Having a construction lawyer on hand is always best if you are in a legal binding contract with a contractor of any kind. Construction disputes are often time consuming and expensive. Work stoppages delayed occupancy and accruing interest on loans are just some of the adverse consequences of disagreements over a construction project.
What is a Construction Lawyer?
A construction lawyer has training and experience dealing with the law related to construction contracts, claims, liens, arbitration, insurance, defects and law suits. A construction lawyer understands legal principles and methodologies concerning all areas of construction law. Knowing how to address the construction industry and approach the courts properly set a good construction lawyer above the rest.
Why Do I Need a Construction Lawyer?
It takes experience and education to know how to navigate through the process of resolving a construction dispute. A construction lawyer can help you draft contracts that will help minimize the risk of problems developing during your construction project, help you avoid paying twice when facing a claim of lien on funds and, should you find yourself facing a law suit, guide you through the process with good advice and dynamic representation. It is always best to consult a construction lawyer before it is too late. As the saying goes: Always better to be safe than sorry.
Hire a Construction Lawyer in North Carolina
Hiring a construction lawyer in North Carolina, especially in the Asheville and surrounding area, is simply a click or phone call away. The attorneys at Cannon Law, P.C. are experienced in advising property owners and contractors in the best practices to avoid construction disputes and in drafting construction documents that minimize construction disputes. In the event that a construction dispute arises we can provide effective representation of contractors and property owners at trial, arbitration or mediation. Click here to contact a construction lawyer in Western North Carolina.
Tips to Avoid Construction Disputes
A construction dispute can have severe consequences. A contractor that is not paid on a timely basis may be unable to meet obligations to suppliers and subcontractors and they may refuse to provide additional goods and services for the project. An owner may have to make extended payments on a construction loan or be unable to occupy the building when anticipated. In our experience, many construction disputes can be avoided by addressing the following issues before construction starts and as issues arise during construction.
- Have a detailed written contract. A written proposal or purchase order may be legally sufficient but it often lacks the detail necessary to avoid common disputes.
- Use correct names. Be sure that the contractor’s correct legal name and the owners of the property reflected in the Register of Deeds office are used on the contract. The North Carolina Secretary of State’s office permits an online search for a contractor or owners if the party is an entity required to be registered with the Secretary of State and not an individual. While the use of a trade name or incorrect name can sometimes be overcome, this is an issue that is best addressed before the contract is signed.
- “Cost plus” contracts should specify what costs are included. Disputes often arise in cost plus contracts when items are included as costs that were unexpected by the owner. Our firm has experience drafting cost plus contracts with specific references to cost items so that the chances for dispute are minimized.
- Know the difference between an estimate and a fixed price. A number of construction disputes arise because the property owner interpreted an estimate as a firm price. Any construction contract containing an estimate should be very careful to spell out that the estimate is not a guarantee of a final price and is subject to change. A “not to exceed” contract should be very clear in stating that the not to exceed price is the maximum amount that will be paid by the property owner.
- Use written documentation for change orders. Disputes over change orders are a common cause of construction litigation. A change order should describe the precise change that is requested, the party making the request, the cost of the change order (if known) along with any impact that the change order will have on the contract price paid by the property owner and the date of completion. Of course, any change order should be signed by all parties to the contract. If an architect is involved in the project be sure to have the architect sign off on the change order as well. Click here for a simple change order form that can assist you in documenting change orders.
- Getting ahead of draws. Although a lender may make period inspections of the construction project to insure that progress is being made in accordance with a draw schedule, neither the property owner nor the contractor should rely solely on the lender’s inspection to insure that draws paid are roughly equivalent to the work completed. If a contractor completes substantially more work than that paid for, it is often a sign that change orders have not been property discussed and documented or that there is an underlying lack of communication regarding what payment is due. Getting ahead of draws by the contractor can result in the contractor going for long period of time without payment if a dispute arises. As for the property owner, allowing a contractor to get substantially ahead of draw payments due increases the likelihood of work stoppages or a lien being filed because of time constraints. In drawing up the construction contract, it is important to be in communication with the lender to insure that the lender’s draw schedule is consistent with that set forth in the contract.
- Failure to specify allowances. Too many construction contracts include vague references to allowances for appliances, cabinets, carpeting, etc. Any allowances should be very specific as to the amount of the allowance, the effect on the contract price and the specific items that are included in such allowances. Allowances should also be realistic. Be sure to include any changes in allowances in a written change order.
- Use realistic dates. At the beginning of a construction project, the parties are typically excited about the project and eagerly anticipating completion. However, when delays inevitably occur in a construction project, the good will and optimism present at the beginning of the project may quickly disappear and a dispute can arise over the completion date for phases or for the entire project. It is critical to use dates that are realistic in order to avoid such disputes. Also, be sure that all subcontractors understand the importance of sticking to a schedule that will permit the project to be completed in accordance with the contract terms.
- Failure to keep good records. Record keeping is important even in simple fixed price contracts. Once a dispute arises, questions often develop regarding who worked when and for how long and what materials were ordered and used on the project. It is much more difficult to go back and attempt to find scraps of paper to support your position. Keep good records from the beginning of the project. Have a folder or large envelope where receipts, correspondence and all other documents related to the project can be readily available in the event of a dispute.
- Beware of arbitration clauses. Arbitration can be a useful means of resolving construction disputes. However, there are many factors that we take into account in drafting a contract in deciding whether or not to recommend an arbitration clause. These may include the size of the project, the location of the parties, the complexity of the project, and the venue where a dispute might go to trial in the absence of arbitration. Even if you decide that an arbitration clause is appropriate there are additional factors to consider. For example, while AAA provides excellent arbitration support, AAA arbitrations can be significantly more expensive than alternative means of dispute resolution. When you agree to arbitration, you usually waive your right to a trial by jury and all the protection that such a trial affords. This is a decision that should be carefully reached after consultation with an attorney.
- Consult a lawyer early. In just about every situation, it is less expensive to consult an attorney before a problem arises than after you are in the middle of a dispute. We can help you anticipate problems with your construction project and draft construction documents that minimize the possibility of such disputes. At the very least, consult an attorney before signing construction documents or before agreeing to anything unusual that you have been asked to do during the construction process.