Common lien disputes involving general contractors are a frequent headache in the construction world. These disputes, often boiling down to disagreements over payment, can tie up projects, strain relationships, and lead to costly legal battles. Lets explore some of the most common flashpoints.
One of the biggest sources of conflict is the "pay-when-paid" clause. General contractors often include these clauses in their subcontracts, stipulating that theyll pay subcontractors only after receiving payment from the property owner. While this seems to protect the general contractor, it can leave subs in a precarious position if the owner delays payment, even if the subcontractor has completed their work perfectly. Disputes arise over whether the clause is even enforceable in a particular jurisdiction, and whether the general contractor made reasonable efforts to collect from the owner.
Another common issue revolves around "change orders." Construction projects rarely go exactly as planned. Unforeseen site conditions, design modifications, or even just owner whims can necessitate changes to the original scope of work. Disagreements over whether a change order was properly authorized, the scope of the work involved, or the agreed-upon price can quickly escalate into a lien dispute. Subcontractors might claim they werent paid for extra work, while general contractors might argue the work was part of the original agreement. Clear communication and meticulous documentation are key to avoiding these headaches.
Then theres the issue of defective work. If a subcontractors work is deemed substandard, the general contractor might withhold payment to cover the cost of repairs. Naturally, the subcontractor might dispute the claim of defective work, arguing that the issue stems from faulty design, owner interference, or some other factor beyond their control. These disputes often require expert testimony to determine the cause of the defect and who bears responsibility.
Finally, "overstated liens" are another common source of contention. Sometimes, a subcontractor might inflate the amount claimed in a lien, perhaps to include disputed change orders, delay damages, or other costs. General contractors, and certainly owners, will challenge such liens, arguing they are excessive and potentially fraudulent. Accurately calculating the lien amount is crucial, as overstating it can weaken the subcontractors position and damage their reputation.
These common lien disputes highlight the importance of clear contracts, proactive communication, and diligent record-keeping in the construction industry. By addressing potential issues early and working collaboratively, parties can often avoid the time, expense, and stress of a full-blown legal battle.
Managing and resolving lien claims is a critical aspect of a general contractors job. Nobody wants to deal with them, but theyre a reality in the construction world, and knowing how to navigate these choppy waters can save you significant time, money, and stress. Essentially, a lien is a legal claim against a property, filed by someone who hasnt been paid for work or materials they provided for a project. As the general contractor, youre often caught in the middle of these disputes, even if youve already paid the subcontractor in question.
One of the most effective ways to manage lien claims is to prevent them in the first place. This starts with clear, comprehensive contracts with all subcontractors and suppliers. These contracts should detail payment terms, deadlines, and dispute resolution procedures. Regular communication with your subs is equally important. Stay on top of their progress and address any payment concerns promptly. A simple phone call to check in can often prevent a small issue from escalating into a full-blown lien claim. Maintaining thorough documentation, including payment records, change orders, and signed-off invoices, is also crucial. This documentation serves as proof of payment and can be invaluable in defending against a lien claim.
When a lien claim does arise, swift action is key. First, understand the validity of the claim. Review your contract and payment records. Did you pay the subcontractor? Was the work completed satisfactorily? If the claim seems unjustified, you have grounds to dispute it. Communicate directly with the claimant to try and resolve the issue amicably. Often, a simple misunderstanding can be resolved through open communication. Mediation is another option to consider before resorting to legal action. A neutral third party can help facilitate a resolution that works for both sides.
If these efforts fail, you may need to take legal action. This might involve filing a lawsuit to challenge the lien or negotiating a settlement. Legal battles can be costly and time-consuming, so exploring all other avenues beforehand is highly recommended. Remember, a lien can cloud the property title and prevent its sale or refinancing, impacting not only you but also the property owner.
