Sacks Tierney P.A.

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Greg Gillis

 
 

“Proportional Indemnity” Is Now the Law of the Land in Arizona

Residential subcontractors will be obligated to indemnify a general contractor only in proportion to the fault caused by the indemnifying subcontractor.

Governor Ducey's April 10, 2019, signing of Senate Bill 1271 ended a year-long effort by the American Subcontractors Association of Arizona (ASA) to provide proportional indemnity in private residential construction contracts.

Previously, proportional indemnity was required in public construction contracts but was not required in private residential construction contracts. Effective August 27, 2019, residential subcontractors will be obligated to indemnify a general contractor only in proportion to the fault caused by the indemnifying subcontractor. It is speculated that this type of proportional liability may be extended to commercial construction contracts in the future.

This is a significant change. All new residential construction contracts should be carefully reviewed to make sure the contractual indemnification language comports with the new statutory requirements.