Construction law governs the relationships, contracts, and disputes arising from building projects. The field combines contract law, property law, regulatory compliance, and specialized remedies unique to the construction industry. Projects involve multiple parties with competing interests, creating fertile ground for disputes over scope, quality, timing, and payment.
Construction Contracts
Contract types allocate risk differently. Fixed-price contracts set total cost regardless of actual expenses. Cost-plus contracts reimburse actual costs plus markup. Guaranteed maximum price caps total cost while sharing savings.
Design-bid-build is traditional project delivery. The owner contracts separately with designer and contractor. Sequential phases extend timelines.
Design-build consolidates design and construction responsibility. Single-point responsibility simplifies coordination but reduces owner control over design.
Construction management at-risk puts the CM in the contractor role with guaranteed price. CM agency leaves the CM as owner’s advisor without price risk.
AIA and ConsensusDocs provide standard form contracts. Modified standard forms are common. Custom contracts address project-specific needs.
Payment Issues
Progress payments fund ongoing work. Applications for payment request amounts due. Owners verify work before paying.
Retainage withholds a percentage of each payment until project completion. Retainage protects against defects and incomplete work. Release at substantial completion is common.
Change orders modify contract scope and price. Proper documentation prevents disputes. Failure to follow change order procedures forfeits claims.
Pay-if-paid clauses condition subcontractor payment on owner payment to general contractor. Enforceability varies by state.
Pay-when-paid clauses create timing obligation, not condition. The general contractor must pay within reasonable time regardless of owner payment.
Mechanic’s Liens
Mechanic’s liens secure payment for work improving real property. The lien attaches to the property itself, not just the defaulting party.
Lien rights arise by statute. Strict compliance with statutory requirements is mandatory. Errors in notices, timing, or amounts can invalidate liens.
Preliminary notices preserve lien rights. Most states require notice to owners before work begins or within specified periods.
Lien waivers release lien rights in exchange for payment. Conditional waivers become effective upon payment. Unconditional waivers are immediately effective.
Lien priority determines payment order if property is sold. Recording date, relation back, and statutory priority rules affect who gets paid first.
Enforcement requires foreclosure action. Liens expire if not enforced within statutory periods. Successful foreclosure forces property sale.
Bond Claims
Payment bonds guarantee payment to subcontractors and suppliers. Sureties pay claims when contractors default.
Performance bonds guarantee project completion. Sureties complete work or pay completion costs when contractors default.
Miller Act requires payment and performance bonds on federal projects over $150,000. State little Miller acts impose similar requirements on state projects.
Bond claim procedures require notice to surety. Timing and content requirements are strict. Missing deadlines forfeits claims.
Surety defenses include lack of proper notice, fraud, material alteration of contract, and contractor defenses.
Construction Defects
Defect claims allege work fails to meet contract requirements, code standards, or reasonable quality expectations.
Express warranty claims are based on specific contract promises. Implied warranty claims invoke merchantability or fitness for purpose.
Negligence claims require showing breach of standard of care causing damages. Expert testimony establishes construction standards.
Statute of repose limits how long after construction claims can be brought. Most states impose 6 to 12 year limits.
Right to repair statutes require notice and opportunity to repair before litigation. Procedures vary by state.
Delay and Disruption
Delay claims seek compensation for extended project duration. Critical path analysis determines whether delays affected completion.
Excusable delays entitle contractors to time extensions but not necessarily money. Weather, owner-caused delays, and unforeseen conditions may be excusable.
Compensable delays entitle contractors to both time and money. Owner-caused delays and changes that extend duration are typically compensable.
Concurrent delay occurs when both parties contribute to delay simultaneously. Allocation of responsibility is heavily litigated.
Disruption differs from delay. Inefficient work caused by interference affects productivity even if completion date is unchanged.
Acceleration claims arise when owners demand early completion or refuse time extensions, forcing contractors to spend more to finish on time.
Government Construction
Federal procurement follows FAR regulations. Competitive bidding, small business preferences, and contract clauses are mandatory.
Disputes go to boards of contract appeals and Court of Federal Claims. Sovereign immunity limits remedies.
State and local procurement follows state law. Competitive bidding requirements apply to most public construction.
Prevailing wage requirements under Davis-Bacon and state laws mandate minimum wages on public projects.
False Claims Act exposure arises from fraud in government construction. Overbilling, defective work, and misrepresentation create liability.
For Service Members
Military construction involves specialized requirements beyond standard government contracting.
MILCON projects follow specific appropriation and approval processes. Congressional notification requirements apply to significant projects.
Contingency construction in operational areas has expedited procedures. Urgent needs override normal procurement timelines.
Base housing construction and privatized housing involve unique arrangements. Public-private partnerships deliver military family housing.
Veteran-owned construction businesses can access set-aside contracts. SDVOSB certification opens contracting opportunities.
Security requirements affect cleared facilities construction. Contractors need appropriate clearances. Construction documents may be classified.
Overseas construction under SOFA involves host nation considerations. Local law, labor, and materials issues differ from domestic projects.
Reserve duty can disrupt construction business operations. Service members who own construction businesses need contingency plans for activation.
A military attorney understands MILCON requirements, the intersection of construction law with government contracting, and how military service affects construction business ownership.
Disclaimer
This article is provided for general informational and educational purposes only. Nothing in this article constitutes legal advice, and no attorney-client relationship is formed by reading this content.
Construction law involves complex contracts, strict statutory requirements, and significant financial stakes. Lien and bond claim deadlines are unforgiving. The information presented here may not reflect current law in any jurisdiction or apply to any specific project.
Do not rely on this article to make legal decisions. Construction disputes require prompt attention to preserve rights. Delay in addressing issues can forfeit claims.
If you are involved in a construction dispute or project, consult with a qualified construction attorney who can evaluate your specific situation.
The authors, publishers, and distributors of this content expressly disclaim any liability for actions taken or not taken based on this information. Reading this article does not create an attorney-client relationship with any person or entity.
For military construction projects or veteran-owned construction businesses, the intersection of construction law with government contracting and military regulations requires specialized counsel.