Finally, consider using tools like joint checks and payment bonds to further mitigate your risk. Joint checks, made out to both the subcontractor and the supplier, ensure materials are paid for directly. Payment bonds protect the owner and general contractor from liens filed by subcontractors who havent been paid. While managing and resolving lien claims can be a complex process, proactive measures and a clear understanding of your legal rights and responsibilities can help you navigate these situations effectively and protect your business.
Preventing Construction Lien Disputes: Best Practices for General Contractors
Construction liens are a powerful tool for subcontractors and suppliers to ensure payment for their work and materials. However, they can also be a major headache for general contractors, leading to project delays, strained relationships, and costly legal battles. Fortunately, many lien disputes can be avoided by implementing proactive best practices throughout the project lifecycle.
Clear communication is paramount. From the outset, general contractors should establish clear payment terms in their contracts with all parties involved. This includes outlining payment schedules, outlining the documentation required for payment applications, and specifying the process for resolving disputes. Regular communication with subcontractors and suppliers regarding payment status can prevent misunderstandings and address potential issues before they escalate.
Thorough documentation is another key element. Maintaining meticulous records of all payments made, change orders, and communications related to payment is crucial. This documentation serves as evidence in case a dispute arises and helps demonstrate good faith effort on the part of the general contractor. Using software or online platforms to manage these records can streamline the process and ensure accuracy.
Early and frequent communication about potential problems is also essential. If a subcontractor expresses concerns about payment or if a dispute arises regarding the scope of work, addressing the issue promptly can prevent it from snowballing into a lien claim. Open dialogue fosters trust and encourages collaborative problem-solving.
Joint checks, where the general contractor and the property owner issue a check jointly payable to the subcontractor or supplier, can also be a valuable tool. This ensures that payments reach the intended recipients and reduces the risk of misappropriation of funds.
Finally, consider using alternative dispute resolution methods, such as mediation or arbitration, to resolve disagreements before they escalate into formal legal proceedings. These methods can be faster, less expensive, and less adversarial than litigation.
By proactively implementing these best practices, general contractors can significantly reduce the risk of construction lien disputes. This not only protects their bottom line but also fosters positive working relationships and contributes to successful project completion. While liens are a necessary mechanism for protecting subcontractors and suppliers, open communication, meticulous documentation, and proactive problem-solving can minimize their necessity and keep projects on track.
Construction projects, by their very nature, are complex beasts. A lot can go wrong, from cost overruns and delays to disagreements over the quality of work. When things do go south, general contractors often find themselves caught in the middle, and understanding their legal recourse and dispute resolution options regarding construction liens is crucial.
One of the most powerful tools in a general contractors arsenal is the mechanics lien (also known as a construction lien). This lien allows the contractor to place a claim on the property itself as security for payment for labor or materials provided. Its a way to ensure they get compensated for the work theyve done, even if the property owner fails to pay. The specific requirements for filing a lien vary by state, so getting local legal advice is paramount. Missing a deadline or not following the proper procedure can invalidate the lien.
However, filing a lien isnt the only option. Mediation and arbitration are often quicker and less expensive than going to court. Mediation involves a neutral third party who helps facilitate communication and negotiation between the disputing parties. The mediator doesnt make a decision but helps the parties reach a mutually acceptable solution. Arbitration, on the other hand, is more like a simplified trial. An arbitrator hears evidence and arguments and then issues a binding decision. Many contracts include mandatory arbitration clauses, so its important to be aware of these provisions.
Of course, litigation is sometimes unavoidable. If other dispute resolution methods fail, taking the matter to court might be the only way to resolve the issue. This can be a lengthy and expensive process, so its generally considered a last resort. A general contractor needs to carefully consider the potential costs and benefits before pursuing litigation.
Finally, a general contractor should always prioritize clear communication and documentation throughout the project. Maintaining detailed records of contracts, change orders, payments, and communications can help prevent disputes from arising in the first place. And, if a dispute does occur, having a strong paper trail can significantly strengthen the contractors position. Prevention is always better than cure, and in the construction world, this means being proactive and organized.
