The process of completing new construction requires communication and adaptability from all involved parties. However, when a project fails to adhere to the agreed upon scope, price or details, both contractors and owners may have the grounds to pursue legal action against the other.
Helping you to navigate such claims, whether you are the plaintiff or the defendant, is in the purview of a legal professional. The following are the most common types of construction claims and how they arise.
How Construction Is Fertile Ground For Legal Action
Most construction projects have many moving parts and if these parts come into conflict, legal action can arise. This could happen because parties misunderstood each other, didn’t complete a task on time, went over budget or there was a breakdown in communication.
The timeline can be one of the most contentious parts of a construction contract. Sometimes, missing deadlines is unavoidable due to acts of God or other uncontrollable events. Other times, poor planning or change orders leave the project unfinished by the time that the task should have been completed. No matter the cause, failure to adhere to the timeline established in the original agreement is a common sticking point between parties.
Materials acquisition may pose an issue. For example, contractors may not order the materials they need in time, making them unable to start the project as anticipated. Supply chain issues can also cause shipping delays; even if the product was ordered in a timely manner, the job may not start right away.
Sometimes, the wrong items are ordered; contractors may not discover until they start work that they don’t have the materials they expected or that the materials do not work for the intended purpose. Similarly, the wrong materials are delivered entirely, or they are delivered in the wrong quantity.
If a builder exceeds the allocated budget, or the owner requests changes that do not adhere to the previously agreed upon expense limit, this can result in conflict. A lot of money is changing hands during these projects, often between multiple parties, which can lead to uncertainty and disagreements. When an owner does not receive what was promised and agreed to in the initial contract, they can sue the contractor(s) involved in the project.
Many of the legal consequences that arise are a result of a breakdown of communication between all parties. Architects, engineers, owners, general contractors and subcontractors are some of the more typically involved parties; disputes can arise between any two or more of these parties or all parties. In general, contractors are responsible for resolving issues between themselves and their subcontractors.
Keeping goals on time, on budget and on track is also about managing expectations. Contractors can encounter challenges in any of these areas and more. A more detailed look at some of the most common claims in construction include:
When The Completion Date Is Delayed
When the completion of a project exceeds the timeline, the owner may pursue a remedy. The timeline should be clearly delineated in the original contract, in conjunction with any extenuating circumstances (such as acts of God) that could impact when legal action is acceptable.
In general, even if the cause was unforeseen events, a delayed completion date can result in a legal claim. Permit issues, defective materials and weather or natural disasters may not be the fault of the contractor, but they may still delay the completion of a project and result in lost income or damages for the owner.
However, in some instances, a project is not finished on time due to direct negligence by the contractors in charge of the project. This could include their failure to work in a timely manner or properly plan the scope of the project. They may also fall short in other areas such as the quality of their work, in which case the owner may ask that they reconstruct sections to a proper standard.
The extra time spent correcting mistakes could delay the completion date, and even if they do successfully complete the project up to adequate standards, the contractor may still be liable for their failure to abide by the initial timeline.
Of course, all of this exists in conjunction with change orders, or other amendments to the original contract that change the scope of the work. If the owner decides before a project is complete that they would like more or different work performed, they can submit a change order. Alterations to the contract brought about by change orders can cause tension between parties, especially if the new changes are expected to fit into the preexisting timeline.
When The Price Changes
Prices on a contract can change over time due to a variety of factors. Most often, this is a shift due to changes in material costs, change orders (as mentioned previously), other unforeseen conditions or even the owner or contractor wanting to change the price.
Material costs can be particularly problematic for properly planning a construction task. While it is fairly simple to identify the cost of materials during an initial order, the problems usually arise if more materials are later required. Contractors may find that the price of the material has increased, the identical material is no longer available or shipping is more expensive.
Unforeseen conditions are another big culprit behind price changes in construction projects. Most often, these appear within the site itself. An example of this would be if the contractor started to build and discovered unsuitable soil conditions. This would change the scope of the project in a way that was not predicted and may result in higher costs to accommodate.
When The Property Is Damaged
Contractors may occasionally cause damage that creates a legal situation. Damage to the owner’s property may occur during construction, such as by hitting underground lines (sewer, internet, etc.) that must then be replaced. The contractor may claim that the area was not properly marked and claim the damage was an accident, while the owner may be asking for the contractor to pay for these damages which creates a legal dispute.
Owners have the right to specify any areas that they do not want to have changed or disturbed. For example, an owner may state that they want a specific tree to be preserved throughout construction. If a contractor cuts down or severely damages that tree, it may qualify as property damage from which the owner can seek legal remedy.
Contractors are not the only parties directly at fault; subcontractors can also cause damage. In this situation, it is the contractor who is typically responsible for subcontractor damage. Subcontractors may carry specific insurance to protect against this; however, with all of the involved parties, legal claims can quickly become complex.
Possible Secondary Claims
While the above scenarios represent the most common construction claims, other construction issues can also arise. This is why it is important to work with a legal professional during the contract drafting phase, to ensure such potential issues are addressed in advance:
- Contractor pollution: If a builder pollutes the area (such as by dumping chemicals into the ground), the owner may sue for damages.
- Defects in the construction: No matter which contractor is completing a project, the finished work must adhere to a minimum reasonable standard of quality. Construction must be finished according to the level of skill that is typical for that trade. Additionally, the contractor is required to exercise a reasonable degree of care, skill, and ability under similar conditions and like surrounding circumstances as is ordinarily employed by others in the same profession. If a contractor does not adhere to these standards and creates defective work, the contractor may be liable for damages, or be required to correct the work.
- Failure to comply with code: Every type of construction project must adhere to local municipal codes for how the building is expected to be constructed. This includes placing the main water shutoff valve in a certain protected location, ensuring there are enough exits and more. It is the responsibility of the contractor to stay current with changing codes and regulations and abide by them as required. If a building receives a code violation as a result of the contractor’s work, the landowner may make a claim to recover those damages and fix the problem.
- Failure to comply with plans and specifications: Most often, disagreements in this area will arise when a contractor does not comply with the details that the owner specified. This may include building the structure differently than the original plan or to different size specifications. If a building does not include amenities that were incorporated into a contract, this could be another fertile ground for legal action. If an owner believes that their contractor did not abide by the plans the parties agreed upon, they can file a legal claim to be provided with construction that meets the plans and specifications that were promised.
Trust The Professionals To Help You Navigate A Legal Claim During A Construction Project
Many issues can arise during a construction project, regardless of the size or scope, giving both the owner and the contractor the right to pursue a claim against the other. Materials may change cost, a number of issues could arise that impact the completion date or the workmanship may not adhere to the specifications that were agreed upon from the beginning of the project.
When one of your cases is in need of a construction expert, estimates, insurance appraisal or umpire services in defect or insurance disputes – please call Advise & Consult, Inc. at 888.684.8305, or email experts@adviseandconsult.net.