What Happens When Your New-Build Home Has Construction Defects?

The problems started four days before we moved in, when one of the window washers we’d hired to clean our new Sloan’s Lake duplex walked upstairs from the basement and said, “Ma’am, you’ve got a leak.”

When we’d toured the house during the inspection roughly a month earlier, in February, snow was still melting outside, yet there was no evidence of the leak that was now dripping from the ceiling into the recess of one of the window wells. No one would welcome this news, of course, but we’d already strained our budget to buy the place. Although mortgage interest rates were high, my husband and I had recently learned we were expecting our first child, and we needed more space. Plus, the two-year-old, never-been-lived-in duplex was on the market for around $100 per square foot less than others we’d toured, largely because the original builder had been foreclosed on. We thought we were getting a great deal. So did our real estate agent.

Much of the next month was spent scheduling a certified plumber, a structural engineer, a siding expert, and a mold inspector to help determine the cause and scope of the drip. We even had to cut a hole in the drywall to assess whether the leak was contained or if it had infiltrated the foundation. Ultimately, we determined that the source of the problem was outside of the house. The flashing—a thin metal strip attached to the bottom of the siding—which was supposed to direct water away from the structure had instead been installed with an eight-degree tilt toward the house. The cost to fix it: $1,800.

That outlay was just the first in an ongoing string of expenditures to fix significant problems in what we’d assumed would be a relatively turnkey property. There was the $3,700 to add necessary landscaping along the front and back of the house and detached garage to protect the foundation from water and ensure proper drainage. Then almost $500 to correct the electrical wiring to two air conditioner units, which had been installed with the wrong wattage. In late April, we learned it would cost $2,300 to repair a leak in one of those air conditioners.

Hot—literally and figuratively—I started to wonder who was at fault for all these mistakes. We had put a lot of trust in and paid a lot of money to other people when buying our home. We had expected that the builder had constructed it properly and with attention to detail. We had taken for granted that the various inspectors whose jobs were to ensure safety, identify potential red flags, and inform us of existing issues would actually do those things. And we had hired a real estate agent to serve as an adviser who would know the right questions to ask. Why had none of them caught or advised us on the defects in our house before we closed?

Maybe we’d put too much faith in the so-called experts and not enough responsibility on ourselves. Maybe we didn’t dig deep enough on questions we had about the foreclosure, and perhaps neither we nor our agent pushed hard enough to secure a warranty from the seller, which would’ve covered many of the costs. We’d owned homes before, one old and one new, but the cliché still rang true: We didn’t know what we didn’t know.

It turns out that we aren’t alone in our tribulations. The Mile High City is experiencing an unfortunate convergence of factors that’s leading to some people—like us—unknowingly moving into shoddily constructed homes and then experiencing The Money Pit in real life. High home prices, a housing shortage, supply chain issues, a deficit of construction workers, and an overworked city inspection team are all parts of the problem. On top of that, the most recently proposed amendments to the state’s construction defect laws—including extending how long homeowners have to file claims and expanding the potential monetary damages that could be awarded to them—died in the Legislature this past spring.

“A housing shortage means builders can get away with cutting corners,” says David Pardo, technical lead at Nookhaus, a Colorado firm that builds accessory dwelling units in Denver, and a property manager for condos and townhomes. “It’s that they can get away with it, in some cases. In other cases, there’s just not the money in the budget, [because maybe] lumber suddenly spiked in price, and they have to skimp somewhere to make the money work so the project can be completed [and they] don’t go bankrupt.”

The reality, he says, is that because of the shortage of homes, “builders know that every home they build will sell”—even if it’s a house of cards.

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Walk down nearly any tree-shaded sidewalk in the Highland neighborhood and you’ll encounter a similar scene: a stately Victorian standing next to a small Craftsman bungalow, with its telltale gabled roof and covered front porch, both looking uncomfortable sitting next to a boxy, new-build duplex with massive windows.

