How Richmond American Homes Uses This Clause
Richmond American Homes purchase agreements may limit the builder's liability for monetary damages resulting from construction defects, delays, or contract breaches. This can restrict buyers' recovery to repair of the specific defect rather than consequential damages such as alternative housing costs or diminished property value.
This provision works in conjunction with other contract terms — including the arbitration clause and warranty exclusions — to create a layered limitation on buyer remedies.
Richmond American Homes's scale as a subsidiary of MDC Holdings means contract templates are largely standardized across its operations. A clause identified in one market's contract is likely present in other markets' contracts, though local addenda may modify the terms.
Builder-Specific Details
Caps on Consequential Damages
The liability limitation typically excludes consequential damages such as loss of use, temporary housing costs, lost income, and diminished property value — which can represent the most significant financial impact on buyers dealing with construction defects.
Standard Form Contract
This clause appears in Richmond American Homes's standard purchase agreement, which is generally presented on a take-it-or-leave-it basis. Buyers typically have limited ability to negotiate individual terms, though making the request in writing is still advisable.
Legal History
The following cases involve Richmond American Homes's use of this clause type.
MDC Holdings Securities and Regulatory Matters
MDC Holdings has disclosed litigation reserves in its SEC filings related to construction defect claims. The company's annual reports document ongoing legal proceedings across multiple states where liability limitations in purchase agreements may be relevant.
State-by-State Enforceability
Enforceability of this clause varies by state. The following reflects Richmond American Homes's operating states.
| State | Status | Note |
|---|---|---|
| Colorado | Uncertain | The enforceability of liability limitations in Colorado new construction contracts depends on the specific terms. Colorado courts may scrutinize caps that effectively eliminate buyer remedies for construction defects. |
| Arizona | Likely Enforceable | Liability limitation clauses in Arizona new construction contracts are generally enforceable, though courts may scrutinize terms that are deemed unconscionable. |
| Nevada | Uncertain | Nevada's construction defect reform legislation has affected damage calculations. The enforceability of contractual liability limitations depends on how they interact with the statutory framework. |
| California | Uncertain | California courts have scrutinized liability limitations in consumer contracts. Provisions that effectively eliminate buyer remedies may face unconscionability challenges. |
| Oregon | Likely Enforceable | Liability limitation clauses in Oregon new construction contracts are generally enforceable, though Oregon's consumer protection statutes may provide additional remedies. |
| Washington | Likely Enforceable | Liability limitation clauses in Washington new construction contracts are generally enforceable, though Washington's Consumer Protection Act may provide additional remedies. |
| Utah | Likely Enforceable | Liability limitation clauses in Utah new construction contracts are generally enforceable consistent with general contract law principles. |
| Idaho | Likely Enforceable | Liability limitation clauses in Idaho new construction contracts are generally enforceable consistent with general contract law principles. |
| Florida | Uncertain | The enforceability of liability limitations in Florida new construction contracts depends on the specific terms. Florida courts may scrutinize caps that effectively eliminate buyer remedies. |
| Maryland | Uncertain | Maryland courts may scrutinize liability limitations in new construction contracts, particularly where they interact with implied warranty protections. |
| Virginia | Likely Enforceable | Liability limitation clauses in Virginia new construction contracts are generally enforceable, though Virginia courts may apply unconscionability analysis in certain circumstances. |
Related Clauses in Richmond American Homes Contracts
This clause often works in combination with other provisions in Richmond American Homes's purchase agreements.
Even if an arbitrator finds in the buyer's favor, the liability cap may limit the award.
The habitability waiver and liability limitation work together to narrow the scope and amount of potential recovery.
Items excluded from the warranty may also fall outside the scope of any liability the builder retains.
Individual claims subject to the liability cap cannot be aggregated through class action to increase leverage.
What Buyers Can Do
- Understand what damages are excluded. The liability limitation may exclude consequential damages such as temporary housing costs, lost income, and diminished property value. Know exactly what the builder's liability is limited to before signing.
- Document all costs associated with defects. If you experience construction defects, document all associated costs including temporary housing, time off work, and repair expenses. This documentation may be relevant if the liability limitation is challenged.
- Request removal of the liability limitation in writing. Even if the builder declines, having a written record of your objection may be relevant if the clause's enforceability is later challenged.
- Have the full contract scanned before signing. This clause is often one of several interconnected provisions in Richmond American contracts that collectively limit buyer remedies. A contract scan can identify all of them.