The purpose of Articles 1 through 3-A of New York’s Lien Law is to protect those who perform labor, or furnish materials, for the improvement of real property in the State.  Although it is commonplace to see in the reported cases construing the statute the virtue that it is to be liberally applied, one should not make the potentially costly mistake of assuming that carelessness in the preparation, service and filing of a Notice of Lien will not have serious consequences for the aspiring lienor.

One common error is to fail to identify sufficiently, in the Notice of Lien, the real property as to which the lien (on a “private job”) is intended to encumber title, or the identity of the “owner” (which term, as used in the Lien Law, may have a broader meaning than the actual fee owner of the property).  Subcontractors, in particular, are liable to err as to the nature of the construction project as a “private job” or “public job,” and/or the identity of the owner.  Often, the use of a commercial company to attend to the preparation, service and filing of the lien will be an economy.  It’s not an economy, however, when the lienor is owed a large sum of money, a valid lien represents the best (or only) hope of getting the lienor paid, and the lien is invalidated because of the preparer’s carelessness or errors.

Another error is to wait to file a lien until the statutory time to do so is about to expire.  Lien Law § 12-a provides for the amendment or modification of a Notice of Lien. However, in addition to a requirement that the lienor make an application in court, there are three criteria which must be satisfied for the court to grant relief.  First, the Notice of Lien, as filed, must be “valid.”  Second, the modification must affect an error that is not a substantive defect.  Third, the modification must not be to the prejudice of another party.  Often, a lienor will delay filing its lien until the eleventh hour. Such may be a product of mere procrastination, or they may be the result of the lienor’s wish to delay or avoid antagonizing the party against which the lien is to be filed, with hopes of minimizing damage to the business relationship.  The latter concern may be a valid one, but should not be indulged in without an appreciation of the risks.

If you file a Notice of Lien containing one or more errors, the errors in question may, or may not, be ones that can be corrected by an amendment.  The line between a mistake that can be corrected by a court order allowing an amendment, and one that cannot, is not always clear.  If a motion for leave to amend is uncertain to succeed, often the lienor’s rights can be preserved by preparing, serving and filing a new Notice of Lien and cancelling the erroneous one filed previously.  If, however, the time to file a Notice of Lien has expired, the remedy of substituting a new Notice of Lien will be unavailable as the new Notice of Lien will not “relate back” to the date that the first, defective, Notice of Lien was filed.  While it’s well and good to try to maintain amicable relations with a general contractor, developer or owner that owes you money, the later you file, the less time will remain to investigate and correct any errors that may be discovered.

The recent case of Metro Woodworking Inc. v. Hunter Roberts Construction Group, LLC, illustrates some of the pitfalls.  Hunter Roberts was the general contractor on a project known as “Site 25,” a hotel and retail complex in New York City.  Metro Woodworking entered into a subcontract to perform millwork at “Site 25” for Hunter Roberts.  Three days after that subcontract was terminated, Metro Woodworking — apparently believing the project to be a private job — filed a Notice of Lien with the County Clerk purporting to run against the real property and identifying “GS Site 25” as the fee owner.  Metro Woodworking filed an action against Hunter Roberts, with causes of action for breach of contract, and for the foreclosure of its lien.

The Notice of Lien was dismissed by the court on motion.  Alas for Metro Woodworking, not only was GS Site 25 not the fee owner of the premises (it was a sublessee), but the true owner was the Battery Park City Authority (BPCA), a public benefit corporation created under Public Authorities Law § 1983.  As filed, Metro Woodworking’s lien was invalid because BPCA is a public entity, and the filing of a private lien against a public entity affecting its real property is not permitted.  Metro Woodworking’s proper remedy was to file a public improvement lien.  Such a lien would not have run against any real property, but only against amounts due or becoming due from whichever party was Hunter Roberts’ contractee on the project.

Metro Woodworking made a motion to reargue or renew, asserting that the defect in identifying the interest of the “owner” was not irremediably fatal because (it asserted) the Lien Law requires only information to the best of the creditor’s knowledge. The Court granted reargument but, upon reargument, adhered to its original determination, finding that a mechanic’s lien on a leasehold interest cannot be filed against real property owned in fee simple by a public entity.  Thus, the Notice of Lien filed against the Site 25 real property owned by the BPCA was not valid, was properly vacated upon the initial motion, and was not capable of being amended or modified.

“Allowing the modification of this lien,” the Court reasoned, “would result in the transformation of a private lien into a public lien.  Those liens are of two different kinds, filed in two different places, and differently published. [* * *] Metro Woodworking’s services resulted in improvements upon the property belonging to BPCA, the public entity.  As such, those improvements are public improvements, according to the Lien Law § 2(7) definition.”

