Expansive Soil and Construction Defect Liability in Colorado

Colorado’s scenic landscapes mesmerize natives and transplants alike. Yet beneath the majestic views lies a complex geological makeup that poses notable challenges to a home’s foundation stability. High concentrations of smectite-group clay minerals cause Colorado’s soil to expand and contract, a geological phenomenon known as expansive soil.

Expansive soil can exert enough pressure to fracture reinforced concrete, distort building frames, and lift multi-story structures. Whether it’s a homeseller’s failure to disclose these hidden subterranean risks or a builder cutting corners on foundation prep, expansive soil can lead to costly repairs and litigation. This article examines the risks that expansive soil poses to homeowners and outlines the legal rights and potential liabilities of sellers, contractors, and builders.

• Expansive soil is among Colorado’s most destructive natural hazards when not properly mitigated.

• Colorado homeowners are protected by mandatory disclosure laws and the legal duty of sellers to reveal known latent defects.

• Contractors and builders can be held liable for structural failures regardless of contract terms for homes built on expansive soil that is not properly treated. 

• The Construction Defect Action Reform Act (CDARA) requires a strict pre-litigation Notice of Claim process before a lawsuit can be filed. 

• Construction defect claims must be filed within two to six years of discovering the defect, with the potential for a two-year filing extension in some cases. 

Expansive soil is considered a hidden natural hazard because they contain high concentrations of clay minerals, particularly bentonite. Bentonite acts like a sponge. On a microscopic level, these clay particles pull moisture from rain, snowmelt, or leaky pipes, forcing them to push apart and expand. 

The Colorado Geological Survey notes that moisture can cause soil to expand by up to 20 percent. This results in a phenomenon called soil heave. The expansion creates an upward force that reaches pressures of 30,000 pounds per square foot, capable of undermining reinforced structural components.

When the soil beneath a house moves unevenly, it puts enormous amounts of stress on the building’s frame. Essentially, one part of your home is being pushed up while the other remains unchanged. 

Inside your home, look for: 

• Drywall cracks 

• Uneven floors

• Stuck doors

• Wall gaps

Outside your home, look for: 

• Foundation cracks

• Separating structures

• Broken concrete

• Leaning walls

In Colorado, your risk of being affected by expansive soil depends on where you live. Some of the most common soil problems our clients deal with include: 

County	Soil Risk	Common Problems
El Paso County, Pueblo County	Extremely High	Severe foundation heaving and cracked brickwork.
Denver County, Douglas County, Jefferson County	Moderate to High	Heaving basement floors, doors that won’t shut.
Larimer County, Boulder County, Weld County	High	Foundations that tilt or rotate.
Mesa County, La Plata County	High	Failing garage slabs and separating driveways.

Source: Colorado Geological Survey

Expansive soil can wreak havoc on a property’s safety and habitability, as well as its long-term value. Since the average buyer can’t detect buried bentonite, Colorado law provides robust protections to safeguard homeowners from undisclosed geological hazards and the resulting structural damage. 

In my experience, contractor liability for defects in expansive soil environments generally falls into one of four categories: 

1. Design and structural defects - Failing to specify a foundation system capable of withstanding predicted soil swelling pressures. For instance, using a simple slab-on-grade foundation in an area requiring deep drilled piers or caissons. 

2. Subsurface and geotechnical failures - Neglecting to conduct proper geotechnical testing, inadequately compacting soil, or failing to over-excavate expansive material constitutes professional negligence.

3. Workmanship defects - Building out of compliance with the architectural plans. A frequent workmanship failure is improper grading. Failing to ensure a minimum five percent slope away from the foundation allows water to pool and triggers soil expansion. 

4. Material defects - Using substandard products, such as concrete that lacks the tensile strength to resist soil movement. 

Colorado law places a heavy burden on those who sell or build homes to be transparent about soil conditions. 

Under C.R.S. 6-6.5-101, developers and builders are legally required to provide buyers with a summary report of soil analyses at least 14 days before the home is sold. For sites with significant potential for expansive soil, a publication detailing:

• Problems associated with such soil

• Building methods to address these problems during construction

• Suggestions for care and maintenance to mitigate these issues

Even beyond the specific soil statutes, Colorado courts established a common law duty for sellers to disclose known, but not readily visible, issues. In Gattis v. McNutt (2013), the Colorado Court of Appeals ruled that sellers of residential property owe an independent, affirmative duty to disclose defects that aren’t readily observable and that the seller knows could materially affect the property’s safety or value, such as expansive soil.

