But they have moved into the space. The job is a renovation of a historic warehouse for use as an office. They also distribute product from the space, and have moved bonded inventory in.
There have been a few hiccups at the end of the project with a specialty glazing product for some interior single lite doors as well as cracked slabs of bathroom vanity material (3 separate shipments from tectura terrazzo- every one showed up cracked). In both of these cases, the contractor has installed temporary items so that everything is functional until the actual product arrives. Otherwise, it is pretty typical final clean/ touch up paint on the list of incomplete work.
I think the owner is gunning to pull LD's on the job which is why they are refusing to sign. The owner is green, and this is their first construction project ever (12,000 SF renovation). They have an owner's rep which is really just a developer friend, not a professional project manager; but he is very reasonable and has given them sound advice that they generally ignore.
I've explained to the owner that the definition of substantial completion is a bit vague (like the constitution, so that it may be interpreted per situation) and as they have already moved into the space, we are meeting the definition of substantial completion; and the contractor is still bound by the contract to finish the work. The GC has been really cooperative in accommodating them moving in and finishing punch, and will come on a weekend to install the glass and vanities.
I'm wondering if a certificate of substantial completion is actually valid if the owner doesn't sign it- G704. It's surprisingly difficult to find this info... My position is that the form is immaterial as the owner has moved into the space already... but I'd like them to sign it to cross the t's and dot the i's. It's a private project, but in our jurisdiction we file it with the state to start the clock on the lien period (also in Owner's best interest, which I've explained).
It is defined in the AIA contract documents... Basically all of them reference the AIA-201 general conditions and it is defined in there. And just FYI, the AIA 201 has been recognized in the court as "the standard" even if there is no formal contract.
Substantial completion is not vague in my experience.
Oct 25, 18 10:04 pm ·
·
vivisection
In practice, maybe not. Things are generally 'done' and touch up stuff is usually pending. I was referring to the actual term and legal definition. 'Substantial' (meaning most, but not all) and 'completion' (meaning all) are fundamentally contradictory terms. The AIA definition, and thus the contract definition, simply defines it as the stage at which the owner can occupy the work for its intended use; which if you consider it is pretty vague. Do you need trim installed to occupy it for its intended use? No. You do not. Is it intentionally vague so a judge or arbiter can ultimately decide what 'substantial completion' means? I think so, and I think that is by design like the constitution.
Oct 25, 18 11:09 pm ·
·
Non Sequitur
I see. I guess we have different versions of these terms up North. Apologies, I assumed things were the same(ish) in the US. Substantial Completion is automatically achieved, in canada at least, when a set % of the total contract value has been completed (typically 3% on 1mil+ projects).
Oct 25, 18 11:25 pm ·
·
vivisection
Yeah, if we had an empirical way to determine substantial completion, I wouldn't have this problem! We would meet your definition.
Oct 26, 18 8:44 am ·
·
Non Sequitur
I just happen to be doing some legal reading and turns out my term is Substantial Performance and is calculated as such: 3% of first 500K, 2% of second 500K, 1% of remainder. So by default, if you have a million dollar project, once there is less than 25K of work to be completed, it's deemed complete in the eyes of the builder's lien act and thus starts the clock on any claims and holdback payments.... and also important, starts off all warranties.
Not that this will help you, but to avoid this exact scenario, in my construction contract (I do residential design/build) I define substantial completion: "For the terms of this contract, substantial completion is the point at which the project is complete for the use intended and for final inspection with the certificate of occupancy issued." I suppose that still leaves some gray area but it's better than nothing.
Oct 26, 18 9:12 am ·
·
Wood Guy
I think it's more of a problem on the construction end. That's where I learned the hard way (like most lessons) that if we wanted final payment, we better be clear about when it was due. Minus hold-backs, of course.
Oct 26, 18 11:00 am ·
·
Featured Comment
mightyaa
It is defined in the AIA contract documents... Basically all of them reference the AIA-201 general conditions and it is defined in there. And just FYI, the AIA 201 has been recognized in the court as "the standard" even if there is no formal contract.
The owner in this case doesn't have a leg to stand on. Basically; he is using the space as intended, therefore regardless of whether he signs or not, the date he moved in is the date of substantial completion. Short of some sort of other arrangement like partial occupancy agreements, that is how the courts would look at it. Just document it. Owner takes on risk btw and just gave the GC an "out" (he no longer has complete access, and by action, the owner has accepted the work....).
The other way I've seen it is when the Building Department signs off that that it is safe to occupy; unfortunately, that's sort of a ground up project since it would be a new certificate of occupancy (remodels don't get those).
BTW; the date is also important since it begins the warranty.
