What are my legal rights and options when a construction project is delayed?
Since delays are sometimes inevitable or outside the control of the builder or contractor, whether you have a valid claim for a construction project delay depends on several key determinations. The three primary considerations regarding delays include:
- Critical or non-critical? Will a particular delay (in window installation, for example) prevent the entire construction project from being completed on time? If not, then it is considered a non-critical delay.
- Excusable or inexcusable? If the contractor failed to work a reasonable amount of time without a valid reason (such as due to an injury or natural disaster), then it may be considered an inexcusable delay.
- Compensable or non-compensable? If the contractor's delay is excusable (out of their control), then they may get an extension of time, or even require additional compensation to complete the project.
Your legal options will likely hinge on those three factors—and how well they're addressed in your Construction Contract. You may consider sending a Breach of Contract Notice for egregious delays. For instance, some contracts include a liquidated damages clause that specifies the amount of money that may be assessed for a given delay or breach.
Whether a delay breaches a contract largely depends on the circumstances and the terms of the contract. If the agreed-upon deadline for construction has passed, or the delay is considered unreasonable, you may have justification for a claim unless it was out of the contractor's control.
Suppose a construction delay at your rental property impacts your tenants — for example, they had to relocate during construction and the date to move back in had to be pushed back. In that case, you may claim damages for lost revenue and associated losses, which may include any relocation costs you have provided for your tenants. However, if that delay was caused by issues you created by making changes to the plans, or caused by factors beyond anyone's control, you may want to ask a lawyer about your options.
How does it work if a delay is outside of my contractor's control?
Generally, if there is nothing the contractor can do about it, and your contract is silent on the issue, there may not be much that can be done. Contractors who are served with construction delay claims may respond with some of the following legal defenses:
- No damages. Depending on what is allowed in your state, a contract term may state that delays (minus any actual damages) are not compensable.
- Concurrent delays. Other factors led to the delay, such as time spent waiting for materials or for another contractor to complete their work.
- Force majeure. A Force Majeure clause lays out specific events (which may include pandemic-related complications) that release the contractor from liability for delays.
What can I do if my contractor disappears before or while working on a project?
Regardless of any specific completion deadline you may or may not have included in a Construction Contract, you have the expectation that the project will be completed within a reasonable amount of time. While the term "reasonable" may sound vague, courts may determine what that amount of time looks like based on the scope of the project, contractual terms, and the facts of the case. Typically, they will consider a failure to work on the project (absent any credible explanation or updates) as an act of abandonment. If unexplained absences and delays result in the project not being completed within a reasonable amount of time, then you may hold the contractor liable for breach of contract. The remedies you may be entitled to will vary from state to state; however, if some work was performed, often a contractor will still be entitled to pay for that work.
Do certain types of delays allow a contractor to receive an extension of time without a penalty?
As discussed earlier, a construction project delay may be considered excusable and thus not a contractual breach — if events beyond the contractor's control intervene, such as severe weather. In these instances, any additional time or other expenses required to complete the project are compensable to the contractor. In other words, the contractor may be allowed payment for additional time, work, and materials needed to finish the project.
If the delay is inexcusable (the contractor failed to complete the work without notice or reasonable excuse), then any additional time or materials needed to complete the project is non-compensable. This means they may not bill you additional hours for the extra time they need to complete the project. They also may be held liable for additional damages caused by the delay, such as lost revenue (if it's a rental property).
How can I legally protect myself and the construction project against delays?
The best way to protect yourself against construction project delays is to review your agreements with a lawyer before signing. Making sure your agreement has the right protections in place is the key to protecting yourself. Here are some of the most important elements to include in your contract in regard to potential delays:
- Time frame. An open-ended completion date may make it more difficult to hold builders accountable for delays to a project. Include dates for notice to proceed, start of construction, and project completion (including exceptions for delays outside of either party's control).
- Change orders. Construction projects rarely go exactly to plan. So make sure you address the process of approving change orders so both parties know how this may impact the time it takes to complete the project.
- Dispute resolution and termination. No matter how well you get along with your contractor, always address how disputes will be handled and which circumstances will allow you to terminate the contract.
- Force majeure. While these clauses typically protect contractors the most, it is in your best interest to read the fine print and ensure they are reasonably written and offer protections for both parties.
- Mechanics liens. Depending on the complexity of the project and how many contractors and subcontractors are involved, you may consider a retainage clause or a lien waiver in the event of disputes among different parties.
Remember, the best protection from a construction project delay—particularly if you stand to lose revenue on a rental property—is to make sure your contract protects you. If you are unsure about the risks of a particular project or contractor, be sure to reach out to a Rocket Lawyer network attorney for affordable legal advice.
This article contains general legal information and does not contain legal advice. Rocket Lawyer is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.