Over the past decade, Denver has ranked among the top 10 cities in the country for residential development. “There is absolutely a correlation between the quality of construction and the speed of construction,” says Reid Jennings, a partner at Littleton’s Parrish & Jennings who began his career as an architectural engineer before moving over to construction litigation. Interest rates on construction loans are high enough, Jennings says, that the economics of those projects “facilitate or encourage build-as-fast-as-you-can, turn-it-over-as-fast-as-you-can.”

That reality is putting an undue burden on the city’s permitting and inspection offices—tasks that can involve up to 30 Denver agencies. Denver’s Community Planning and Development (CPD) department has 65 building inspectors to cover the city. They handle mechanical, electrical, and building approvals.

These inspectors are different from the private ones buyers hire when they’re considering purchasing a home. City inspectors are licensed and trained in specific trades and are focused on structural integrity, safety, and minimum code requirements. They don’t, for example, make sure that the floorboards are properly aligned or that the oven turns on. “They’re not responsible for checking for compliance with the [builder’s] plans and specifications. They’re not responsible for checking the manufacturer’s installation instructions and whether or not there’s been full compliance,” says Max Gad, a partner at Lasater & Martin who focuses on construction defect litigation.

The CPD team handles approximately 20,000 inspections per month, 60 percent of which are residential. That’s more than 300 inspections per inspector per month, a number that has been fairly consistent over the past decade. That’s a much heavier lift than city inspectors have in, say, Seattle—where 100 professionals handle around 166 inspections per person per month—but on par with Fort Worth, Texas, where 24 city inspectors handled more than 330 primarily commercial inspections per month in 2023.

Denver is currently short three building inspectors, while the broader inspection team (including zoning) has an additional seven vacant positions. “We are not fully staffed. Occasionally we cancel inspections because of it—less than one percent, but more than we were canceling six months ago,” says Dennis Shults, CPD’s deputy building official. “If I could get those [three positions] back, that’d be great. It allows us to do other things than just focus on quick inspections, getting in and out.”

Being overworked could conceivably lead to fewer issues being discovered during inspections. In Denver, about 75 percent of daily inspections pass, Shults says. In Seattle, only about half do. Less harried inspectors still might not have caught our basement leak, though. Before the certificate of occupancy was issued for our duplex, for example, the siding would have been checked—but only to confirm the flashing was present, not that it was correctly installed. “We would have inspected that, but it’s possible with a siding permit that we don’t see the actual flashing detail that gets under the siding or around the windows. We just see the final product, so we wouldn’t be able to see if there’s water intrusion behind it,” Shults says.

The private inspection company we hired to examine our home before the closing said something similar: The flashing should have been evaluated, but the inspection does not serve as a guarantee. “Sometimes we get tunnel vision when we see a defect, and we look right past another defect,” the operations manager told me.

“The [private] home inspection is only as good as the home inspector,” attorney Jennings says, adding that “the dirty little secret is that most city inspections…are primarily spot checks.” Despite their limitations, he still advises paying for your own private home inspection. Even oversights could be helpful for homeowners if they decide to pursue legal or other action: If a professional inspector is unable to perceive a problem, Jennings explains, how can an ordinary homeowner, who is not an expert on construction, reasonably be expected to identify a builder’s blunder?

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No one lived in our house before us. The four-bedroom, five-bathroom property had been empty since construction was completed in 2022. Despite the fact that the home was new, other issues started to present themselves as the weeks went by. Spaces developed between some floorboards, and others began to bubble due to flawed installation, according to the general contractor we hired to repair them. One morning, a piece of wood that hadn’t been glued properly tumbled onto my foot from the kitchen island. We were surprised to find no cable jack or Ethernet port had been installed, meaning we couldn’t access TV or internet until Xfinity was able to run a line into our house, which took a month. A whistling sound flowed through our primary bathroom vent whenever the AC attempted to kick on—even though it never actually blew cold air when it did, forcing us to relocate to the basement for a week during a summer heat wave.

