What Legal Options Do You Have with Delayed Construction Projects?

Every contractor knows that having something unexpected come up on a construction project is more a rule than an exception. The more complex and high-end the project, the more likely it is—change orders, supply delays, and other factors outside of your control can make a job drag on well past its projected completion date. But what happens when the project owner blames you and refuses to pay? Understanding the factors that form the basis of a valid claim for a construction delay and how you can protect yourself with a well-written contract can help reduce the likelihood that you’ll end up fighting an unfair claim in court or walking away from a project without full payment.

What Caused the Delay?

A building or remodeling of a commercial project or a luxury home is a complicated proposition: coordinating subcontractors in the right sequence, making sure all required materials are on hand at the right time, coping with unexpected conditions at the site, and integrating change orders into the original plans. Sometimes all of this can be accomplished without extending the timeline of the project. However, when it can’t, you may be threatened with legal action by a frustrated client. Just because a project runs long, however, does not mean they have a valid basis for a claim. The three factors that go into determining if there are grounds for a claim are:

• Is the delay critical or non-critical? If a particular delay will prevent the entire project from being completed on time, it is critical.
• Is the delay excusable or inexcusable? If you weren’t able to work a reasonable amount of time on the project, was it for a valid reason, such as injury, acts of God, or a natural disaster? If so, the delay is excusable.
• Is the delay compensable or non-compensable? If delays on the project were out of your control, you may be entitled to an extension of time or even additional compensation to complete the work.

If the project owner feels that your actions (or inactions) caused a delay that could have been avoided, they may attempt to sue you for breach of contract. Whether they’re able to successfully move ahead with such a claim can depend on how well the factors above are addressed in your construction contract.

Protecting Your Rights

A contract with the right protections in place is one of the best ways to both set expectations for a project and make it less likely you’ll end up in court over a disagreement with your client. Among the most important elements to address in your agreement are:

Time frame: The overall time frame agreed to in the contract should be reasonable for the amount of work included in the original plans. Dates for notice to proceed, start of construction, and project completion should be laid out, as well as exceptions for delays outside of your control.

Change orders: The process of addressing any change orders should be detailed so the project owner understands how mid-course corrections can impact the overall timeline of the project.

Dispute resolution and termination: If disputes arise, your contract should specify the process by which they’ll be handled, and which circumstances will allow a termination of the agreement.

Force majeure: This clause offers protection if an unforeseen and unavoidable catastrophe strikes, such as severe weather, or a pandemic. You’ll want to be sure this is reasonably written to protect you against unrealistic expectations.

• Change orders: The process of addressing any change orders should be detailed so the project owner understands how mid-course corrections can impact the overall timeline of the project.

• Dispute resolution and termination: If disputes arise, your contract should specify the process by which they’ll be handled, and which circumstances will allow a termination of the agreement.

• Force majeure: This clause offers protection if an unforeseen and unavoidable catastrophe strikes, such as severe weather, or a pandemic. You’ll want to be sure this is reasonably written to protect you against unrealistic expectations.

• Mechanics liens: A mechanic’s lien preserves your right to seek payment for work you performed but were not compensated for; the project owner won’t be able to sell, refinance, or take a loan against property that is encumbered by a lien. Be wary of any clauses that seek to limit or eliminate your right to file a lien in the case of a dispute. However, be very careful as Mechanics Liens have very strict time limits that if not observed, will result in losing the right to lien.

Consult an Experienced Construction Law Attorney Before Problems Arise

Too often builders find out their contracts offer inadequate protection the hard way—when their clients withhold payment or initiate legal action over delays that weren’t the builder’s fault. Whether you’re hoping to avoid this outcome, or you’ve already been dragged into a legal dispute, Ghassemian Law Group can help. Our experienced construction prevention attorneys can draft the right contract and guide you through the course of construction. On the other hand, if you find yourself faced with a lawsuit, our litigation attorneys have the expertise to vigorously defend your rights, seeking the most cost-effective resolution possible in your case and guarding against legal missteps that could hurt your chances of getting properly compensated. To find out how we can protect you before things go wrong, call us today.

This article is informational only and meant to provide guidance. It is not meant to be legal advice and it does not create an attorney-client relationship. For what to do in your specific situation, please consult with a qualified Construction Law attorney.