Construction Attorney in New York : Building Construction Contract

Scope of work must be detailed enough that both parties understand what is included and excluded. Payment terms should specify when invoices are due, what triggers payment milestones, and whether retainage applies. Change order procedures are critical; without a clear mechanism for approving and pricing changes, disputes spiral quickly. Insurance and bonding requirements protect all parties and are often mandated by lenders or owners. A dispute resolution clause, whether requiring mediation before litigation or selecting arbitration, can save months and significant legal fees. From a practitioner's perspective, I have seen contracts fail not because of disagreement on major points but because the change order process was vague or nonexistent.

New York Lien Law provides statutory protections for contractors, subcontractors, and suppliers, but these protections depend on compliance with strict procedural requirements. A contractor or subcontractor who does not receive payment may file a mechanic's lien against the property, but the lien must be filed within a specific timeframe (generally 90 days from the last date of labor or supply). In New York Supreme Court, lien foreclosure actions are common, and the court will examine whether the lien claimant substantially performed the work or supplied materials as alleged. Failure to comply with notice requirements or filing deadlines can result in loss of lien rights entirely, which is why early consultation with counsel is essential to preserve your claim.

Every change order should be documented in writing before work begins, signed by both parties, and should specify the nature of the change, the cost impact, any schedule adjustment, and how it integrates with the original contract. Site conditions, design changes, and owner-requested modifications are the most common triggers for change orders. A contractor who performs work without a signed change order may find itself unable to recover the cost if the owner disputes the scope. In practice, these cases are rarely as clean as the statute suggests; courts examine the full course of dealing between the parties, prior change orders, and industry custom. Maintaining a contemporaneous daily log of work performed and materials supplied creates a record that can prove invaluable in a dispute.

The prime contractor must pay subcontractors within a reasonable time after receiving payment from the owner, though the contract may specify exact payment terms. Retainage, a percentage of each payment held back until project completion, is standard practice but must be clearly defined in the contract. New York General Obligations Law Section 5-322.1 requires that retainage be held in a separate account and that the prime contractor not commingle these funds with its own operating accounts. Disputes over retainage release often end up in court, particularly at project completion when the owner and contractor disagree about whether the work is truly complete. A residential construction contract must address retainage explicitly to avoid confusion.

Consider whether your current contract is in writing and whether all key terms are defined. If you are in a dispute, determine whether you have complied with all notice and filing requirements under New York Lien Law. If you are a subcontractor or supplier, verify that you provided preliminary notice to the owner and all required parties. If you are an owner, assess whether you have documented all change orders in writing and whether your payment obligations are current. The difference between a manageable dispute and a costly lien foreclosure action often hinges on decisions made early in the project or at the first sign of disagreement. Your next step is to review your contract with counsel and clarify the procedures for handling changes, payment, and dispute resolution before they become critical.