Construction Law
Common Causes of Construction Litigation
It is an unfortunate fact that litigation is common in the construction industry. Being able to sue anyone for just about anything ensures that companies will file lawsuits in response to problems as a way of forcing resolution. Your construction company will likely be sued many times over your tenure for a variety of reasons. In this article, a Denver contractor lawyer discusses the common causes of construction litigation and how you can try to avoid them.
Related: A Comprehensive Guide to Construction Defect Claims and How to Avoid Them
Work Defects
Work defects are one of the most common causes of construction litigation. The quality of the work that any contractor or subcontractor does is subject to review. If it does not meet the agreed-upon standard, then it’s likely that the company in charge of the project will file a lawsuit to remedy the situation.
This becomes an even bigger problem when the quality of work leads to defects. For example, errors in laying a foundation for a building can lead to cracks or instability. This, in turn, will lead to other problems that could threaten the stability of the entire building. The contractor will bear the brunt of the responsibility for this since it is responsible for managing the work and ensuring quality. However, the contractor may also sue the subcontractor for the cost of repairing additional problems and fixing the foundation.
The best way to avoid legal problems when it comes to work quality and work defects is to develop a method of prevention. This includes hiring subcontractors that have a reputation for doing good work, overseeing construction operations to ensure compliance with performance standards, and taking steps to assess work during and after the construction process. While it’s true that some defects will not show until years after construction is finished, many of the most common problems can be found and addressed before the project is finished. Taking a moment to make sure that the work done on the project meets quality standards can save construction companies and subcontractors a significant amount of time, money, and damage to their reputations.
It may also be useful to discuss how quality issues and defects will be handled before reaching legal action. Any construction companies are able to negotiate contracts where arbitration and other remedies are attempted before resorting to legal action. This can work out better for all parties involved. If you are unfamiliar with arbitration clauses or negotiating contracts, having one of our Denver construction lawyers write and review your contracts can help you avoid serious problems in the future.
Related: How to Protect Your Company During Construction Litigation
Delays and Abandonment
Delays are a common problem that all construction companies have to deal with. Delays can happen because of the construction company or other factors that are out of its control. Whatever the case, the contractor is usually held responsible for not meeting deadlines. This can lead to legal action to enforce the penalties outlined in contracts.
Abandonment is a more serious problem in which the construction company abandons the project that it was working on. Abandonment is uncommon in the construction industry, but it usually happens when there are significant problems in the project that make it impossible for the construction company to continue to work. For example, consistent delays or other interruptions to work can significantly increase the cost of the project beyond what the construction company can afford. Other companies may abandon projects for lack of payment and disputes with site owners.
There are several ways to deal with delays in abandonment and construction products. Some companies work with a Denver construction lawyer to develop a contract where delays that are out of the construction company’s control automatically adjust the deadlines throughout the project to compensate. This helps the construction company keep everything on schedule and avoid problems.
Another method of addressing the problem is to implement a dispute resolution process to handle problems before they become critical. Construction companies do not take abandoning projects lightly as it can have a major impact on their reputation; however, some companies may feel forced to do so when the situation gets out of hand. The dispute resolution process should give both parties a chance to address problems before they reach the point where the company feels that the only option is to abandon the project.
Related: Abandonment In A Construction Contract
Non-Payment
One of the most difficult parts of managing a construction project is handling payment for contractors and subcontractors. While construction companies have access to many systems designed to help them with this, there can still be problems. When a contractor or subcontractor goes unpaid, it can quickly lead to legal action.
In the case of subcontractors, not being paid for work that was done on a project can often lead to the subcontractor filing a lien. Having a lien on the property is a big problem for the property owner and can be a big problem for the construction company as well. Contractors have also been known to stop work on a project until payment has been received or take legal action to receive final payment.
Regardless of the situation, not receiving payment often pushes construction companies to take legal action. With so many expenses to cover and having to pay for most of those expenses upfront, construction companies do not have a lot of leeway when it comes to handling nonpayment issues. Allowing those issues to continue can lead to serious business-related issues for the company. If you want to avoid this, it may be best to discuss the situation with a Denver construction litigation lawyer to see what your options are other than taking legal action.
Construction litigation is something that every construction company will have to deal with at one point or another. Generally, you can get help from a legal ally to help you find a way of resolving the conflict before it becomes too serious. If you have questions about construction litigation or ways of preventing it, contact a Denver contractor lawyer from Cotney Attorneys & Consultants.
If you would like to speak with a Denver contractor lawyer, please contact us today.
Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.