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 DESIGN/BUILD CONTRACT

Design/Build contractors are really running two businesses at once: there is the design portion of a project, and then there is the actual construction.  Design/Build contractors should therefore have two different contracts for these phases of the job for the following reasons:
  1. Design does not fall under the Massachusetts Home Improvement Contractor Statute, M.G.L. c.142A which governs home renovation projects in Massachusetts. There are strict requirements for which clauses have to be included in these contracts and any violation is a per se, automatic violation of the Consumer Protection Statute, M.G.L. c.93A, which can give consumers up to double or triple damages, attorney’s fees, interest and costs.  For that reason, contractors do not want the design portion of these projects to be subject to these laws.
  2. The contractor must make clear to the homeowner that there is a separate fee for the design, and that the fee is nonrefundable. I have seen too many cases where a homeowner decides to proceed with another contractor and then asks for all of his money back. 
  3. It must be made clear to the homeowner that the design is for the contractor’s use only. One of the advantages of design/build is that the design does not require the degree of specificity that would allow for it to be used by an outside contractor.  The contractor can make modifications as the project progresses.  This provides the homeowner with savings by bundling the design and build services.  However, if the design/build process is not made clear, there is a higher risk that the homeowner will attempt to take the design/build contractor’s design to other contractors.  
  4. The contractor should decide who owns the design once it is paid for. If the homeowner is given the design then the homeowner should have to sign an indemnification clause that would protect, defend and pay back the contractor if he is sued for the use of the design by someone else.
  5. The contractor may decide to include mediation and/or arbitration clauses in the design contract that would result in a settlement of any dispute regarding the design phase. This would be binding, and would not fall under the state Home Improvement Contractor Arbitration Program.
  6. The contractor may also want to include a clause that allows him to end the work at the design phase “for convenience” if the relationship is not going well.
It is the contractor’s job to educate the consumer about the advantages unique qualities of design/build.  The customer should know who is doing the design and the type of qualifications being offered.  They should understand that it is the intent of the parties to engage in every phase of the construction together. 
Most consumers are not familiar with design/build.  It is important to have comprehensive contracts to protect you if unexpected issues occur.

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