Forest City

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This fall, the Colorado Court of Appeals issued an opinion in Rogers v. Forest City Stapleton, Inc. (2015COA167) that may significantly impact developers and construction professionals in Colorado.

The lawsuit involves a dispute between a homeowner in the Stapleton neighborhood and the master developer of the community (Forest City).  Before any new structures were built, Forest City subdivided the former Stapleton International Airport land into individual lots to create a new residential development.  Undeveloped lots were sold to a professional homebuilder (Infinity Home Collection at Stapleton, LLC).  Infinity improved and finished the lot, constructed a house on it, and sold the lot to Rogers.

Rogers claims that an undisclosed high water table beneath his house, coupled with calcite leaching from nearby roads, infiltrated his basement.  Rogers’ claim against Forest City included breach of implied warranty.  His theory was that by allowing Infinity to construct a home with a basement on the lot, Forest City had implied that the lot was suitable for that purpose.

Forest City argued that it did not have any role in the builder’s or homeowner’s decision to build a basement on the lot because it had provide the builder with all of the information available respecting the lot’s subsurface and groundwater condition.

Before the Court of Appeals decision, no Colorado appellate court had recognized an implied warranty running from a lot developer to a subsequent home buyer where the developer is not involved in construction of the house.

Although the opinion attempted to carve a narrow exception for implied warranty claims against a developer, developers, builders, contractors, and designers may now be exposed to more frequent and successful claims for breach of implied warranty.

I have two particular concerns:  the lack of a relationship between the homeowner and the developer; and the lack of control by the developer did not seem to dissuade the Court from imposing liability.  Extending this to a “worst case” scenario as it might apply to architects – merely designing a home for a particular location could create an implied warranty that the home is suitable for the conditions on the lot.  The implied warranty claim is also not limited to the first purchaser of the home.

Forest City Stapleton, Inc. has petitioned the Colorado Supreme Court for review of the opinion.  As of the writing of this article, the Colorado Supreme Court has not decided whether it will review the case.

Because Forest City raises implications regarding site conditions, my next article will cover issues surrounding differing site conditions.

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