C&E Module 3

Who has rights to file a Mechanics Lien?

1. Contractors 2. Subcontractors 3. Material Supplier 4. Laborer 5. Design Professional (Architect, Engineer, etc.)

What does the issuance of a Certificate of Payment NOT represent on behalf of the Architect?

1. Exhaustive or continuous on-site inspections. 2. Reviewed construction means, methods, techniques, sequences or procedures. 3. Reviewed copies of requisitions received from subcontractors and material suppliers. 4. Made examination to ascertain how the Contractor has used money previously paid on account of the Contract Sum. A201 9.4.2

What other assemblies, components and site conditions require special inspections?

1. Seismic resistance structural systems. 2. High load diaphragms in wood frame construction (shear walls). 3. Structural masonry. 4. Pile foundations. 5. Smoke control systems.

Which AIA contract is G714?

Construction Change Directive

Which AIA contract is A201?

General Conditions for Contract for Construction.

How long after Substantial Completion is the Contractor required to correct any work not in compliance with the Contract Documents?

One year. The A201 General Conditions states the Contractor must correct any work not in accordance to the Contract Documents within one year after the date of Substantial Completion (after receiving written notice from the Owner).

The term "at risk" in Construction Management at Risk, means:

The contractor holds the trade contracts and takes the performance risk for construction.

What is a Stop Notice?

a lien against funds.

What is Substantial Completion?

when the Work is sufficiently complete in accordance with the Contract Documents and ready for the Owner's occupancy and use. A201 9.8

What must the Contractor submit to the Architect in order to receive Final Payment?

1. Affidavit that payrolls, bills for materials and equipment and other indebtedness have been paid or satisfied. 2. Submit Contractor's Affidavit of Release of Liens. 3. Certificate stating that the insurance is in effect and no known reason for it not being renewable. 4. Consent of Surety. 5. Proof of release of all applicable liens from Subcontractors, material suppliers, and vendors. A201 9.10.2

Describe the Application for Payment Procedure

1. At least 10 days before the established date for each progress payment, the Contractor completes and submits the Application and Certificate for Payment to the Architect. 2. Payments shall be made on account of materials and equipment delivered and stored on site. If approved in advance by the Owner, payment may be made for materials and equipment stored off the site. A201 9.1

What process is required in order to issue the Certificate of Substantial Completion?

1. Contractor submits to Architect a punch lost of items to be completed prior to final payment. 2. Architect makes inspection to determine if Work is substantially complete. If not, Contractor shall complete the Work prior to the issuance of a Certificate of Substantial Completion. 3. Once complete, Architect issues Certificate of Substantial Completion to Owner and Contractor A201 9.8

Describe the process for Final Completion and Final Payment.

1. Contractor submits to the Architect the final Application for Payment. 2. Architect makes inspection to determine Final Completion, that all remaining Work is completed in accordance with the Contract Documents, has taken place. 3. Architect issues a final Certificate of Payment to the Owner which states that the work has been completed in accordance with the Contract Documents and the outstanding balance is now due. A201 9.10

What documents, not directly used by the Architect, are typically used during Contract Administration?

1. Contractor's Affidavit of Releases of Liens 2. Lien releases from subcontractors, material suppliers, and vendors. 3. Certificate of Occupancy (issued by Building Official) 4. Notice of Completion (filed by Owner).

What are the five steps included in the process of imposing a Design Professionals Lien?

1. Has construction commenced? - if yes, lien does not apply, must use mechanics lien. 2. Determine governmental approval- if no building permit or other government approval has been granted, lien is not available. 3. Send Demand Letter - 10 days prior to recording lien, issue landowner payment demand. 4. Record Lien - in COunty of project location, no later than 90 days after knowledge that work will not commence. 5. Enforce Lien- file suit within 90 days of recording the lien.

What are five ways an Architect can help protect an owner from liens being filed?

1. Have the Owner request the General Contractor to purchase a Performance Bond and Payment Bond. 2. Receive a signed lien release from subcontractors at a time of payment. 3. Architect process Contractor's request for payment in a timely manner. 4. Collect and hold retainage. 5. Recommend the Owner file Notice of Completion with County Recorder to reduce the window in which liens may be filed.

In terms of the design professionals lien laws, what four groups are considered design professionals?

1. Licensed Architect 2. Licensed Landscape Architect 3. Registered Professional Engineer 4. Licensed Land Surveyor

What steel components or assemblies require special inspections?

