Landmark Changes in Colorado Construction Law Construction Law Forum by James W. Bain and Alvin M. Cohen Published in: The Colorado Lawyer, June 1997, Vol. 26, No. 6, pages 123-126
Over the past 100 years, dramatic changes have swept the construction industry, including the current widespread use of fast-track construction, computerized critical path scheduling, and design-build and multi-prime projects. Not surprisingly, the law has changed as dramatically. While space limitations preclude a discussion of all such changes, this article outlines some of the more fundamental (and landmark) ones. Specifically, it focuses on: (1) fundamental changes in government construction contracting, and (2) changes in buyer and owner protections.
Buyer and Owner Protections Traditionally, buyers of developed real estate had little or no recourse against the builder because of the contract law doctrine that "the contract for sale merges into the deed." This common law doctrine, based on the buyer's affirmative duty to inspect before purchase, often served to deny redress for defective buildings. The related "merger doctrine" further limited a buyer's remedies by providing that a contract for sale merges into the deed at closing, so that any contract warranties and representations expire. Courts gradually reduced, and then ended, the harsh results of these doctrines based on society's changing perception of the morals of the marketplace. Not surprisingly, these doctrines initially fell in the home building context. First, the merger doctrine was curtailed in rulings that home buyers were entitled to certain limited warranties arising from the contract to sell that merged into the deed. More important, caveat emptor fell in 1964 in Carpenter v. Donohoe, where the Colorado Supreme Court, for the first time in United States, ruled that builders of new homes implicitly warrant that a home complies with the building codes, it is built in a workmanlike manner, and it is suitable for habitation.
Fraudulent Concealment Contemporaneously with these developments, courts expanded protections to buyers based on fraudulent concealment by establishing the seller's affirmative duty to disclose known defects. More recently, in Olmstead v. Herbst, requiring a builder-vendor to disclose defects completely obviates caveat emptor, which was based on duty to inspect and the buyer's obligation to inspect.