Beyond the time limit, there are bigger hurdles. Most developers do projects under an LLC specific to that property. Once the project is done the developer usually desolves the LLC right away or lets it lapse when the next State renewal comes around. Either way you are probably looking at going after an entity that doesn't exist anymore. There are options to go after the 'main guys' but this can be tricky, time consuming and expensive.
You need to talk with an attorney about whether it is a viable path to take. Looking up the Developer/LLC and checking status would be one of the first things to do.
I'm not sure I fully buy the contractors assessment. It doesn't quite add up, possible but not sure about it. Regardless of how the windows were installed there is always going to be caulking. Once the caulk fails you are susceptible to leaks. The better the install the less critically reliant the window system is on caulk. The worse the install the more reliant the window system is on having intact caulking.
Consider using Solarseal caulk instead of standard silicone which everyone likes to get at HD.
First of all, how the hell do you cut the window frame? if that contractor cut the frame, then I think you lost warranty on your windows.
Second, where is it leaking from? Side, top? Bottom? When you are standing inside the room where, are there any wet spots on the wall? You see, besides caulking, there needs to be flashing over the top of the window and below the window. Also, if your window is inside the brick, you need to have weep holes over the window to allow for the water to escape the wall cavity to the outside, not inside. Over time, water will get behind the brick, there is no stopping it. That's why you need flashing and caulking to get the water back out from behind the brick.
Third, the window guy should have never installed the windows if the window opening was too small. Rough contractor should have left at least 1/2" of space around the actual window to allow for shims and adjustments. If that's the case, then I think you have a case and you need to go back to the developer. He needs to remedy the situation, which at this point, will cost thousands. I think you should definitely go back to the developer but you need to go back with some hard evidence that the windows were installed incorrectly. (By the way, I'm not an attorney so don't take my advice on legal basis. Make sure you consult an attorney).
I don't think window company can do much unless they can get you a smaller window. Also, how do I know so much about windows? That's because my professional degree out of college was in architecture and I drew hundreds of buildings, been on dozens of development sites and dealt with hundreds of contractors.
I hope this helped. Contact me if you need anything else.
Check your contract and your builders warranty. Get a written statement from your contractor and seek the advice of an attorney. At the same time, it might be helpful to make the builder aware of your intentions. This might help them to see the light.........