TEN NEW YEAR’S RESOLUTIONS FOR CONTRACTORS-2021

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   As I sit down to write my annual list of resolutions for contractors, I am amazed at how much things changed in 2020. Construction was going well and then, in March 2020, COVID-19 hit. At first, we thought it was going to be a disaster for the construction industry. States, cities and towns shut down projects and many applied for PPP loans. Then, something amazing happened. Construction was considered an essential service and everyone was back to work.  That said, the work world changed: companies were donating their PPE to frontline workers, COVID-19 protocols had to be followed and paperwork had to be filed. Everyone was scrambling to figure out how to comply and keep their businesses going. So, you may or may not ask, what was I, as a construction lawyer doing? I spent March and April thinking about the new risks contractors/construction companies were facing and developing contract clauses to protect the industry. I wrote a number of blog posts with clauses to add to your contra

The Punch List Contract Clause

One of the ways to prevent a "neverending" punch list is to clearly define in your contract what constitutes punch list items and what does not.

Here is one sample clause:

1. PUNCHLIST: Thirty-day break-in period. During the first thirty (30) days after the dates of Substantial Completion, the Owner may note minor malfunctions or defects such as sticking doors, nail pops, etc. The Owner should maintain a list of these malfunctions and defects as they occur, and must submit in writing not later than forty-five (45) days after the date of substantial completion. All defects, which are determined to be covered under this warranty, shall be corrected within sixty (60) days. Any defect or malfunction which occurs after the thirty (30) day break-in period shall be classified as a “Latent Defect.”

2. LATENT DEFECTS: A latent defect is defined as a malfunction or defect in warrantable items, which becomes apparent after the thirty (30) day break-in period, but before the end of the warranty period. The Owner shall notify the Contractor in writing at the address set forth in this agreement of the existence and nature of any latent defects. Such notification shall be within ten (l0) days of the reasonable discovery of such defect. If a warrantable defect exists, it shall be corrected within sixty(60) days after the receipt of written notification by the Contractor.

Here is another option:

It at the time of delivery of the Certificate of Occupancy there are uncompleted items of work, there shall be a specific itemized punch list. Builder will use diligence to complete any such punch list items with in thirty (30) days after closing. Buyer acknowledges that there will not be any “holdbacks” or escrow with the reference to punch list items. The Builder acknowledges that the bank may require funds to be held in escrow for major items such as landscaping. Only items to which the Parties agree to in writing prior to closing will be corrected by Builder under the punch-list, all other corrective action will fall under the Limited Warranty.

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