Two homeowners came to my office last month with contracts they had already signed. Both were custom-build agreements, both from reputable Front-Range builders, and both quietly tilted every meaningful risk onto the homeowner. The damage was mostly done — but the bigger lesson is what I would have changed before either contract was signed.
If you are about to sign a Colorado construction contract — for a custom home, an addition, or a substantial remodel — the negotiation window is short and it closes the moment you sign. Here is what I push back on, in roughly the order of how often the language matters in a real dispute.
What goes in the scope, in actual writing?
Most contract fights I see in Colorado start with the words "as discussed" or "per plans." Neither phrase is a contract term. If the builder verbally agreed to anything — a specific brand of window, a specific tile, a particular subcontractor — it needs to be in a written exhibit attached to the contract.
A scope I trust looks like this:
A signed-and-dated set of plans and specifications, referenced by version number
An itemized allowance schedule (cabinetry, flooring, fixtures, appliances) with dollar figures
A list of named subcontractors for the trades that matter most to you (foundation, framing, plumbing, electrical)
A clear statement of who pulls each permit and who pays for the permit fees
If the builder will not name subcontractors, that is its own answer. Anyone who is unwilling to commit a framer to paper today is reserving the right to substitute the cheapest one available three months from now.
How are payments structured, and what is held back?
Front-loaded payment schedules are the single most common warning sign I see. A reasonable schedule pays the builder behind the work, not ahead of it — a deposit at signing (usually 5–10%), then progress draws tied to completed and inspected milestones, with the final payment large enough to mean something.
Three things I always push for:
Retainage of 5–10% held until substantial completion and the punch list is closed. This is the only leverage you have once the builder declares the job "done."
Conditional and unconditional lien waivers from every subcontractor and supplier with each draw. Without these, you can pay your builder in full and still get hit with a mechanic's lien from a sub the builder never paid.
No "stored materials" payments for materials that have not been delivered to your property and identified to your job.
I have had more than one client pay a builder in full, only to discover months later that the framing sub was never paid. Lien waivers are the cheap insurance that prevents that conversation.
Change orders — written or it didn't happen
Verbal change-order agreements are how most cost overruns enter a project. Your contract should say two things plainly:
Any change in scope, schedule, or price requires a written, signed change order before the work is performed.
Change-order pricing is calculated by a method spelled out in the contract — fixed unit prices, or time and materials with a stated markup cap (10–15% over direct cost is typical).
The phrase to avoid is "to be agreed upon at the time of the change." That phrase guarantees a dispute.
For more on the mechanics of change orders, see our guide on drafting effective change orders.
Liquidated damages, force majeure, and what happens when the schedule slips
Construction projects in Colorado are weather-exposed, supply-chain exposed, and permit-exposed. A reasonable contract recognizes that, but it does not turn schedule into a fiction.
What I look for:
A substantial completion date — not just a "target" — with a defined definition of substantial completion
A liquidated damages clause with a daily dollar figure that approximates real holding costs (rent, additional mortgage interest, storage)
A narrow force majeure clause — weather and acts of God are reasonable; "supply chain disruption" or "labor shortages" without further definition is a loophole
A clear procedure for the builder to request a time extension in writing, with a deadline for the request
The most common builder pushback I hear is that liquidated damages are a "penalty." Under Colorado law they are not, provided the daily figure is a reasonable estimate of the homeowner's actual losses and not punitive. Set the number at a number you can defend.
Indemnity, insurance, and the limits-of-liability page nobody reads
The single most dangerous paragraph in many residential construction contracts is the one captioned "Limitation of Liability" or "Indemnification." Builders sometimes include language requiring the homeowner to indemnify the builder for the builder's own negligence, or capping the builder's liability at a small fraction of the contract price.
Both should be struck. What a balanced version looks like:
Mutual indemnification, each party for its own negligent acts
No cap on liability for personal injury, death, or willful misconduct
A liability cap, if any, that is at least equal to the contract price
A requirement that the builder maintain commercial general liability insurance of at least $1M per occurrence, naming the homeowner as additional insured
I also want to see proof of workers' compensation coverage. If a worker is injured on your property and the builder does not carry comp, the liability can flow to you.
Dispute resolution — read this section twice
Most residential construction contracts contain a mandatory arbitration clause. Arbitration is not inherently bad, but the terms of arbitration matter enormously. Watch for:
Venue outside Colorado (often the builder's home state) — strike or change
Loser-pays-all-fees provisions that make small claims economically unviable
Class-action waivers — these are usually enforceable but worth knowing about
Arbitrator selection weighted toward industry panels rather than neutral lists
I have a separate piece on challenging a Colorado construction arbitration clause if you are already past the signing stage.
Warranty — and what the warranty actually covers
Colorado requires no specific written warranty for residential construction, but a serious builder will offer one. Read the warranty document, not just the contract.
What matters:
A clear list of what is warranted, by what duration (workmanship vs. systems vs. structural)
A claims procedure that does not require you to give the original builder unlimited repair attempts
An exclusion list that does not swallow the warranty (e.g., "settlement," "normal wear," and "owner maintenance" defined so broadly they cover everything)
For the bigger picture of how Colorado courts and statutes handle these disputes once they go bad, see our Colorado Construction Defect Dispute Resolution Guide.
If you are about to sign this week
A short checklist I give homeowners who call me the day before signing:
Confirm the plans and specs are dated, signed, and attached as an exhibit.
Confirm the payment schedule pays behind the work, with 5–10% retainage.
Confirm change orders require a written, signed document before work proceeds.
Strike any one-sided indemnification language.
Confirm a substantial completion date and a defensible liquidated-damages figure.
Read the arbitration clause for venue, fee-shifting, and arbitrator selection.
Get a copy of the warranty document before, not after, you sign the contract.
None of this requires confrontation. Reputable Colorado builders deal with these requests routinely. The ones who refuse to discuss them are telling you something useful — usually before you have written a check.
If you are already past the signing stage and the project is going sideways, the question shifts from "what should I have negotiated" to "what remedies do I have now." That is a different conversation, and one we have often. Send the contract and a brief project history, and we will tell you what your real options are.
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