Like sellers, contractors, developers, and engineers face substantial liability if they fail to implement proper mitigation strategies. 

In Colorado, builders can’t use a contract to shield themselves from liability for poor workmanship. In Colorado, builders can’t use a contract to shield themselves from liability for poor workmanship. In A.C. Excavating v. Yacht Club II Homeowners Ass’n (2005), the Colorado Supreme Court reaffirmed this principle, allowing homeowners to assert both breach of contract and negligence claims against a builder because they owe an independent duty of care to construct homes without negligence. This duty applies broadly to all builders, including general contractors and subcontractors, and is not limited by contractual relationships.

Contractors, developers, and geotechnical engineers face substantial liability if they fail to implement adequate mitigation strategies for expansive soil. 

If a builder or seller observes early signs of soil heave and fails to inform the buyer, they can face severe legal claims for fraudulent concealment or negligent misrepresentation. Under C.R.S. 6-6.5.101, failure to do so carries a civil penalty of $500 for the builder and may also be used as evidence of negligence per se in a larger construction defect lawsuit. 

Beyond the $500 civil penalty, non-disclosure can also trigger the following legal claims:

• Colorado Consumer Protection Act (CCPA) - Under C.R.S. 6-1-105, a builder who knowingly engages in a deceptive trade practice can be sued under the CCPA. Hiding soil heave to induce a sale may permit the recovery of treble damages and attorney fees if the practice is shown to significantly impact the public. 

• Construction Defect Action Reform Act (CDARA) - Under this act, a builder may be liable for certain damages caused by soil heave pursuant to Colorado statute.

• Fraudulent Concealment - A seller who misrepresents the condition of the soil may be found to have committed fraudulent misrepresentation, which negatively impacts the parties' contract and exposes the seller to full compensatory damages and even punitive damages.

Contractors frequently defend against expansive soil claims using the maintenance manual defense. They may argue that the homeowner’s failure to maintain proper drainage or irrigation, like planting vegetation too close to the foundation or forgoing gutter maintenance, constituted contributory negligence that triggered the soil heave.

Under C.R.S. 13-20-803.3, construction professionals can assert this, and other affirmative defenses by proving that the reasonable maintenance recommendations were provided in writing. 

“A construction professional is not liable for damage or defect to the extent the professional can prove, as an affirmative defense, that the damage or defect was caused:...By the homeowner or the homeowner’s agent, employee, or construction professional, by virtue of their failure to follow the builder’s or manufacturer’s maintenance recommendations or to do commonly accepted homeowner maintenance obligations.

Contractors are expected to demonstrate that the homeowner had notice of these recommendations and that their failure to follow them actually contributed to the defect or damage. 

Expansive soil cases sit at the complex intersection of geological science, structural engineering, and insurance law, making them uniquely intricate and often litigious. 

Under the Colorado Construction Defect Action Reform Act (CDARA), homeowners may recover various types of damages, subject to specific limitations and conditions outlined in the statute. These damages include:

1. Actual Damages - CDARA defines "actual damages" as the fair market value of the property without the alleged construction defect, the replacement cost of the property, or the reasonable cost to repair the defect, whichever is less. Additionally, for residential property, actual damages may include relocation costs and other direct economic costs related to the loss of use of the property, as well as interest, costs of suit, and reasonable attorney fees if awardable under contract or applicable law. However, CDARA precludes recovery of punitive damages in construction defect actions.

2. Damages for Personal and Bodily Injury - Homeowners may recover damages for personal or bodily injury caused by construction defects. These damages are recoverable by law, which caps noneconomic damages for personal or bodily injury at $250,000, adjusted for inflation. Non-economic damages include losses such as annoyance, inconvenience, aggravation, and discomfort arising from injury to the home, as well as loss of use and enjoyment of the home.

3. Economic Costs Related to Loss of Use - CDARA allows recovery of economic costs related to the loss of use of residential property. This may include costs such as relocation expenses and, in some cases, stigma damages, which represent a loss in property value even after repairs are completed. However, construction professionals may argue that losses not specifically enumerated by CDARA, such as lost profits or delay damages, are not recoverable.

