In Construction Contracts, Follow Through Matters

A property owner thought it was protected from an overcharge in the price of material in a construction project because the price of material was specified in the contractor’s contract with the supplier.

The Michigan Court of Appeals ruled otherwise. The court rejected the property owner’s reliance upon the contract because the property owner did not demand sworn statements and valid lien waivers.

Having lost the fight, the property owner had to pay the other side’s legal fees too. Which must have really aggravated the property owner, a law firm.

Follow through matters. A property owner needs to be sure a notice of commencement is posted on site and recorded. The property owner then needs to be sure the contractor provides sworn statements and lien waivers when payment is requested. These steps are necessary to avoid having to pay twice for the same work or materials. And subcontractors and suppliers need to be sure to provide a notice of furnishing promptly after beginning work or supplying. That is necessary to avoid losing the right to payment if the contractor fails to pay the sub or supplier. Follow through matters.

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