1. Material verification for high strength bolts. 2. High strength bolts. 3. Material verification of structural steel. 4. Welding of structural steel. 5. Steel joint frame details for compliance with construction documents.

What types of components of concrete require special inspection?

1. Reinforcing steel and welding. 2. Bolts, anchors and formwork. 3. Verifying use of required design mix. 4. Sample concrete during placement for subsequent strength (core test). 5. Shotcrete (sprayed on concrete mixture).

What three steps are involved in issuing a Mechanics Lien?

1. Serve Notice of Mechanics Lien - must serve on the Owner by registered mail prior to recording the lien. 2. Record Mechanics Lien - at County Recorder's office in Count where project is located. 3. Enforce Mechanics Lien - file lawsuit within 90 calendar days from date of recording.

What does the Certificate of Substantial Completion establish?

1. The date of Substantial Completion. 2. The responsibilities of the Owner and Contractor for security, maintenance, heat, utilities, damage to the work and insurance (typically transferred to the Owner). 3. Warranty period behinds for work. 4. Release of Retainage to Contractor. 5. Statute of Limitations time clock begins. A201 9.8.4

What is an application for payment (request for payment)?

A Contractor's written request for payment for the amount due based on the work completed or materials stored on site.

Who performs special inspections?

A Special Inspector shall be a qualified person who shall demonstrate competence, to the satisfaction of the building official, for inspection of the particular type of construction or operation requiring special inspection. The Owner shall employee one or more special inspectors to provide inspection during construction.

What is a "latent defect"?

A defect "hidden" in materials, equipment or completed work and not readily apparent or capable of discovery by reasonable observation.

What is a "patent defect"?

A defect that would be "visible" in materials, equipment or completed work by any reasonable observation or inspection. Having a defect blocked from view by a pile of trash does not count as a latent or hidden.

What is a Preliminary 20 Day Notice?

A document that aids subcontractors, vendors, and material suppliers protect their lien rights in the event they are not paid for services rendered or materials supplied. Within 20 days of furnishing labor or materials, subcontractors must serve a Preliminary 20 Day Notice to owner, by certified first class mail or in person, which allows the Owner to be made aware of the lien rights of the subcontractors, vendors, and material suppliers.

What is a Mechanics Lien?

A legal claim against real property for satisfaction of a debt (.i.e. you or another individual perform work on a private project and are not paid for your service or materials, you can file a mechanics lien). Not allowed on public projects. Does not affect the ability to pursue other remedies.

What is a lien?

A lien is a legal financial claim against real property. If a Prime Contractor (Architect or General Contractor), or Subcontractor, Material Supplier, or Vendor, have not been paid for work on the project, they can file a claim of lien on the property (except for public projects).

When a Contractor or Subcontractor accepts final payment, what rights are they essentially waiving?

Acceptance of final payment by the Contractor or a Subcontractor or material supplier shall constitute a waiver of claims by that payee except those previously made in writing and identified by that payee as unsettled at the time of final Application for Payment.

What is the warranty period for the Contractor's work?

According to the A201, General Conditions, the Contractor must correct any work not found to be in compliance with the Contract Documents within 1 year of Substantial Completion.

What does the AIA G706A - Contractor's Affidavit of Release of Liens signify?

Affidavit that payrolls, bills for materials and equipment, and other indebtedness have been paid or satisfied. It's proof of release of all applicable liens - lien releases from subcontractors, vendors and material suppliers.

What must the Contractor warrant upon submittal of an Application for Payment?

All previous Work shall be free and clear of Liens. This means the Contractor would need to submit lien releases for previous work with the submittal of the new Application for Payment. A201 9.3.3

Who is responsible for resolving disputes?

Although the Architect is "initial decision maker" all 3 parties are responsible for helping resolve disputes.

What is the Certificate of Occupancy?

An official document from the local building code enforcement department stating that the project has met all applicable codes and is ready for it's designated purpose (ready to move in).

What's included in an RFP?

Any fees and costs, along with a firm's experience.

Which parties are exempt from sending a Preliminary 20 Day Notice to the Owner?

Architects and General Contractors. They do not have to send a Preliminary 20 Day Notice as they have a direct contract with the Owner.

Let's say you receive shop drawings for the steel work directly from the steel subcontractor. What should you do?

Do nothing, send them back unchecked.

What are the consequences of not sending a Preliminary 20 Day Notice to the Owner?

Failure to send the Preliminary 20 Day Notice cam cause the subcontractors, vendors, or material suppliers to lose some or all of their lien rights.

