Friday, March 30, 2012

Spring Is Here: Get Your Construction Contracts and Legal Requirements in Order

Spring is here, and so is the rush of construction projects that need warmer temperatures to start (or restart as it were). With the economy giving signs that it is on the upswing, here is hoping that 2012 construction will start off with a bang.

If you are a contractor, it is time to start taking a fresh look at your contracts. Subcontractors and suppliers should do the same. Remember, in some states, no contract means no mechanics lien or construction lien. In Oregon, residential construction companies need a written contract for every project or risk waiving the contractor mechanics lien rights. The Oregon Construction Contractors Board also requires that residential contractors provide customers with certain, mandatory notices before work begins. The Oregon CCB website provides sample residential construction forms. Other states have also enacted provisions that may affect Oregon mechanics lien rights unless your contractual provisions meet certain requirements (see our blog on Texas Lien Waivers).

I am always suprised at how fast, and how often, the Federal and State legislatures pass new laws, change old ones, and feel the need to interfere in private contractual relationships. While you may think you are too small to really be affected by these laws and regulations, think again. As we reported earlier in the week, Texas has gone so far as to mandate what kind of lien waivers must be used at different milestones during a construction project - big government in a small government state, I dare say. So keep in mind that statutes abound regarding how and when you pay your subcontractors and suppliers, what your workers must receive in compensation and benefits, project safety issues, sexual harrasment policies, how and when you can file a construction lien for the work you performed, notices you must give prior to doing, well, just about anything...and the list goes on and on.

But enough complaining, keep your contracts in line and you can avoid any unfortunate consequences and hold on to your conractors license. According to an article by Katie Jeremiah in the Journal of Daily Commerce entitled Spring Cleaning, Dust off Construction Contract Forms, "The good news is that unlike 2003, when major public contracting reforms occurred, and 2007, when private contracting reforms took place, 2012 will not require a major overhaul of most construction contracts. But there are a few provisions that may need scrubbing. And contractors who have not updated their contracts for the past several years may want to take on a deep clean."

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