The Project in Las Vegas A Large-Scale Example of Typical Construction Dispute
A mega-project in Las Vegas is having real problems; mega-problems. But when you look past the large numbers, all that is left is a simple construction dispute that is played out everyday across the nation between contractors, subcontractors and owners. The dispute – reported recently by the Wall Street Journal – serves as a good, large-scale example of how things can go wrong in a construction project.
Here are three key components of this dispute:
- The general contractor claims the owner hasn’t paid according to the payment schedule, and the owner claims it is owed money because of construction defects.
- Failure to pay the prime trickled down to the subs, and they have filed liens.
- The owner further refuses to pay the prime because (i) they have a contractual duty to keep the project lien-free; and (ii) The liens are causing the owner damages in that it is more difficult to sell the condominium units.
Sound familiar? Of course it sounds familiar, this is a summary of nearly every owner / prime contractor dispute across the country.
As your construction project approaches completion, keep these issues in mind. Owners very frequently get tighter on the final payments because they’re afraid the prime contractor will bail before work is 100% complete. But the budget squeeze results in subcontractor liens, animosity, catch-22s and the spark of a litigation war.
We usually recommend two ways to handle these frequent problems.
First, handle it in the contract. Think about these issues before you sign anything, and make the contract clear about how the contract will reach final completion.
Second, set up a way to resolve the dispute out of court (mediations, initial decision makers, and the like).
What do you guys think? Any other recommendations?
Posted in: Arbitration & ADR, Construction News, LitigationTags: ,Initial Decision Makers,Las Vegas City Center,Mediation,Wall Street Journal
3 Comments to “The Project in Las Vegas A Large-Scale Example of Typical Construction Dispute”
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Scott,
Great point-huge claims have the same “DNA” of smaller claims. But instead of a few change orders, there may be dozens, even hundreds of them; instead of dozens of RFIs, there may be hundreds, even thousands of them. All of this increases the risks and costs of going to trial. After all, if the construction professionals can not agree on the reasons for the problems, can we reasonably expect a jury of ordinary citizens to figure it out during the course of a trial?
[...] was the subject of a blog post on the Construction Law Monitor, which that blog called a “Large-Scale Example of an Everyday Construction Dispute.” And that summary is perfectly true when it comes down to mechanics [...]
THE SUBCONTRACTORS ARE DUE THEIR PAYMENTS SINCE THEY HAVE FINISHED THEY PORTION OF THE CONTRACT. THEY DON’T HAVE ANY DIRECT CONTRACT WITH CLIENT AND MUST BE PAID. IF THE CONTRACTOR HAD REALLY DONE THE WORK THEN THE CONTRACTOR MUST BE PAID IF THE WORK DONE IN ACCORDANCE WITH THE CONTRACT SPECIFICATIONS, DRAWINGS AND CONDITIONS.