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Resolving property construction disputes
Buying the freehold for a piece of land and building your own home can represent a lifelong dream. Such an ambition represents considerable capital investment. Property construction disputes, when they arise can be particularly complex.
When faced with a dispute your first thought may be to settle the matter through the civil court system. However, there are less expensive and stressful alternatives, such as mediation.
In this guide, we explain your options for resolving a property construction dispute and address frequently asked questions.
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Why do construction disputes occur?
Construction projects are often cash and time-sensitive, with multiple sub-contractor businesses involved in bringing the building to completion. The project must be properly managed otherwise this can lead to delays, dissatisfaction and disputed results during the various stages.
Common causes of disputes include:
Outstanding payments
This often occurs when staged funding stalls or falls short of expectations. Withholding staged payments can leave contractors unable to continue within an agreed timeframe, as they can’t buy materials or labour. Or, the final payment may be withheld on completion.
Extensions of time
Projects can be delayed for many reasons. When a deadline needs to be pushed back, there can be resistance from whoever commissioned the project, and from the other contractors involved.
Associated loss and expense caused by delay or disruption to a building project
Late payments and time problems almost certainly will impact on work schedule and the earning potential of contractors and subcontractors, as well as the main contractor building new property.
Poor quality work or defective workmanship
Quality of work can be disputed. The client who commissioned the building may feel aggrieved about the quality of materials or workmanship, creating a cascade of blame from the project manager down to the smallest suppliers.
Liquidated damages
Some construction contracts have penalties clauses, meaning that if the time frame is breached financial penalties can be invoked. Securing the sums agreed is called liquidated damages, sometimes involves a court ruling.
Associated costs of carrying out additional works or variations under a contract
As the project progresses there may be snags that require variations, or the finished result may need modifications. Responsibility for costs and assignment of fault may often be attributed to a range of reasons that are often hotly disputed.
General property damage
There are times when new build or renovation projects are completed, but some aspect of the building is damaged. The dispute again revolves around culpability and cost to repair.
Boundary disputes
Disputes about boundaries can happen at any stage of a construction project, along with party walls and encroachment on a property’s access.
Post-construction disputes
Post-construction disputes can occur if remedial work or compensation is required should property defects appear over time, such as cracks and damp.
Alternatives to litigation
The quickest way to settle construction disputes is through open communication. Air the issue, provide evidence of claims and seek to find a compromise that suits all parties. If that fails, you still don’t need to take the matter to court. Your other options include mediation or arbitration.
What are the differences between mediation and arbitration?
Mediation is a structured, interactive process for resolving disputes, using the services of an impartial third party. Mediators are trained to move discussions along calmly and effectively, while the different parties resolve their differences and reach a settlement. This is known as negotiated dispute resolution.
Mediators can be involved on an ongoing basis during a construction project. One of the key aims is to resolve the matter mutually, in a way that leaves a working relationship still intact.
Arbitration is when the dispute resolution is guided by someone with legal knowledge who can provide legal advice. They listen to different opinions, assess the evidence, then make a fair and equitable judgement. To undergo an arbitration process, both parties agree to abide by the outcome.
Litigation, on the other hand, is when one of the parties takes out a lawsuit, and request that the civil courts make a decision.
What does a construction lawyer do?
With so many possible causes for delays and disagreements, even the smallest new-build benefits from the services of a construction solicitor.
A property construction lawyer will assess contracts to ensure your needs, goals and potential concerns have been properly addressed. They will also problem-solve when disputes arise, as well as representing you in legal actions.
What happens in a court case over a property construction dispute?
If negotiated dispute resolution methods fail – you can pay a fee and submit a claims form, with the ‘Particulars of Claim’. The defendant then has 14 days to respond and can either offer a settlement or indicate an intention to defend themselves.
To progress to court proceedings, both parties would complete a Directions Questionnaire that assesses the merits of the case. Judges use this to provide a list of actions (known as directions) and a timeframe.
The timescale of a court case depends on the complexity of the case and the number of directions involved. In larger cases, a Listing Questionnaire/Pre-trial Checklist stage is used to gather more pre-trial information in the final stages.
You would then pay a Hearing Fee, and the case goes to court for a legally binding ruling. The costs involved vary according to the level of difficulty of the case and the track it takes, as well as the amount of time your construction lawyer needs to gather all your case materials.
Avoiding construction disputes
Ensure you only engage in property projects which are realistic and affordable. Make sure all agreements and discussions are documented, and maintain project records scrupulously including receipts and timed reports.
It is also vital to manage the goals and expectations of everyone involved, especially any instructions or payment criteria. Your project management team must keep lines of communication open throughout, for clarity, accountability and agreement on project details, finances and any amendments required.
Do you need help resolving a property construction dispute?
Giambrone is an award-winning, full-service law firm. We help settle disputes as quickly as possible, without accruing heavy court costs where possible. Our real estate team have a track record in successfully managing the legal requirements necessary for estate management, regeneration programmes and joint ventures and collaboration agreements.
To talk to one of our experienced real estate lawyers today, request a call back here.
Frequently asked questions – resolving construction disputes
Can you refuse to pay a contractor?
If a contract exists, then you must settle any payment agreed, unless you are withholding payment as part of a legal process.
What happens if a contractor abandons a job?
Document attempts to discuss the matter and get the work completed or to secure financial compensation, then resolve the dispute with one of the methods outlined above. You may also want to flag the issue with your local authority.
Can you sue a builder?
You can take out a lawsuit against a builder if you have clear evidence of some form of professional negligence. Be aware there is a statute of limitations on breach of contract, limiting your window of opportunity.
How long do builders have to fix defects?
This depends on the level of work required and any ‘reasonable’ and practical requests you make. The best way forward is to agree on a timescale, and then take action if completion stalls.
What is an amicable settlement of disputes?
The first step in resolving real estate disputes should always be an attempt to settle the issue with a calm discussion, using documented evidence of your grievance. Give the opposing party a chance to explain, and then mutually agree on a way forward.
How do you file a claim against a general contractor?
If your contract was with a general contractor, and the subcontractors used caused the dispute, you can then file a claim against the general contractor as they have potentially shown professional negligence in overseeing the work.
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