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Colorado’s New Homeowner Protection Act

By Chad M. McShane

The Homeowner Protection Act of 2007 was recently enacted. The Act will be applicable to all construction defect actions, including lawsuits and arbitrations, that are filed after April 20, 2007. The Act is actually a revision to the “limitation of damages” provision contained in Colorado’s Construction Defect Action Reform Act of 2003 (“CDARA”), C.R.S. § 13-20-801, et seq. The Act’s revisions will impact current rights of homeowners and homebuilders, but does not apply to commercial construction or projects.

The Act specifically prohibits and declares as “void against public policy” any waiver or limitation on a homeowner’s legal rights, remedies or damages related to construction defect claims or Consumer Protection Act claims. The Act, however, does not prevent a waiver or limitation of rights, remedies or damages to a homeowner to the extent the homeowner and the homebuilder have agreed to waive such claims in a written settlement of an existing construction dispute.

The Act also amended C.R.S. § 13-20-807, applying to express warranties. While the amendment to C.R.S. § 13-20-807 indicates that the new portions of the Act do not limit the provisions of an express warranty or the obligations of the provider of such warranty, the Act makes clear that, to the extent an express warranty attempts to waive or limit release remedies or damages to a homeowner, those provisions will be considered unenforceable.

The Act will apply retroactively to warranty limitations or warranty exclusions, so long as the actual lawsuit or arbitration is filed after April 20, 2007. The Act is intended to benefit homeowners who previously agreed to limitations of remedies in exchange for receipt of certain warranties from contractors. The existing damages limitations found in CDARA were not revised. Construction professionals, such as homebuilders, who previously used limitation of warranties or waivers of remedies in construction contracts should review those warranties and waivers and understand that the new Act will not allow enforcement of any limitation of remedies or damages that is inconsistent with CDARA.