Facts & Myths

Facts & Myths

A construction defect is a mistake made during the designing or building of a home that causes a problem. Common construction defects cause cracked foundations, leaky roofs and unsealed windows. These mistakes can be dangerous and very expensive for homeowners, who should be able to expect they’re buying a quality product from their developer-builder.

Homeownership is a cherished value in Colorado – and every homebuyer should expect that their new house is built right with no construction defects. But some homes are simply NOT built right. Bad builders shouldn’t be able to shirk responsibilities with a “lick and a promise” or a “caulk and walk.” Builders can solve the problem of construction defects by building homes right the first time. 

MYTHS

REALITY

Condominium developments
aren’t being built today

because of Colorado
construction defect laws.
Nonsense. A January 2015 study  shows classic economic theory – low demand due to stringent lending requirements, higher down payments and purchase fees, lower real income, higher unemployment, later marriage, higher college debt – explains slow condo development, not construction defects. Follow the money. Affordable housing isn’t a priority for developers maximizing profits building high-end townhomes/condos in Cherry Creek, LoDo and LoHi, as well as apartments across the metro area.
Colorado’s construction
defect laws are hostile to
builders and developers,
who are easy targets for
lawsuits.
Untrue. Homeowners in Colorado have only 6 years to file a construction defect claim – only 4 states have shorter timeframes.
 All condo projects get
sued by their HOA.
 No. Construction defect lawsuits are uncommon. In a legislative hearing Industry experts estimated that 93% of claims are resolved without going to court.
Homeowners go straight
to court and builders
never have an
opportunity to do
repairs first.
State law’s “notice of claim” process  already requires homeowners to give homebuilders a chance to inspect the damage and make repairs or a settlement offer.
There’s big money to be made by homeowners and HOAs filing lawsuits – there’s no downside.

 

 Nope. There is no incentive for a homeowner or HOA to take on an expensive, time-consuming, disruptive, emotionally draining, multi-year construction defect lawsuit. Also, homeowners never are “made whole,” usually having to make decision of what gets fixed and what doesn’t because the award doesn’t cover repairs.
 Most construction defect claims are frivolous.  No way. Leaking roofs, windows and ceilings, buckling and cracked foundations, mold in drywall, retaining wall failures – often caused by builders cutting corners – jeopardize the health, safety and well-being of homeowners.

Colorado Laws Already Favor Builders

Short Time Frames for Finding Defects. Colorado’s 6-year statute of repose means homeowners who find a defect after 6 years have no legal recourse. Our 2-year statute of limitations means homeowners have only 2 years after a defect is found to seek legal redress. Only four states have shorter frames for homeowners to find defects – TN, KY, VA, and AR.

Limited Builder Liability. Construction professionals have specific limits on construction defect liability – and homeowner damages are limited compared to many other states. Also, a law clarifies that insurance covers construction defects so builders are protected from out-of-pocket costs.

Financial Incentive for Slow Repairs. Colorado allows builders to avoid paying interest costs in delaying repairs, resulting in frustratingly long repair wait times for homeowners.

Current Laws – and New Proposals – Disadvantage Homeowners

There have been attempts to further weaken homeowner protections in the false name of “affordable housing”:

                • Homeowners are already required to give builders “opportunity to repair” before legal action.
                • Very few claims – just 7% – go to trial under current law.1
                • Proposed disclosures force HOAs to assess defects without experts like architects, engineers.
                • Proposed mandatory arbitration is expensive for homeowners to pay for a private judge.
                • Proposed rules give builders choice of arbitrator giving them unfair advantage in process.
                • Proposed measures threaten the right to appeal arbitration – and basic civil right to a jury trial.

New Proposals Threaten Owners of Affordable Housing

Proposed laws put owners of affordable housing at serious risk by sacrificing their rights to be fairly compensated for damage to their single largest investment, their home.

                • Mid-to-low income homeowners are least able to afford costs of arbitration, initial repairs.
                • Arbitration and repair costs can put mid-to-low income homeowners at risk of foreclosure.

Lack of Affordable Housing Due to Market, Not Construction Defects

A rigorous January 2015 study of the metro Denver housing market showed slow demand for condos due to:

                • Stricter lending standards, requiring higher credit scores and lower debt to savings ratios
                • Higher costs like higher down payments, origination fees and mortgage insurance
                • Depressed wages and higher unemployment
                • Lower marriage rates, later childbearing, student debt delaying home purchasing

FACTSHEETS