New House Warranty and Construction Defect Action Reform Act

  • Real Estate
October 31, 2019

Why the One-Year New House Warranty is a Wolf in Sheep’s Clothing

Residential construction project contracts typically have a one-year limited warranty. But, your warranty is statutory and is two years after the discovery of the manifestation of a defect and you have a full six years to make such a discovery.

Warranties protect homeowners from bad workmanship. A warranty is not required to be in a contract, but often, a builder will mislead buyers by including a one-year limited warranty “in lieu of an implied warranty.” You cannot waive the implied warranty (two years from defect discovery / six years from occupancy date) in a contract with the builder — no matter what it says. Beware of the two tricks-of-the-trade. The first trick is to get you to complain about a construction issue during the one-year period so that the two-year statute of limitations kicks in and begins to run. The second trick is to get you to believe the warranty has already run out during the six-year period so that you won’t pursue the builder when you could have.

The implied warranty of good workmanship is the reasonable expectation that a home will be constructed in a workmanlike manner. The implied warranty of habitability is the reasonable expectation that a home will be safe to live in. You automatically have these warranties when you purchase a new home in Colorado.

In Colorado, the Construction Defect Action Reform Act (CDARA) governs these issues, and it was enacted to help restrict frivolous lawsuits involving the construction industry and to limit the liability of construction professionals. CDARA governs lawsuits brought against a “construction professional” that asserts a claim “caused by a defect in the design or construction of an improvement to real property” [C.R.S. § 13-20-802.5(1)]. A “construction professional” is defined as “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” [C.R.S. § 13-20-802.5(4)]. It is clear from this definition that CDARA is applicable to almost everyone involved in the construction process. C.R.S. § 13-20-806(7)(a) preserves the homebuyer’s implied warranties and makes any contractual provision to the contrary void as against public policy.

CDARA also governs the statute of limitations and repose in a construction-defect case [see C.R.S. § 13-80-104]. A homeowner has a two-year statute of limitations to sue a construction professional after the homeowner discovers (or should have discovered) a physical manifestation of a defect and a six-year statute of repose to sue a construction professional after substantial completion of the improvement to real property (which may be extended up to two years if the defect is discovered during the fifth or sixth year after substantial completion).

At Jorgensen, Brownell & Pepin, P.C., our attorneys can represent you in your defect case against a construction professional. Our legal team is available to advise you on your rights under the Construction Defect Action Reform Act during a free consultation.

To schedule your no-cost case evaluation with our lawyers, complete our contact form or call (720) 491-3117.

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