The concept of home improvement, home renovation or remodeling is the process of renovating, making improvements or making additions to one's home.[1] Home improvement can consist of projects that upgrade an existing home interior (such as electrical and plumbing), exterior (masonry, concrete, siding, roofing) or other improvements to the property (i.e. garden work or garage maintenance/additions). Home improvement projects can be carried out for a number of different reasons; personal preference and comfort, maintenance or repair work, making a home bigger by adding rooms/spaces, as a means of saving energy, or to improve safety.[2]
While "home improvement" often refers to building projects that alter the structure of an existing home, it can also include improvements to lawns, gardens, and outdoor structures, such as gazebos and garages. It also encompasses maintenance, repair, and general servicing tasks. Home improvement projects generally have one or more of the following goals:[citation needed]
Maintenance projects can include:
Additional living space may be added by:
Homeowners may reduce utility costs with:
The need to be safer or for better privacy or emergency management can be fulfilled with diversified measures which can be improved, maintained or added. Secret compartments and passages can also be conceived for privacy and security.
Home or residential renovation is an almost $300 billion industry in the United States,[5] and a $48 billion industry in Canada.[6][full citation needed] The average cost per project is $3,000 in the United States and $11,000–15,000 in Canada.
Professional home improvement is ancient and goes back to the beginning of recorded civilization. One example is Sergius Orata, who in the 1st century B.C. is said by the writer Vitruvius (in his famous book De architectura) to have invented the hypocaust. The hypocaust is an underfloor heating system that was used throughout the Roman Empire in villas of the wealthy. He is said to have become wealthy himself by buying villas at a low price, adding spas and his newly invented hypocaust, and reselling them at higher prices.[7]
Perhaps the most important or visible professionals in the renovation industry are renovation contractors or skilled trades. These are the builders that have specialized credentials, licensing and experience to perform renovation services in specific municipalities.
While there is a fairly large "grey market" of unlicensed companies, there are those that have membership in a reputable association and/or are accredited by a professional organization. Homeowners are recommended to perform checks such as verifying license and insurance and checking business references prior to hiring a contractor to work on their house.
Because interior renovation will touch the change of the internal structure of the house, ceiling construction, circuit configuration and partition walls, etc., such work related to the structure of the house, of course, also includes renovation of wallpaper posting, furniture settings, lighting, etc.
Aggregators are companies that bundle home improvement service offers and act as intermediary agency between service providers and customers.
Home improvement was popularized on television in 1979 with the premiere of This Old House starring Bob Vila on PBS. American cable channel HGTV features many do-it-yourself shows, as does sister channel DIY Network.[8] Danny Lipford hosts and produces the nationally syndicated Today's Homeowner with Danny Lipford. Tom Kraeutler and Leslie Segrete co-host the nationally syndicated The Money Pit Home Improvement Radio Show.
Movies that poked fun at the difficulties involved include: Mr. Blandings Builds His Dream House (1948), starring Cary Grant and Myrna Loy; George Washington Slept Here (1942), featuring Jack Benny and Ann Sheridan; and The Money Pit (1986), with Tom Hanks and Shelley Long. The sitcom Home Improvement used the home improvement theme for comedic purposes.
A contractor[1][2] (North American English) or builder (British English),[3][4] is responsible for the day-to-day oversight of a construction site, management of vendors and trades, and the communication of information to all involved parties throughout the course of a building project.[5]
In the United States, a contractor may be a sole proprietor managing a project and performing labor or carpentry work, have a small staff, or may be a very large company managing billion dollar projects. Some builders build new homes, some are remodelers, some are developers.[6]
A general contractor is a construction manager employed by a client, usually upon the advice of the project's architect or engineer.[7] General Contractors are mainly responsible for the overall coordination of a project and may also act as building designer and construction foreman (a tradesman in charge of a crew).