In a Hail Mary to solve our ongoing lack of air conditioning, we had our ducts cleaned in the hope that it would improve airflow, if not fully cool the moving air. After pulling out two beer cans, a wad of tape, and seemingly all of the drywall debris from the home’s construction, which the builders had swept into the ducts instead of a dumpster, one of the technicians looked befuddled. “I was just at a house where the people have lived for 40 years and never had their ducts cleaned,” he said. “Yours were dirtier.”

But it wasn’t until another evening, shortly thereafter, that I began to consider consulting a lawyer. Halfway through roasting vegetables for dinner, the oven started beeping and wouldn’t stop until I reset the breaker. My husband walked in the door to find me crying on the floor.

Still, I waited to pick up the phone—until my husband and I were jolted awake at 4:30 a.m. by a banging noise coming from inside the walls. Our house and all of our toilets were shaking, plus the control panel on our washing machine was blinking. It was as if a ghost had gone into full haunting mode. In reality, it was likely due to a sprinkler system malfunction.

As I told bits of our story to Jennings, the attorney, he nodded knowingly. He’d heard similar stories—often worse—from many clients. The kinds of problems we were experiencing were “not isolated,” he told me. “[They] occur on projects from commercial properties to multimillion-dollar custom-built homes to spec-build townhomes.”

The question was what to do about it. At their most basic, Lasater & Martin’s Gad explained, construction defects are “a failure to build correctly.” These can range from major botches related to, for instance, how the foundation was dug, to moderately concerning issues, like our siding. There doesn’t even have to be physical damage to meet the criteria; rather, the potential for harm can serve as legal proof.

But it typically takes at least a year for these types of lawsuits to work their ways through the courts, and attorneys’ fees start around $10,000. Plus, if the builder doesn’t have adequate insurance, there might not be “money or a pot of gold at the end of the rainbow there to help get you fairly compensated for your damages,” Gad says. In other words, even a judgment in a homeowner’s favor likely won’t net much.

Beyond lawsuits, homeowners and renters don’t have much recourse. “Without having specialized experts that are going to do more intrusive inspections, observations, really digging into a discrete issue, it’s really difficult to identify or to protect yourself as a homeowner on the front end,” Jennings says. “Particularly with new-build homes, issues develop.”

Since 2003, the state’s Construction Defect Action Reform Act has included a notice of claim process whereby an injured party must provide written notice detailing all of the defects in their home to the contractor before filing a lawsuit. This allows the construction professional to inspect the alleged defects and potentially address them, with the goal being to avoid going to court. Jennings has seen approximately three cases over his 12-year career settle at this stage. We didn’t know about the notice of claim process but inadvertently went through an informal version of it by calling and emailing the seller—a private capital lender that had taken over the foreclosure—about our issues in order to get both our flashing repair and the initial AC leak fixes reimbursed.

As of late summer, we had already shelled out more than $9,000 and anticipate spending another $10,000 on longer-term fixes. So far, we have recouped around $5,000 from the seller. Hiring a lawyer for a minimum of $10,000 to potentially win back $14,000 would be absurd. But it’s not only about the money. At a time when we should have been excited about starting our next chapter—decorating a new house, preparing for our baby’s arrival—we instead devoted hours and loads of mental and emotional energy to finding experts, setting up appointments, and stressing over whether our house was actually safe. Instead of being thrilled with this next step, we found ourselves overwhelmed, frustrated, and sad. Five months after moving in, with several of the most critical issues having been sorted out, we’re finally getting the chance to feel some of that joy.

And, if we’re looking for bright sides, we certainly have a lot more knowledge for our next home purchase. As one loan officer who’s worked in northwest Denver for decades put it: “A lot of it comes back to caveat emptor.” That’s Latin for “let the buyer beware.”

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