Safeguarding Owners in Small/Midsize Construction Jobs

Construction agreements prepared by contractors often are very sketchy. Used throughout the country, the American Institute of Architecture ("AIA") construction agreement forms significantly improve on contractor forms and provide a fairly balanced allocation of responsibilities between the owner, architect and contractor. Currently, however, the AIA forms tend to be building industry-centric and, from the owner's standpoint, provide inadequate safeguards against contractor misconduct.

To improve the safeguards for owners, a committee of the New York State Bar Association, headed by Nancy Connery of the New York office, is drafting a form of rider intended to be attached to the form of agreement used for midsize construction projects, AIA Form A107. The rider will address common problems that arise during construction: the rider will expand the owner's rights if a violation is issued against the site because of the contractor's acts; provide the owner the right to suspend payments and offset damages against future payments if a mechanics lien is filed against the project for work for which payment has been made; provide a way for determining the "add on" charges for profit and administrative costs imposed for change orders; and address unrealistic insurance requirements imposed on owners. The proposed rider is expected to be published this year.

 

Related Attorney: Nancy Ann Connery