Oct 26, 18 10:58 am ·
·
llbb
This is exactly my interpretation. I've been thoroughly reviewing all additions/ deletions to their contract, but A201 is standard and they never worked out partial occupancy before the owner moved in. We were attempting to have a meeting about these concerns - (I was framing it as a meeting to discuss the terms of partial occupancy), and their movers just showed up, they hadn't been clear with me or the builder. The GC was doing punch & clean and got kicked out. All the systems furniture had been loaded in the day before, so everyone knew it was close. The owner has vacilitated between seeming to have zero understanding of the contract and being intentionally adversarial with the builder... it's going south quickly.
Did you have a Division 1 on this project? Under section Closeout Procedures, there should be language for Substantial Completion Procedures. Once contractor has provided Certificates of Release, Closeout Submittals, maintenance materials etc etc, handed over the keys, did startup procedures, inspections, etc, etc, then it is officially done. That is your check list right there.
Owner can only dispute that some of these items were not done yet. If contractor has given them list of Incomplete Items, as required, then those incomplete items become part of Final Completion.
Oct 26, 18 12:11 pm ·
·
llbb
We only did outline specs for the project, because it was an aggressive schedule & cost+GMP. They have a standard A102 contract / A201 so all of that is covered.
Oct 26, 18 4:53 pm ·
·
Rusty!
A201 does define Substantial Completion pretty well, but it doesn't fully list all actions by Contractor that are needed to satisfy meeting the Substantial Completion threshold. In any case, having an aggressive schedule and GMP clause describes 99% of private work done out there these days. There is no excuse to go to construction with outline specs only. This is why bathroom vanity came in broken 3 times. Outline spec doesn't deal with delivery and storage requirements, among million other things that can fuck you over.
Oct 26, 18 5:15 pm ·
·
vivisection
I mean, maybe you have the luxury of writing full specs for every job or an owner or contractor that bother to read them and understand what they even mean. That's really not my experience with the vast majority of private work... We didn't, thus they are not part of the contract documents, so A201 is the only contractual definition. We do lots of commercial real estate work as well for both tenants and developers and I feel like I am the one reminding everyone of what is in the lease agreement/ work letter and thus what they are responsible for. Unfortunately my experience is a lot of people don't actually read or understand contract terms. And the bathroom vanity slab came in broken 3 times because the shipping company is incompetent. They arrived broken every time on the truck, though I'm aware that the GC is still responsible for getting the work done in the timeframe they said it would be done.
Oct 26, 18 8:23 pm ·
·
88Buildings
Yes, you are right. And architects usually found this out too late in the game. Many small architecture firms are burned by things like this.
In my opinion, the most important things are;
Know your own strength.
Know your clients very well.
Make sure you can make enough money to deal with all these hassles.
Nov 7, 18 5:54 pm ·
·
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Owner refuses to sign substantial completion
But they have moved into the space. The job is a renovation of a historic warehouse for use as an office. They also distribute product from the space, and have moved bonded inventory in.
There have been a few hiccups at the end of the project with a specialty glazing product for some interior single lite doors as well as cracked slabs of bathroom vanity material (3 separate shipments from tectura terrazzo- every one showed up cracked). In both of these cases, the contractor has installed temporary items so that everything is functional until the actual product arrives. Otherwise, it is pretty typical final clean/ touch up paint on the list of incomplete work.
I think the owner is gunning to pull LD's on the job which is why they are refusing to sign. The owner is green, and this is their first construction project ever (12,000 SF renovation). They have an owner's rep which is really just a developer friend, not a professional project manager; but he is very reasonable and has given them sound advice that they generally ignore.
I've explained to the owner that the definition of substantial completion is a bit vague (like the constitution, so that it may be interpreted per situation) and as they have already moved into the space, we are meeting the definition of substantial completion; and the contractor is still bound by the contract to finish the work. The GC has been really cooperative in accommodating them moving in and finishing punch, and will come on a weekend to install the glass and vanities.
I'm wondering if a certificate of substantial completion is actually valid if the owner doesn't sign it- G704. It's surprisingly difficult to find this info... My position is that the form is immaterial as the owner has moved into the space already... but I'd like them to sign it to cross the t's and dot the i's. It's a private project, but in our jurisdiction we file it with the state to start the clock on the lien period (also in Owner's best interest, which I've explained).
1 Featured Comment
It is defined in the AIA contract documents... Basically all of them reference the AIA-201 general conditions and it is defined in there. And just FYI, the AIA 201 has been recognized in the court as "the standard" even if there is no formal contract.
All 4 Comments
Substantial completion is not vague in my experience.