A general contractor must first assess the project-specific documents (referred to as a bid, proposal, or tender documents). In the case of renovations, a site visit is required to get a better understanding of the project. Depending on the project delivery method, the general contractor will submit a fixed price proposal or bid, cost-plus price or an estimate. The general contractor considers the cost of home office overhead, general conditions, materials, and equipment, as well as the cost of labor, to provide the owner with a price for the project.
Contract documents may include drawings, project manuals (including general, supplementary, or special conditions and specifications), and addendum or modifications issued prior to proposal/bidding and prepared by a design professional, such as an architect.The general contractor may also assume the role of construction manager, responsible for overseeing the project while assuming financial and legal risks.There are several types of risks can occur include cost overruns, delays, and liabilities related to safety or contract breaches.
Prior to formal appointment, the selected general contractor to whom a client proposes to award a contract is often referred to as a "preferred contractor".[8]
A general contractor is responsible for providing all of the material, labor, equipment (such as heavy equipment and tools) and services necessary for the construction of the project. A general contractor often hires specialized subcontractors to perform all or portions of the construction work. When using subcontractors, the general contractor is responsible for overseeing the quality of all work performed by any and all of the workers and subcontractors.
It is a best practice for general contractors to prioritize safety on the job site, and they are generally responsible for ensuring that work takes place following safe practices.
A general contractor's responsibilities may include applying for building permits, advising the person they are hired by, securing the property, providing temporary utilities on site, managing personnel on site, providing site surveying and engineering, disposing or recycling of construction waste, monitoring schedules and cash flows, and maintaining accurate records.[9]
The general contractor may be responsible for some part of the design, referred to as the "contractor's design portion" (JCT terminology).[10]
In the United Kingdom, Australia and some British Commonwealth countries, the term 'general contractor' was gradually superseded by builders during the early twentieth century.[citation needed] This was the term used by major professional, trade, and consumer organizations when issuing contracts for construction work, and thus the term 'general contractor' fell out of use except in large organizations where the main contractor is the top manager and a general contractor shares responsibilities with professional contractors.
General contractors who conduct work for government agencies are often referred to as "builders". This term is also used in contexts where the customer's immediate general contractor is permitted to sub-contract or circumstances are likely to involve sub-contracting to specialist operators e.g. in various public services.
In the United States and Asia, the terms general contractor (or simply "contractor"), prime contractor and main contractor are often interchangeable when referring to small local companies that perform residential work. These companies are represented by trade organizations such as the NAHB.[11]
Licensing requirements to work legally on construction projects vary from locale to locale. In the United States, there are no federal licensing requirements to become a general contractor, but most US states require general contractors to obtain a local license to operate. It is the states' responsibility to define these requirements: for example, in the state of California, the requirements are stated as follows:
With a few exceptions, all businesses or individuals who work on any building, highway, road, parking facility, railroad, excavation, or other structure in California must be licensed by the California Contractors State License Board (CSLB) if the total cost of one or more contracts on the project is $500 or more.
In every state that requires a license, a surety bond is required as part of the licensing process, with the exception of Louisiana, where bonding requirements may vary in different parishes. Not all states require General Contractor licenses - these include Vermont, New Hampshire and Maine, among others.
Some general contractors obtain bachelor's degrees in construction science, building science, surveying, construction safety, or other disciplines.
General Contractors often learn about different aspects of construction, including masonry, carpentry, framing, and plumbing. Aspiring general contractors communicate with subcontractors and may learn the management skills they need to run their own company.
Experience in the construction industry as well as references from customers, business partners, or former employers are demanded. Some jurisdictions require candidates to provide proof of financing to own their own general contracting firm.
General Contractors often run their own business. They hire subcontractors to complete specialized construction work and may manage a team of plumbers, electricians, bricklayers, carpenters, iron workers, technicians, handymans, architects and roofers. General Contractors build their business by networking with potential clients, buying basic construction tools, and ensuring that their subcontractors complete high-quality work. General Contractors do not usually complete much construction work themselves, but they need to be familiar with construction techniques so they can manage workers effectively. Other reasons include access to specialist skills, flexible hiring and firing, and lower costs.
