Construction contracts and Colorado homeowner protection act

This post was written by construction attorney Bradley Shefrin, and the original appears at the following link:

https://www.linkedin.com/pulse/colorado-court-appeals-renders-key-aia-contract-void-bradley-shefrin

On March 9, 2017, the Colorado Court of Appeals issued its ruling in Broomfield Senior Living v. R.G. Brinkmann. The case involves the enforceability of Section 13.7.1 of the AIA Form A101-1997 Contract. The A101 contract is a popular agreement used by owners and general contractors in construction. In this instance, it was entered into between a national general contracting firm and a national company that builds and operates senior living centers. Section 13.7.1 of the AIA contract generally states that any defect claims against the general contractor must be filed within a specified date from substantial completion of the project. Brinkmann argued that the AIA’s statute-of-limitations provision (using “substantial completion” as the starting point) reflected the parties’ intent to deviate from Colorado’s statute of limitation (which is 2-years from the discovery of the defect). Although the trial judge agreed and dismissed the owner’s claims, the Colorado Court of Appeals reversed. Relying on the Homeowners Protection Act (“HPA”), the appellate panel concluded that the project was constructed for “residential purposes,” and therefore, the project fell within the protection of the HPA. The HPA, enacted in 2007 to combat against one-sided and unfair home purchase contract provisions, renders void any contract language in which the homeowner is waiving rights to pursue home-builders for defect claims. By declaring the project to be “residential,” the Colorado Court of Appeals decreed that commercially-sophisticated parties cannot consent to modify the statute-of-limitations by adopting long-standing AIA contract language. In light of this ruling, commercial contractor should be aware that Section 13.7.1, which is found in several AIA contract forms, won’t be enforced in any Colorado project involving the construction of residential living units.