Construction Contractors—Tips to Avoid Construction Defects and Litigation
The attorneys at Millin & Millin understand that construction litigation can be a costly and time-consuming issue for you as a contractor, builder, or developer. Whether you are a General Contractor or a Subcontractor, liabilities laws that can still come into effect after years, can mean unexpected lawsuits for mistakes you aren’t even responsible for.
In the state of Texas, an action for damages against a person who constructs/repairs an improvement must be brought within 10 years of substantial completion. If the claimant presents a written claim for damages during the 10-year period, the period is extended for two years from the date of the claim. If injury occurs during the 10th year, the claimant may bring suit up to two years after the day the cause of action accrues. TEX. CIV. PRAC. & REM. CODE ANN. §16.009.
Lawsuits vary from deviations from the building code, to issues with architectural or engineering plans, and on to defective materials or products sold to you by others. Unfortunately, suits against your company can emerge from a number of sources, so you need to be proactive in your fight against construction defect lawsuits.
This also means that the cost of doing business has increased. Insurance costs have grown from anywhere between 15 to 50 percent, with many insurers canceling all their contractor customers.
As a contractor, you’ll want to take the necessary steps to avoid liability issues. Our team at Millin & Millin has the knowledge and experience to thoroughly represent you in your construction litigation needs, but our best advice can be to try and avoid construction litigation in its entirety.
Consider the following guidelines to protect yourself from disputes:
- The most effective advice is simply to build the project right the first time. Do not attempt to shorten project length by cutting corners—you only jeopardize the project and risk litigation further down the line.
- Make sure that potential customers see examples of your work before you begin their assignment.
- Written contracts are essential; surprisingly, one of the biggest causes of homeowner-contractor disputes is a lack of a written contract or an improperly developed contract. Your time and money will be well spent on obtaining the assistance of a law firm like Millin & Millin to help you develop a contract. In fact, once this contact has been created, you can continue to utilize it as a template.
- Prior to initiating construction, ensure that you and your client have worked out all of the details. From work to be performed to payment schedules, on to expectations for when the project will start and tentative finish dates. Finalizing these details will help with the development of the previously mentioned contract.
- Before construction begins, make sure you know what building permits will be required and take them out in a timely manner. Only do work after the permit has been issued.
- It is an industry best practice to put everything down in writing. One example is to create a list of “allowance items” and the allotted amount for the items. This will help you to create a budget for items that have not yet been selected. If a particular item exceeds the allowance then it is the responsibility of the client to pay the additional amount.
- If there are any changes to the contract then make sure to put those in writing as well and have every party involved signed off. Never change anything on the project without the approval and signature of your customer.
- Another vital detail to record is the type of materials that you are utilizing for construction and the expectation of that material. Customers may request for you to use a material of lesser quality to complete the project, but this can ultimately lead to construction defects and a lawsuit. If the customer wants a change in the materials used, have them sign off on this, and record the change. Customers wanting to save money doesn’t always equate to a better deal for you.
- Again, always record and retain project records. Include photos, video, legal paperwork, documents from visits, and notes from conversations with the clients for at least 10 years.
- Stay informed about products that are being used in the construction project. By keeping up-to-date on reports of these problem materials, you can avoid lawsuits further down the road. Certain newer materials are prone to mold and can be extremely expensive to repair. Insurance claims are in the millions for issues of this nature.
- Make sure engineers you are working with sign off on your plans and ensure that they have professional liability insurance. You should also be capable of obtaining a certificate of insurance from the firm.
- Ensure that every subcontractor is insured and obtain a certificate of insurance from them every year that the project continues. You should also make sure that you also named as an additional insured. Check to make sure that their liabilities are the same as yours. Failure to do so can mean your insurance company pays for the damage the subcontractor did.
- It is in your own best interest to evaluate the exposures in contractual agreements you may have with other contractors. Unfortunately, not everyone blames a fair game.
- Ensure that every employee is properly trained.
- Always make sure that all work is done to code, as any slip on your behalf (even if requested by the client) means you are still liable.
- Continuous on-site supervision is essential. Document these visits and have a checklist of where the project is and what needs to be completed. Notify your client immediately about any delays and explain to them the processes you are taking to handle the issues.
- Maintain good communication with your client throughout the project. Answer calls and emails in timely-manner, as failing to do so will only lead to a frustrated and angry customer who may be more liable to sue.
- A healthy cash flow is vital for any project to get the construction going.
- Do a walkthrough of the final product and create a checklist of any corrections that need to be made. This is an excellent manner to maintain healthy relationships with your customers.
Millin & Millin is a law firm that you can trust with your construction-related disputes.
If you have done your job directly, there’s no reason you should be concerned about an unnecessary lawsuit against you. Do not let a construction-related dispute become a burden in your life.