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Construction defects can give rise to contract disputes


Since 2012, the construction industry in Colorado has been on an upswing following the economic downturn that hurt the country starting in 2008. More builders have had the opportunity to meet the needs of the state's population. Whenever Coloradans build or remodel houses or businesses, they turn to contractors who handle the construction or repairs needed.

Each project requires a contract agreement between contractor and client that details and defines the estimated costs, schedule and materials to be used. When a contractor does not follow the terms of the written agreement, a contract dispute usually results.

Construction management contracts are often disputed after construction is finished because the owner has found one or more defects. When that happens, the owner is required under Colorado law to send a Notice of Claim to the contractor or builder who oversaw the construction. This allows the contractors to assess the problem and determine how to fix it. It also allows the construction professional to settle the claim.

The amount of damages that can be awarded to the homeowner is clearly defined under the state's Construction Defect Action Reform Act of 2003. Both homeowners and builders should be aware on what is written in the act to avoid conflicts before and after construction.

Contract disputes can be prevented in two significant ways. First, the party providing the service should be careful when drafting or entering into a business contract. The person should seek legal advice before signing any agreement. Second, once the agreement or contract is signed, that party must meet the contract's terms.

In the event of a contract dispute, a business owner can negotiate with the other party and settle the case out of court. Otherwise, litigation will require time in court, a process that is longer and more expensive and has a less certain outcome.

Source: Coloradoattorneygeneral.gov, "Construction defects," accessed on July 23, 2014

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