What timeframes are important to be aware of regarding Mechanics Liens?

If a Notice of Completion or Notice of Cessation (work has formally stopped) is NOT filed by the Owner, the lien filing period is 90 days from completion of construction. If the Notice of Completion or Notice of Cessation is filed, the lien period is reduced to: -60 days for Prime Contractors -30 days for Subcontractors

What should the Contractor do if the Architect does not process a submittal in a timely manner?

If no action has been taken by the Architect within the reasonable time, the Contractor will consider it to be approved. The Architect and Contractor must process submittals within a reasonable time.

The Contractor has consistently failed to keep the site clean and free of debris. What options does the Owner have in this situation?

If the Contractor fails to clean up as provided in the Contract Documents, the Owner may do so and shall be entitled to reimbursement from the Contractor. A201 3.15.2

Under what circumstances would the Owner contact a Subcontractor directly?

If the Contractor fails to furnish written evidence that the Subcontractors have been properly paid, after a request from the Owner to do so, then the Owner shall have the right to contact Subcontractors to ascertain whether they have been properly paid.

How does filing the Notice of Completion affect the period for Contractors and Subcontractors to file liens?

If the Owner files the Notice of Completion with the County Clerk Recorder's Office, it has the following affect on lien periods: 1. Prime Contractors - reduces the lie period from 90 days to 60 days. 2. Subcontractors - reduced the lien period from 90 days to 60 days. If no Notice of Completion is filed, lien period is 90 days for both Prime and Sub Contractors.

Under what conditions can the Architect withhold certification?

If the work on the Application does not match the work completed in the field, the Architect will discuss this with the Contractor. If an agreement cannot be reached, the Architect will issue the Application of Certificate of Payment to the Owner for the amount the Architect believes to be accurate. A201 9.5

Can the Architect perform Additional Services at any time?

No, only with approval by the Owner.

Are Shop Drawings part of the Contract Documents?

No, shop drawings and submittals are not Contract Documents. They show how the Contractor intends to conform to the Contract Documents.

Can Subcontractors skip the Architect and submit their Shop Drawings to the Owner?

No, the Owner is not expected to understand Shop Drawings and they must be reviewed by the Contractor first and then they submit to the Architect.

When does the Owner make payments to the Contractor?

Once the Owner receives the approved Application and Certificate of Payment from the Architect, they make the payment to the Contractor A201 9.6.1

What's included in an RFQ?

Only a firm's relevant experience.

The Schedule of Values refers to...

Paying the Contractor's applications for payment.

What are progress payments?

Payments made to the Contractor during progress on the construction, based on the work completed or the materials purchased and stored on-site.

What is the Statute of Limitations for latent (hidden by reasonable inspection) defects in the Work?

Statute of Limitations is 10 years. No action shall be brought to recover damages from any person performing or furnishing the design, specifications, surveying, planning, supervision or observation of construction or construction of an improvement to real property more than ten (10) years after the Substantial Completion of such improvement.

What is the Statute of Limitations for patent (visible or apparent by reasonable inspection) defects in the Work?

Statute of Limitations is 4 years. No action shall be brought to recover damages from any person performing or furnishing the design, specifications, surveying, planning, supervision or observation of construction or construction of an improvement to real property more than four (4) years after the Substantial Completion of such improvement.

What is the main difference between the filing of a Stop Notice and a Mechanics Lien?

Stop notice may be filed on a public or private project. Mechanics Lien cannot be filed ona public project, only a private project.

During construction, a portion of the foundation of the building next door is undermined. What should the Contractor do?

The A201 General Conditions states the Contractor must act at their discretion to protect the safety of people and property of any threatened damage, injury or loss.

What is the Architect looking for in reviewing Shop Drawings?

The Architect is reviewing for design and aesthetic intent only. The Contractor is responsible for errors and omissions on the Shop Drawings.

On final inspection of the building, the Building Inspector discovered that the toilet fixtures do not comply with the plumbing code. After an investigation, it is determined that the installed toilet fixtures complied with the toilets specified in the Contract Documents. Who is responsible for replacing the fixtures?

The Architect. According to the B101 (Owner - Architect Agreement), it is the Architect's responsibility to "incorporate design requirements to meet code." Since the Architect selected and specified the toilet fixtures that do not comply, they were negligent and are responsible for the cost of removing, and replacing then, The Building Department assumes no responsibility even though it issued the building permit.

What is the Contractor entitled to if the Work is stopped due to non-payment?

