Colorado Law on Construction Defects, Part II: Notice of Claim Process

Last month we reviewed two significant statutes governing construction defect claims in Colorado. This month we're looking at the statutory processes applicable to construction defect claims.

In Colorado, construction defect actions are governed by Colorado's Construction Defect Action Reform Act (CDARA). Under CDARA, claimants must provide the construction professional(s) with a notice of claim before they can pursue an action in court for construction defects. If a claimant files suit before completing the notice of claim process, the matter must be stayed while the parties complete the process.

The notice of claim process entails the following steps:

• Filing the Notice. The notice of claim must include a general description of the type and location of the construction defect and any damages claimed to have been caused by the defect.
• Responding to the Notice of Claim. Receipt of the notice of claim initiates the notice of claim process and requires immediate action. Under CDARA, construction professionals have a right to inspect the property within 30 days.
• Offer to Settle. Within 30 days following the completion of the inspection process of a residential property, or within 45 days following the inspection of a commercial property, the construction professional may provide the claimant with an offer to settle.
• Remedy or Pay? The offer to settle may consist of the payment of a sum certain or by agreeing to remedy the claimed defect described in the notice of claim. Determining which option is preferable can depend on the variety of circumstances, including the relationship between the parties, financial considerations, desire for an immediate release from the claimant, and involvement of an insurance company. It is frequently advisable to include legal counsel in this process.
• After Completion of the Notice of Claim Process. If the parties complete the notice of claim process and do not resolve the matter, the claimant may proceed with filing suit against the construction professional(s).

The notice of claim process usually provides the parties with an opportunity to resolve the dispute prior to suit being filed.  It is therefore advisable that the construction professional take advantage of the statutory process and, as appropriate, involve counsel in the process.