A property owner or real estate developer develops a program of their needs and selects a site (often with an architect). The architect assembles a design team of consulting engineers and other experts to design the building and specify the building systems. Today contractors frequently participate on the design team by providing pre-design services such as providing estimations of the budget and scheduling requirements to improve the economy of the project. In other cases, the general contractor is hired at the close of the design phase. The owner, architect, and general contractor work closely together to meet deadlines and budget. The general contractor works with subcontractors to ensure quality standards; subcontractors specialise in areas such as electrical wiring, plumbing, masonry, etc.
Building design, also called architectural design, refers to the broadly based architectural, engineering and technical applications to the design of buildings. All building projects require the services of a building designer, typically a licensed architect. Smaller, less complicated projects often do not require a licensed professional, and the design of such projects is often undertaken by building designers, draftspersons, interior designers (for interior fit-outs or renovations), or contractors. Larger, more complex building projects require the services of many professionals trained in specialist disciplines, usually coordinated by an architect.
An architect is a person trained in the planning, design and supervision of the construction of buildings. Professionally, an architect's decisions affect public safety, and thus an architect must undergo specialized training consisting of advanced education and a practicum (or internship) for practical experience to earn a license to practice architecture. In most of the world's jurisdictions, the professional and commercial use of the term "architect" is legally protected.
Building engineering typically includes the services of electrical, mechanical and structural engineers.
A draftsperson or documenter has attained a certificate or diploma in architectural drafting (or equivalent training), and provides services relating to preparing construction documents rather than building design. Some draftspersons are employed by architectural design firms and building contractors, while others are self-employed.[1]
In many places, building codes and legislation of professions allow persons to design single family residential buildings and, in some cases, light commercial buildings without an architectural license. As such, "Building designer" is a common designation in the United States, Canada, Australia and elsewhere for someone who offers building design services but is not a licensed architect or engineer.
Anyone may use the title of "building designer" in the broadest sense. In many places, a building designer may achieve certification demonstrating a higher level of training. In the U.S., the National Council of Building Designer Certification (NCBDC),[2] an offshoot of the American Institute of Building Design,[3] administers a program leading to the title of Certified Professional Building Designer (CPBD). Usually, building designers are trained as architectural technologists or draftspersons; they may also be architecture school graduates that have not completed licensing requirements.[4]
Many building designers are known as "residential" or "home designers", since they focus mainly on residential design and remodeling.[5] In the U.S. state of Nevada, "Residential Designer" is a regulated term for those who are registered as such under Nevada State Board of Architecture, Interior Design and Residential Design, and one may not legally represent oneself in a professional capacity without being currently registered.
In Australia where use of the term architect and some derivatives is highly restricted but the architectural design of buildings has very few restrictions in place, the term building designer is used extensively by people or design practices who are not registered by the relevant State Board of Architects. In Queensland the term building design is used in legislation which licenses practitioners as part of a broader building industry licensing system. In Victoria there is a registration process for building designers and in other States there is currently no regulation of the profession. A Building Designers Association operates in each state to represent the interests of building designers.
Building surveyors are technically minded general practitioners in the United Kingdom, Australia and elsewhere, trained much like architectural technologists. In the UK, the knowledge and expertise of the building surveyor is applied to various tasks in the property and construction markets, including building design for smaller residential and light commercial projects. This aspect of the practice is similar to other European occupations, most notably the geometra in Italy, but also the géomètre in France, Belgium and Switzerland. the building surveyors are also capable on establishment of bills of quantities for the new works and renovation or maintenance or rehabilitation works.[6]
The profession of Building Surveyor does not exist in the US. The title Surveyor refers almost exclusively to Land surveyors. Architects, Building Designers, Residential Designers, Construction Managers, and Home Inspectors perform some or all of the work of the U.K. Building Surveyor.
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