Builder Repair Promises: Buyer Beware

When a new homeowner or association discovers construction problems, the first step is usually to contact the builder (or the builder’s warranty program) to request repairs.  In turn, it is common for the builder to agree to repair the problems.  Quality builders fulfill their repair promises within a reasonable amount of time.  Unfortunately, there are also builders that have no intention of actually performing the repairs.  The purpose behind such false promises is often to delay the homeowner or association from taking legal action until it is too late.  To the detriment of many well-intentioned homeowners, Colorado law actually permits (and encourages) builders to engage in such deceptive practices.  As a result, homeowners and associations should be aware of Colorado’s timing limitations and proceed with caution when accepting repair promises from their builder.   

Colorado has some of the shortest timeframes in the country when it comes to filing a legal claim regarding construction problems.  There are two different statutes that homeowners should be aware of in this regard: the statute of limitations and the statute of repose.  The statute of limitations in Colorado prohibits a homeowner (or a homeowner’s association) from asserting a construction claim against a builder two years after the problem was first identified.  The statute of repose prohibits the assertion of a construction claim six years after the defective improvement was constructed.

For many years, Colorado courts recognized an equitable exception to the statute of limitations commonly referred to as the “repair doctrine”.  Put simply, the repair doctrine hit the pause button on the statute of limitation’s two-year clock during those times when a builder promised to perform repairs or engaged in repair efforts.  When both sides were working together honestly and in good faith, the repair doctrine was beneficial to everyone involved.  Stopping the statue clock gave both sides the time needed to resolve the problems.  In turn, many potential construction defect claims were successfully avoided, saving both sides the time and cost of litigation.

Unfortunately, the Colorado Supreme Court’s 2010 decision in Smith v. Executive Homes did away with the repair doctrine.  As a consequence, homeowners that are attempting to informally resolve construction problems with their builder near their two-year deadline are now presented with a difficult choice.  On one hand, homeowners can choose not to file a claim within two years trusting that the builder will honor his repair promises.  On the other hand, a homeowner can choose to file a claim before the two years expires. 

Because the repair doctrine no longer exists, this decision should not be taken lightly.  The first choice avoids litigation; however, if the builder’s repair promises are not genuine or ultimately honored, the homeowner will lose all legal rights and protections under Colorado law.  This means that the builder will escape all liability and the homeowner will be shouldered with the full cost of repairing the builder’s own improper work.  While the second choice may dissuade some builders from performing some repairs immediately, it is also ensures that the homeowner’s legal rights are protected.