
Changes in the law following passage of the Construction Defect Action Reform Acts of 2001 and 2003 have rewritten the rules of the game for builders, developers, contractors, design professionals, and homeowners. Among other things, these new laws provide the following:
- Homeowners are required to allow their builder or developer "one last chance" to make things right. Simply if the builder or developer "participates" in this "right to offer a cure," the builder or developer may obtain immunity from treble damages under Colorados Consumer Protection Act. Unfortunately, even if the builder committed consumer fraud during the original sales transaction, and even if the builder ignores its customers complaints after sale, these new laws strip Colorado property owners of rights and remedies they have enjoyed for many decades in Colorado if the builder or developer participates in this "right to offer a cure," despite the fact no repairs are made and insufficient money is offered to
17. Special Interest Legislation. Is there anything Colorado homeowners can do to protect themselves against further stripping away of their rights due to special interest legislation backed by wealthy development and insurance company interests?
We at Sullan², Sandgrund, Perczak & Nuss P.C. hope this section answers homeowners' basic questions. If you need further details and would like to discuss them, or your case, with one of our experienced construction defect attorneys, please contact us by phone at 1-800-991-7041 or email to schedule an appointment.