The Court also rejected Metro Woodworking’s argument that it substantially complied with the Lien Law. Metro Woodworking argued that the lien was valid since the “owner” named in its Notice of Lien, GS Site 25, held a leasehold interest in the property; and, under the Lien Law a tenant (or subtenant) can be an “owner” against which a lien can be filed.  While it is true, the Court found, that a lessee can fit within the definition of an “owner” in Lien Law § 2(3), this is true only insofar as the subject matter of the lien is owned by a private entity.  Metro Woodworking complied with the Lien Law as the latter pertains to private improvements, not to public improvements.  Nor could “substantial compliance” salvage Metro Woodworking’s lien, the court found, because it substantially complied with the Lien Law only as the same applies to a privately-owned real property.  Consequently, the first element necessary to give power to the court to authorize the amendment of the Notice of Lien — that the latter be valid as filed — was unmet.  Wherefore, the motion for leave to amend the Notice of Lien could not be granted.

If you believe your lien to be for a significant amount of money, it may be a good investment to have a professional title search done before filing your lien.  In any case, if you intend to file a lien at all, it’s usually better to file as promptly as possible.  It’s important, too, to take pains to get the lien notice and filing procedures right the first time.  The deadlines are relatively short and unforgiving, and you should not take it for granted that errors are unimportant because of the possibility of correcting them later via amendment under Lien Law §12-a.

Lien Law § 9 provides a checklist of what must be contained in a Notice of Lien on a private improvement.  The requirements for the contents of a Notice of Lien on a public improvement are set forth in Lien Law § 12.  The procedures and deadlines for service and filing are also set forth in the statute.  Careful work in preparing, serving and filing a lien is critical, and a lack of care may be very costly.

One of the easiest ways to forfeit your rights under a construction contract is to fail to understand, and take action within, the many time limitations that may exist in the agreement. A perfectly valid and justified claim can become valueless for the want of something as simple as a letter providing notice of your claim within a specific time period. These time limitations are often found not only in your typical construction contracts, but also in statutes enacted by the state legislature. While adhering to the terms of your contract is of utmost importance, your rights can be lost just as easily when you fail to abide by the provisions of the various statutes that affect your contract. The fact that such laws are in a state of constant change makes this task all the more difficult.

Take, for example, the recent case of Kafka Construction Inc. v. New York City School Construction Authority (125 AD3d 933 [2d Dept 2015]), decided by the Appellate Division in February. Kafka contracted with the New York City School Construction Authority (SCA) to perform approximately $12 million worth of work at a high school in Queens. The contract allowed the SCA to opt to have Kafka not perform some of the work under the contract (and be credited accordingly). The SCA exercised this right and Kafka completed the reduced scope of work. Prior to final payment, the SCA requested that Kafka provide a change order reflecting the credit due to the SCA based on the reduced scope of work. On February 4, 2011, Kafka provided a change order proposal to the SCA reflecting a credit of $192,608.18. The SCA did not respond to the Kafka proposal until September 14, 2011, when it claimed that its own calculation showed that the proper credit amount was $814,535.00.

Two weeks later, Kafka served a Notice of Claim on the SCA for $621,926.82, the difference between the Kafka and SCA change order values. The parties’ attempts to negotiate a settlement were unsuccessful, leading Kafka to commence a lawsuit. The SCA made a motion to dismiss, claiming that Kafka had failed to serve a timely Notice of Claim pursuant to Public Authorities Law § 1744(2)—which requires, among other things, that a Notice of Claim be filed with the SCA within 90 days of the accrual of the claim. Kafka argued that its Notice of Claim was timely as its claim accrued on September 14, 2011, the date it received the SCA’s conflicting change order. The SCA argued that Kafka’s claim accrued on February 4, 2011, when it submitted its change order to the SCA. The lower court agreed with the SCA and dismissed the complaint, citing New York cases which held that a claim accrues under Public Authorities Law § 1744(2) at the time that work is substantially completed or a detailed invoice for the work performed is submitted. Based on that definition of accrual, Kafka’s claim accrued when it submitted its proposed change order on February 4, 2011. The appellate court affirmed the dismissal of Kafka’s suit on the same grounds set forth by the lower court.

The result of the appellate court’s holding was that Kafka’s claim had both accrued and expired before the SCA ever made any determination as to what credit it was owed in the first place. In fact, the lower court noted that under New York law, a contractor’s claim may become time-barred before there is any reason to expect litigation.

Lest seemingly odd results (like what happened to Kafka) continue to happen, on December 17, 2014, the New York legislature amended Public Authorities Law § 1744(2) to provide that a claim accrues when payment for the claimed amount is denied (i.e.: when the contractor first has a reason to know that there is a dispute as to the amount owed). However, since that provision was only deemed effective as to contracts executed after its effective date, Kafka was still out of luck.

