Understanding the Statute of Limitations and Statute of Repose Under the Colorado Construction Defect Action Reform Act

Posted December 19, 2024 in Commercial Litigation, Construction Defect, Construction Law, Litigation

In 2009, Colorado passed the Construction Defect Action Reform Act (CDARA), a landmark piece of legislation aimed at addressing the growing number of construction defect lawsuits in the state. One of the primary goals of CDARA was to balance the interests of property owners, builders, and contractors while ensuring that claims related to construction defects were brought in a timely and fair manner. Central to this effort are two key legal concepts: the statute of limitations and the statute of repose. These provisions set strict timelines within which parties must bring claims for construction defects, and understanding their nuances is crucial for anyone involved in construction-related legal matters in Colorado. A statute of limitations governs the time periods under which an action must be commenced once it is accrued. A statute of repose is different because it bars all claims after a certain period of time regardless of when the injury occurs.[1]

What is the Construction Defect Statute of Limitations in Colorado?

The statute of limitations is a legal rule that sets the maximum time period during which a party can bring a lawsuit after a particular event, such as the discovery of a defect which usually manifests itself in the form of property damage. Under CDARA, the statute of limitations for actions against construction professionals is two years from the date the defect is discovered or should have been discovered.[2] Defects can manifest as property damage but CDARA’s statute of limitations also emphasizes reasonable diligence underscoring homeowner maintenance and inspection responsibilities.[3]

Key Points about the Statute of Limitations:

• Discovery Rule: The clock does not start when the construction is completed, but when the defect is discovered or when it could have been discovered with reasonable diligence.
• Two-Year Limit: Once the defect is discovered, the property owner has two years to file a lawsuit. After this period, the right to bring a claim may be lost.
• Applicability: The statute applies to both residential and commercial properties. This ensures that construction defect claims are addressed within a reasonable timeframe, reducing the risk of stale claims.

What is the Statute of Repose for Construction Defect Claims in Colorado?

The statute of repose, on the other hand, is a more rigid timeline. It provides a hard deadline for filing construction defect claims, regardless of when the defect is discovered. Under CDARA, the maximum time to bring an action against a construction professional for defects is six years.[4]

Key Points about the Statute of Repose:

• Fixed Deadline: The statute of repose is not affected by the discovery rule unlike the statute of limitations.
• Substantial Completion: The six-year period begins on the date of “substantial completion” of the construction project, which is generally when the work is considered sufficiently complete to be used for its intended purpose. This may be different from the final date of construction or the date a building permit is closed.
• One Exception: If the defect manifests in the fifth or sixth year from substantial completion, the action must be brought within two years after the date upon which the cause of action arose.[5]

How Do the Statute of Limitations and Statute of Repose Work Together?

While both the statute of limitations and the statute of repose set deadlines for filing construction defect claims, they serve different purposes and operate in tandem. Here’s how they interact:

1. Statute of Limitations (Two Years): The clock starts when the defect is discovered or should have been discovered. The property owner has two years from the date of accrual to file a claim. The statute of limitations can be tolled (paused) under the notice provisions of CDARA.
2. Statute of Repose (Six Years): Regardless of when the defect is discovered, no claims can be filed more than six years after the substantial completion of the project. The clock starts upon substantial completion.

In this way, the statute of repose provides a final cut-off for claims, while the statute of limitations gives a reasonable period (post-accrual) within which to act.

Conclusion: Why These Statutes Matter

The statute of limitations and the statute of repose under CDARA are designed to promote fairness in construction defect litigation. By establishing clear deadlines, the law helps ensure that claims are brought in a timely manner, giving both plaintiffs and defendants a sense of closure. For property owners, understanding these timelines is crucial to protecting their rights to seek legal recourse for defects. For contractors, developers, and insurers, it is essential to know when their liability will end.

As construction defect claims can be complex and involve various factors, those considering legal action or defending against claims should consult with legal professionals experienced in construction law to ensure compliance with these critical timelines.

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DISCLAIMER

The information contained on this website is provided for informational purposes only. It is not legal advice and should not be construed as providing legal advice on any subject matter. Laws frequently change and therefore this content is not necessarily up to date, nor comprehensive. Contact us or another attorney with any legal questions specific to your matter. You may request a consultation by completing our consultation request form.

[1] Mortgage Investments Corp. v. Battle Mountain Corp., 70 P.3d 1176 (Colo. 2003).

[2] C.R.S. § 13-80-102(1) and C.R.S. § 13-80-104(1)(a).

[3] C.R.S. § 13-80-104(1)(b)(I)

[4] C.R.S. § 13-80-104(1)(a)

[5] C.R.S. § 13-80-104(1)(a)