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The Construction Defect Notice of Claim Process

Under the Colorado Construction Action Defect Reform Act (“CDARA”), anyone making a claim for construction or design defects must first go through a process before filing the lawsuit called the Notice of Claim process. Claimants and construction professionals use the notice of claim process to resolve construction disputes before having to go to court or arbitration. Even when cases do end up in litigation, the notice of claim process provides both sides with information about the property, the defects, and the litigation positions each side will take.

 

Written Notice by Claimant

A claimant begins the notice of claim process by sending a letter to each “construction professional” whose work may be implicated. The term “construction professional” has a legal definition under C.R.S. § 13-20-802.5(4), but generally, it means the contractors, developers, and designers who performed work on the project. The letter must describe the claim in reasonable detail so that the construction professional can determine the nature of the problems. After the notice of claim is sent, the construction professionals are entitled to request an inspection of the property. The inspection must be completed within 30 days of service of the notice of claim.

 

Offer to Repair

After the claimant sends the notice and an inspection has been completed, a construction professional has 30 to 45 days to make an offer to settle the claim by agreeing to pay money or repair the issue. The time period is 30 days for work related to residential property and 45 days for work related to commercial property. See C.R.S. § 13-20-803.5(3). After receiving the offer to remedy the defect, a claimant has 15 days to accept or reject the offer. If the offer is accepted, the parties settle the matter. The settlement may involve the construction professional paying a monetary amount to the claimant or possibly agreeing to repair or replace defective work.

 

Ending the Notice of Claim Process

If the notice of claim process breaks down at any point, either in the inspection phase or possibly during the offer phase, the notice of claim process is complete. Once that happens, the claimant is entitled to pursue his or her claim in court or arbitration. For most claims, however, there will likely be other requirements that must be satisfied too. It is very common for construction agreements, community association declarations, and purchase and sale agreements to include what are called “alternative dispute” or “prelitigation” provisions in them. Many of these provisions require that certain things happen in addition to the notice of claim process. Some examples include mandatory good faith negotiation, mandatory mediation, mandatory voting, among many other things.

 

Written Changes to Notice of Claim Process

CDARA provides “[a]fter the sending of a notice of claim, a claimant and a construction professional may, by written mutual agreement, alter the procedure for the notice of claim process described in this section.” C.R.S. § § 13-20-803.5(11). This provision allows the claimant and the construction professionals to enter into written agreements modifying the time limitations for inspecting, making offers to repair, and acceptance of an offer. Sometimes, it makes sense to enter into a fully negotiated agreement with each construction professional. These agreements allow the parties additional time to resolve their dispute.

 

Retain a Lawyer Before Engaging in the NOC Process

The notice of claim process is highly complicated and has many statutory deadlines in it. Failing to comply with each deadline contained in the notice of claim statute may have disastrous results for a prospective claimant. Similarly, a construction professional who fails to adequately protect its rights during the notice of claim process may be faced with unnecessary litigation that follows. You should always contact and consult with an attorney. It is absolutely imperative that each of the deadlines are followed and all of the requirements are met.