In practice, maybe not. Things are generally 'done' and touch up stuff is usually pending. I was referring to the actual term and legal definition. 'Substantial' (meaning most, but not all) and 'completion' (meaning all) are fundamentally contradictory terms. The AIA definition, and thus the contract definition, simply defines it as the stage at which the owner can occupy the work for its intended use; which if you consider it is pretty vague. Do you need trim installed to occupy it for its intended use? No. You do not. Is it intentionally vague so a judge or arbiter can ultimately decide what 'substantial completion' means? I think so, and I think that is by design like the constitution.
I see. I guess we have different versions of these terms up North. Apologies, I assumed things were the same(ish) in the US. Substantial Completion is automatically achieved, in canada at least, when a set % of the total contract value has been completed (typically 3% on 1mil+ projects).
Yeah, if we had an empirical way to determine substantial completion, I wouldn't have this problem! We would meet your definition.
I just happen to be doing some legal reading and turns out my term is Substantial Performance and is calculated as such: 3% of first 500K, 2% of second 500K, 1% of remainder. So by default, if you have a million dollar project, once there is less than 25K of work to be completed, it's deemed complete in the eyes of the builder's lien act and thus starts the clock on any claims and holdback payments.... and also important, starts off all warranties.
Not that this will help you, but to avoid this exact scenario, in my construction contract (I do residential design/build) I define substantial completion: "For the terms of this contract, substantial completion is the point at which the project is complete for the use intended and for final inspection with the certificate of occupancy issued." I suppose that still leaves some gray area but it's better than nothing.
I think it's more of a problem on the construction end. That's where I learned the hard way (like most lessons) that if we wanted final payment, we better be clear about when it was due. Minus hold-backs, of course.
It is defined in the AIA contract documents... Basically all of them reference the AIA-201 general conditions and it is defined in there. And just FYI, the AIA 201 has been recognized in the court as "the standard" even if there is no formal contract.
The owner in this case doesn't have a leg to stand on. Basically; he is using the space as intended, therefore regardless of whether he signs or not, the date he moved in is the date of substantial completion. Short of some sort of other arrangement like partial occupancy agreements, that is how the courts would look at it. Just document it. Owner takes on risk btw and just gave the GC an "out" (he no longer has complete access, and by action, the owner has accepted the work....).
The other way I've seen it is when the Building Department signs off that that it is safe to occupy; unfortunately, that's sort of a ground up project since it would be a new certificate of occupancy (remodels don't get those).
BTW; the date is also important since it begins the warranty.
This is exactly my interpretation. I've been thoroughly reviewing all additions/ deletions to their contract, but A201 is standard and they never worked out partial occupancy before the owner moved in. We were attempting to have a meeting about these concerns - (I was framing it as a meeting to discuss the terms of partial occupancy), and their movers just showed up, they hadn't been clear with me or the builder. The GC was doing punch & clean and got kicked out. All the systems furniture had been loaded in the day before, so everyone knew it was close. The owner has vacilitated between seeming to have zero understanding of the contract and being intentionally adversarial with the builder... it's going south quickly.
Did you have a Division 1 on this project? Under section Closeout Procedures, there should be language for Substantial Completion Procedures. Once contractor has provided Certificates of Release, Closeout Submittals, maintenance materials etc etc, handed over the keys, did startup procedures, inspections, etc, etc, then it is officially done. That is your check list right there.
Owner can only dispute that some of these items were not done yet. If contractor has given them list of Incomplete Items, as required, then those incomplete items become part of Final Completion.
We only did outline specs for the project, because it was an aggressive schedule & cost+GMP. They have a standard A102 contract / A201 so all of that is covered.
A201 does define Substantial Completion pretty well, but it doesn't fully list all actions by Contractor that are needed to satisfy meeting the Substantial Completion threshold. In any case, having an aggressive schedule and GMP clause describes 99% of private work done out there these days. There is no excuse to go to construction with outline specs only. This is why bathroom vanity came in broken 3 times. Outline spec doesn't deal with delivery and storage requirements, among million other things that can fuck you over.
I mean, maybe you have the luxury of writing full specs for every job or an owner or contractor that bother to read them and understand what they even mean. That's really not my experience with the vast majority of private work... We didn't, thus they are not part of the contract documents, so A201 is the only contractual definition. We do lots of commercial real estate work as well for both tenants and developers and I feel like I am the one reminding everyone of what is in the lease agreement/ work letter and thus what they are responsible for. Unfortunately my experience is a lot of people don't actually read or understand contract terms. And the bathroom vanity slab came in broken 3 times because the shipping company is incompetent. They arrived broken every time on the truck, though I'm aware that the GC is still responsible for getting the work done in the timeframe they said it would be done.
Yes, you are right. And architects usually found this out too late in the game. Many small architecture firms are burned by things like this.
In my opinion, the most important things are;
Know your own strength.
Know your clients very well.
Make sure you can make enough money to deal with all these hassles.
Block this user
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