Architectural Contracts, Disputes Architects, Design Professional Liens, Mechanics Liens and Copyrights
Contracts with Architects are different from many other construction industry contracts. First of all, the contracts are usually form contracts drafted by the American Institute of Architects (“A.I.A.”), and are typically more favorable to the architects, and not the property owner or client.
Additionally, architectural fees (which often also include the cost of a structural engineer, mechanical engineer, and other designers, but not usually the soils or geotechnical engineer) are usually based on a percentage of the ultimate actual future construction cost, plus other items, sometimes with a maximum fee.
It is therefore a good idea to include in the contract or an addendum the maximum fee, or the construction cost or budget you have in mind, to avoid a later surprise and higher building and architectural costs.
Architects’ estimates of construction costs are often too low, and the A.I.A. form contracts typically absolve the architect from responsibility if the actual construction cost comes out higher than the designer’s estimate.
Your contract should require that the Architect redesign the project if necessary to bring the contractor’s costs within your budget, if the contractors’ bid is too high.
Architects also often provide construction supervision (or “observation”) services, to assure that the builder meets the design requirements, correctly interprets the drawings, receives approval of shop drawings, and to assure that the contractor’s payment applications are correct as to the amount owed for the percentage of work complete.
It usually a good idea to have the architect performs these services and maybe also help you find or evaluate prospective contractors. These construction phase costs can add about 5% - 15% to the amount of your bill, or more.
The A.I.A. form design contracts allow the owner to terminate the architect for “cause” or for “convenience”.
To terminate the architect for “cause” usually requires that there be some material breach of the contract, incompetence, fraud, etc.
If the contract termination is for your “convenience”, you may be required to pay the full architectural fee, even if the architect’s work was only partly performed.
Because architects (and other designers) have a Copyright in the original or creative part of their designs and drawings, if you terminate an architect for your “convenience”, you may not be able to have someone else complete the architect’s design, or to construct the project at all based on the original architect’s design, unless the termination was for good “cause”, as determined by a court or arbitration panel. “Cause” personably means incompetence, delays, breaches of contract, etc.
Designers may sue in Federal Court for violation or infringement of a registered Copyright, and seek an injunction against the unauthorized use of the drawings to construct the project, statutory damages, actual damages, any profit made by unauthorized use of the drawings as well as, plus costs and attorneys fees.
A.I.A. form contracts usually provide for or require mediation or arbitration of disputes with architects.
Licensed Architects, Engineers or Surveyors in California who have written contracts with property owners also have a right to a “Design Professional’s Lien” on the owner’s property, for the amount claimed to be owed for their design work.
Unlike mechanics liens in California, these liens can be effective even if no construction work is ever commenced on the property. But for a designer’s lien to be validly recorded, at least a building permit or similar government approval for the project must have been issued.
The amount of the lien is the amount still owed on the design contract. Ten days prior to recording the lien, the designer must first serve a written demand for payment on the owner, by certified or registered mail.
The lien must be recorded with the County Recorder within 90 days of when the architect first learns that construction is not going forward, and suit must be filed on the lien within 90 days of its recording or the lien becomes invalid.
If the project proceeds to construction, the designer may of course record a regular Mechanics Lien any time before or within 90 days of “completion” or “cessation” of construction work on the whole project.
Of course, architects and even unlicensed designers may also sue for breach of contract, Copyright Infringement, and on other claims, as may as property owners.
Most architects carry limited “claims made” liability or “errors and omissions” insurance for their negligence or errors or omissions. But always ask to see the actual insurance policies to be sure the designer is insured, as current certificates of insurance are difficult or impossible to enforce. The typical designer’s insurance policy only covers claims made during the period covered by the policy, not claims arising later, unless the designer also has subsequent policies.
For design contracts on a project of any significant size or complexity, it is advisable to consult with an experienced Construction Attorney to make sure the agreement will satisfy your needs, and those of the architect, and protect your interests.
N.B. The contents of this Article do not constitute legal advice or create an attorney-client
relationship, and you may not rely on it without seeking legal advice regarding your
particular situation and contract from a competent government construction contracts attorney. Please also note that contracts very, and statutes and case law are frequently changing, and thus these materials may become outdated or incorrect.
© 2011, George W. Wolff all rights reserved
ABOUT THE AUTHOR: George W. Wolff, Attorney, Wolff Law Office
Mr. Wolff is "AV" rated by his peers under Martindale-Hubbell's Independent Lawyer Rating system, which evaluates lawyers and law firms in the US and Canada by asking other attorneys for their opinion. Just 5% of attorneys and law firms in the country qualify for and are awarded this "AV" rating.
Born Aurora, Illinois; admitted to bar, 1973, Illinois; 1977, U.S. Supreme Court; 1978, California; 1982, New York, U.S. District Court, Northern District of California, U.S. Court of Appeals, Ninth Circuit; 1983, Trial Bar, U.s. District Court, Northern District of Illinois. Education: Purdue University (B.S., in Civil Engineering, 1964); Stanford University (M.S., in Civil Engineering and Construction Management, 1965); University of California at Berkeley (M.B.A., in Finance and Real Estate, 1970); Northwestern University, School of Law, Chicago (1972-1973); University of California, Hastings College of the Law, San Francisco (J.D., 1973).
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Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author.