The Contract Time shall be extended appropriately and the Contract Sum shall be increased by the amount of the Contractor's reasonable costs of shutdown, delay and start-up, plus interest as provided for in the Contract Documents.

Who is responsible for errors and omissions on submittals?

The Contractor is responsible for errors and omissions on submittals to the Architect.

What should the Contractor do if they discover inconsistencies within the Contract Documents?

The Contractor shall promptly report to the Architect any errors, omissions or inconsistencies discovered by or made known to the Contractor regarding the Contract Documents.

When can the Owner occupy any portion of the Work?

The Owner may occupy any portion of the Work when such portion is designated by separate agreement with the Contractor, provided such occupancy is consented to the by the surety and authorized by the public authority having jurisdiction (Building Official_ over the project. A201 9.9.1

Who performs Structural Observations?

The Owner shall employ a registered design professional to perform structural observations (usually the structural engineer). At the conclusion of the work included in the permit, the structural observer shall submit tot he building official a written statement that site visits have been made and identify any reported deficiencies that have not been resolved.

What is the Statute of Limitations for Contractual Liability in the State of California?

The Statute of Limitations for Contractual Liability (relation to upholding written agreements or contracts) in California is four (4) years from the date of the default of the contract.

What are three conditions that will cause a Design Professionals Lien to expire?

The lien automatically expires if: 1. Design professional does not file lawsuit to enforce the lien. 2. The work commences on the project. 3. Landowner partially or fully satisfies the lien, design professional shall execute and record a document as applicable.

How is Arbitration different from Mediation?

The main difference is Mediation is non-binding and Arbitration is binding. Both are forms of alternate dispute resolution. Arbitration is used when Mediation is unable to resolve a dispute.

Contract Sum

The total amount payable by the Owner to the Contractor for peformance of the Work under the Contract Documents. A201 Article 9.1

Once the Construction Phase has begin, the Architect is responsible for the paperwork during construction, including:

Transmittals, Construction Change Directives, Change Orders, Contractor's Applications for Certificate of Payment, Submittals and Shop Drawings, Drawing revisions, Approvals, meeting minutes, phone logs and field reports.

True or False: Changes made by the owner most often trigger Additional Services

True, usually changes by the Owner result in Additional Services since it changes things already approved.

What is a Statement of Special Inspections?

Where special inspection or testing is required, the registered design professional in responsible charge shall prepare a statement of special inspections for submittal by the permit applicant (this usually appears on the structural engineer's drawings, depending on the firm/project).

When does the Architect issue a Certificate for Payment?

Within 7 days after receipt of the Contractor's Application for Payment, the Architect shall either issue to the Owner a Certificate for Payment, with a copy to the Contractor, for such amount the Architect determines if properly due or notify the Contractor and Owner in writing of the Architect's reasons for withholding certification in whole or in part. A201 9.4.1

Can the Architect adjust the amount the Contractor is paid?

Yes, if the Work completed does not match the Application and Certificate for Payment, the Architect can adjust the amount. A201 9.4

Define a Bonded Stop Notice.

a Stop Notice presented to a construction lender accompanied by a bond with good and sufficient sureties for 125% of the claim. If a Bonded Stop Notice is presented to the lender, the lender does not have the option to withhold funds.

What is Arbitration?

an alternative to litigation (going to court) for a dispute. One (or possible more) arbitrators listens to both sides and renders a decision.

What are Special Inspections?

are inspections as required of the materials, installation, fabrication, erection of placement of components and connections requiring special expertise to ensure compliance with approved construction documents and reference standards. They can be continuous (full time observation of the work) or periodic (part time of intermittent observation of the work).

Record drawings

created showing the decisions and changes made during construction that vary from the working drawings.

As-built drawings

created showing the exact dimensions and conditions of how these are built. Represents the Contractor's final project, not design intent of the Architect. Additional service in B101

How does a Notice of Non-Responsibility protect the Owner?

is utilized when a tenant (not Owner) of a space is performing work and the Owner (landlord) wants to protect themselves from any liens stemming from failure of the tenant to pay contractors and vendors. Is completed by the owner and physically posted at the construction site.

What is a Design Professionals Lien?

right to record a lien on a property before construction begins IF a building permit or other governmental approval has been obtained.

What is Mediation?

the first line of conflict resolution if parties are unable to resolve it themselves. It is a form of alternative dispute resolution and it must take place before Arbitration. A neutral third party aims to assist two (or more) parties in reaching an agreement. Both parties share the expenses of Mediation. An important distinction is that Mediation is non-binding.