Construction Law: Contracts, Disputes, and Liability on Construction Projects

 

Construction law governs the legal relationships among the many parties involved in construction projects, including property owners, general contractors, subcontractors, architects, engineers, suppliers, and lenders. Construction projects are complex undertakings that involve significant financial risks and frequent disputes. Understanding the legal framework that governs construction projects is essential for all parties to protect their interests and manage risk effectively.

 

At bbhinc.net you will find a legal resource covering construction law, construction contracts, construction defect litigation, mechanic’s lien law, and the full range of legal issues that arise in the construction industry.

 

The Construction Contract: The Foundation of the Project

The construction contract is the most important document on any construction project. It defines the scope of work, the contract price and payment terms, the schedule for completion, the allocation of risk between the owner and the contractor, the procedure for changes to the work, and the mechanisms for resolving disputes.

 

Construction law is a branch of law that deals with matters relating to building construction, engineering, and related fields. The American Institute of Architects (AIA) and the Engineers Joint Contract Documents Committee (EJCDC) publish widely used standard form construction contracts that represent a balanced allocation of risks between owners and contractors. These standard forms can be modified to reflect the specific requirements of a project, but modifications must be made carefully to avoid creating unintended imbalances.

 

Construction Defect Claims

Construction defect claims arise when a completed building or structure has deficiencies that affect its value, habitability, or safety. Defects can result from design errors, workmanship deficiencies, the use of defective materials, or failures in the building’s systems (such as roofing, waterproofing, or mechanical systems).

 

The statutes of limitations and statutes of repose applicable to construction defect claims vary significantly between jurisdictions and can be complex. The claim must be brought within the applicable period after the defect is discovered or should have been discovered, subject to the outer limit imposed by the statute of repose.

 

Mechanic’s Lien Law

Mechanic’s lien law provides contractors, subcontractors, and suppliers with a security interest in the property they have improved to secure payment for their work or materials. A mechanic’s lien effectively clouds the title to the property, making it difficult or impossible to sell or refinance until the lien is resolved.

 

The procedures for establishing and enforcing a mechanic’s lien are highly technical and strictly enforced. A party that fails to comply with the required procedures may lose its lien rights. Critical steps typically include providing preliminary notice to the owner and lender at the beginning of the project, filing the lien claim within a specified period after completion of work, and filing suit to enforce the lien within another specified period.

 

Delay and Disruption Claims

Construction projects frequently experience delays and disruptions that affect the cost and schedule of the work. The legal rights of contractors who experience delay depend on the cause of the delay and the provisions of the contract. Owner-caused delays typically entitle the contractor to both additional time and additional compensation. Force majeure events may entitle the contractor to additional time but not additional compensation.

 

Dispute Resolution in Construction

Construction disputes can be resolved through negotiation, mediation, arbitration, or litigation. Many construction contracts require the parties to attempt resolution through negotiation and mediation before proceeding to arbitration or litigation.