New Law Affects Colorado Construction Contracts

Posted by: Sep 13, 2021By Brian Stutheit

The law, which was House Bill 21-1167 and will appear in Colorado Revised Statutes as C.R.S. 38-46-101, prohibits a property owner from withholding from a contractor more than 5% of the price of completed work to ensure the work is satisfactorily completed. The contractor and subcontractors are also prohibited from withholding more than 5% from subcontractors and suppliers.

The contract allows an owner to require that lien waivers to be executed before payment is made.

The act applies to:

  • A contract between a property owner and a contractor that has a price of at least $150,000; and
  • A subcontract or supply agreement to such a contract.

The act does not apply to a single contract that governs:

  • The building of:
  • A single-family dwelling;
  • A multifamily dwelling with 4 or fewer family dwelling units; or
  • A contract with a public entity.

What is a contract under the new statute? The law says “contract” means an contract to construct, alter or repair a structure or improvement on real property.

The law does not distinguish between contracts for residential or commercial work.

This law is effective in September 2021 and applies to contracts made after the effective date.