Validity of Residential Limitation of Liability Clause Still in Question

The Colorado Court of Appeals issued its decision in Taylor Morrision v. BemasConstruction, leaving an important issue in homebuilder construction defect cases involving architects and engineers remains unresolved . 

The central issue on appeal as it applies to design firms (architects and engineering) was whether a 2007 statute known as the Homeowner Protection Act prevented a homebuilder/developer from invalidating a limitation of  liability clause in the contract between it and a design professional.  

The trial court had held that the statutory provision which invalidated LOL clauses was limited to homeowners and not available to developer/homebuilders.

However, the Court of Appeals did not rule on this issue instead limiting its opinion to an analysis of whether the statute could be applied to an agreement pre-dating the Homeowner Protection Act.

The Court held the Act was unconstitutional as applied in this case because it was retrospective in nature.

Thus, one of the more important issues in homebuilder construction defect cases involving architects and engineers remains unresolved.

I would note that limitation of liability clauses are still considered enforceable in a commercial setting. 

It is anticipated legislation will be introduced in this session in an attempt to mitigate some of the more onerous provisions affecting construction defect litigation.  Return to our blog or contact us to learn more.

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