4. Treble Damages and Attorney Fees - In cases where a construction professional fails to comply with an accepted offer to remedy or settle a claim, or fails to respond to a notice of claim, the professional may be subject to treble damages under the Colorado Consumer Protection Act (CCPA), provided the claimant prevails on the CCPA claim. However, the aggregate amount of treble damages and attorney fees awarded in such cases is capped at $250,000.

5. Limitations on Negligence Claims - CDARA restricts negligence claims to those resulting in actual damage to real or personal property, actual loss of use of such property, bodily injury, or wrongful death. Claims based solely on failure to comply with building codes or industry standards are not actionable unless they result in one of these specified harms.

6. Common Law Damages - While CDARA significantly affects recoverable damages, common law damages may still be available in certain circumstances, such as claims against non-construction professionals, claims predating CDARA, or cases where CDARA's "actual damages" limitations are construed as defenses.

Navigating insurance in expansive soil litigation is a minefield. Most Commercial General Liability (CGL) policies carried by contractors contain an “Earth Movement Exclusion.” This clause excludes coverage for property damage, whether direct or indirect, caused by:

• soil settlement

• shrinkage

• expansion

• or heaving

Colorado courts interpret these exclusions broadly to apply to any movement of land, including expansive soil. The Earth Movement Exclusion clause eliminates coverage unless the policy specifically states otherwise. 

Consequently, if a plaintiff’s complaint merely alleges that damage was caused by soil shifting, the builder’s insurer will likely deny coverage and refuse to defend the contractor. Therefore, plaintiffs must carefully argue that the damage was the result of construction or design defects—such as poor water management or inadequate pier depths—that allowed the soil to move. This strategy triggers the insurer’s duty to defend and increases the likelihood of a successful financial recovery. 

Proving that a home’s damage was caused by negligence requires expert testimony that explains why structural damage occurred and how the seller or builder failed. 

Our firm leverages a multi-disciplinary network of experts to build your case, including:

• Geotechnical engineers - Experts in core drilling, geotechnical experts analyze the soil’s plasticity to prove it was capable of the destructive heaving your property is experiencing.

• Structural engineers - By mapping the load-bearing failures of the building from frame movement, they can prove the builder’s design is insufficient to withstand the upward pressure of the soil. 

• Cost estimators - Specialists providing detailed bids for complex stabilization methods can help you secure a fair recovery that determines how much the fix would cost. 

If expanding soil is damaging your property, or if you’re a contractor facing a defect claim, getting legal advice early is the most effective way to protect your property or business interests. Robinson & Henry provides the specialized guidance needed to navigate Colorado’s complex construction statutes and insurance hurdles, focusing on: 

• Liability and coverage assessment - Determining how the Colorado Construction Defect Action Reform Act (CDARA) applies to your situation and identifying whether insurance exclusions or indemnification clauses impact your recovery. 

• Statutory compliance - Analyzing the strict statutes of repose and limitation that govern soil-related claims, ensuring you meet critical filing deadlines before your right to sue expires.

• Dispute resolution - Evaluating whether your case is best served through the CDARA Notice of Claim process, mediation, or formal litigation to secure the compensation required for structural remediation. 

Connect with a Colorado real estate and construction litigation attorney to safeguard your property or your business. Call 303-688-0944 or book your consultation online to review your expansive soil case with an experienced attorney today.

What qualifies as a construction defect in Colorado?

A construction defect is any flaw in the design, workmanship, materials, or building systems that causes a property to fall below expected quality standards, creates damage, or makes the structure unsafe. 

What is the economic loss rule?

Under the Economic Loss Rule, if someone suffers only financial losses (economic damages) because another party failed to fulfill a contractual obligation, they generally cannot sue for negligence or other tort claims unless there is a separate legal duty outside of the contract. However, Colorado courts have carved out an exception for residential construction, establishing that builders owe an independent duty of care to homeowners. 

Who can be held liable for expansive soil defects?

Liability can extend to multiple parties involved in the construction process, including developers, general contractors, subcontractors, architects, and geotechnical engineers. Liability depends on whether the failure originated in the design, site preparation, materials, or execution of the work.