Practice Tip: The Kafka case is illustrative of the extreme importance of staying on top of project events and exercising forward thinking in relation to those events. A failure to identify what may grow into a claim at the earliest possible moment could be fatal to recovery, as it was for Kafka. Still, early identification of potential claims is only step one. Strict compliance with statutory and contractual limitations regarding those claims is just as critical. Also, even though the possibility of an outcome like that in the Kafka case has been mitigated by the new law, it is still wise to err on the side of caution and send a notice of claim to protect your rights anyway. In the end, it is important to consult your construction attorney on these matters so you can keep your mind on the task at hand—the construction itself.

A recent decision¹ in the Appellate Division, Fourth Department, affirmed the adage that if you don’t get it right the first time, try, try, again, applies to public bidding in New York State.

Here, the Contractor was the low bidder on a County project and was awarded the contract.  During its post-bid review, however, the Contractor discovered “two unconscionable and substantial clerical errors”, whereby it omitted the costs for two subcontractors from its bid.  The Contractor asked the County for permission to withdraw its bid.  The County granted the request and returned the Contractor’s bid bonds.  The County also notified all bidders of the situation, and told them that it intended to rebid the contract. 

The County advertised for bids and the bids were opened, only to find that the same Contractor was again the low bidder.  The County again awarded the contract to the Contractor, however, this time, the second low bidder objected and commenced an Article 78 proceeding, seeking to disqualify the low bidder from participating in the rebid, vacating the award of the contract and directing the County to award the contract to the second low bidder.   The Supreme Court agreed and vacated the contract.  The County and the low bidder Contractor appealed the Appellate Division, Fourth Department.

The appellate court indicated that the sole remedy for a bid mistake under the General Municipal Law is the withdrawal of that bid and the return of the bid bond to the bidder.  That is what the County did said the court.  Under the General Municipal Law, said the court, the County is also permitted, in its discretion, to award the contract to the next lowest responsible bidder or rebid the contract.   The County, said the court, acted within its discretion when it decided to rebid the contract, rather than award the bid to the next lowest bidder.

The appellate court also said that the General Municipal Law is silent on the question whether a contractor that was permitted to withdraw its bid may or may not participate in the rebid.   Since the Legislature did not forbid a contractor in that situation from participating in a rebid, the court said, “a court cannot by implication supply in a statute a provision which it is reasonable to suppose the Legislature intended intentionally to omit”.  Accordingly, the court refused to read in an implicit prohibition against allowing the contractor, who previously withdrew its bid, to participate in the rebid.

The Contractor’s rebid, said the appellate court, was not an amendment to or reformation of a bid to rectify an error, which is prohibited by the General Municipal Law.  The Contractor’s bid was just like the bids submitted by the other bidders on the rebid, and it did not compromise the integrity of the competitive bidding process.

¹ Matter of Concrete Applied Tech. Corp. v. County of Erie, 2015 NY Slip Op 06087

In the case of Persaud v. Bovis Lend Lease, Inc., the Appellate Division reminded us that absent a specific reference or the attachment of a prime contract to a subcontract, not every provision of a prime contract carries over into a subcontract. In Persaud, the injured employee of an electrical sub-subcontractor sued various defendants, but not his employer – the Workers’ Compensation Law statutorily insulates the employer from actions for injuries by employees. Those defendants then sued that employer to recover for any damages they might incur as a result of the employee’s lawsuit. The suit against the employer was based on three legal theories: contribution, common-law indemnification, and contractual indemnification. The contribution and common law indemnity claims were dismissed because the injured employee did not suffer a “grave injury”, as that term is defined in the Worker’s Compensation Law.

As to the remaining claim, the Court observed that an employer may be subject to an indemnification claim based on a provision in a written contract. Certain of the defendants argued that the agreement between the general contractor and its subcontractor required insurance. However, the electrical sub-subcontractor was not a signatory to that agreement. Consequently, certain defendants argued that the subcontract signed by the electrical sub-subcontractor incorporated “by reference” the insurance requirements of the prime contract agreement. In rejecting that argument, the Court reaffirmed the long-standing principle of New York law that incorporation clauses in a construction subcontract bind the subcontractor only as to prime contract provisions relating to the scope, quality, character, and manner of the work to be performed. Therefore, the Court held the contractual indemnification and insurance requirements of the prime contract agreement here were not incorporated by reference. The electrical sub-subcontractor established that no other written agreement existed and the defendants failed to raise a triable issue of fact in opposition. 

The Lesson Of The Decision:

Should it be desired that all prime contract provisions apply to a subcontract, the prime contract in its entirety must be physically affixed to the subcontract, and the subcontract must contain language to the effect that “the subcontractor is on notice and acknowledges every contact provision in the prime contract agreement, attached hereto, is applicable to the subcontractor in addition to those prime contract provisions relating to the scope, quality, character, and manner of the work to be performed.”

A general contractor that expects to hold its subcontractor to the subcontractor’s obligations under the subcontract must be able to demonstrate that it complied with its own obligations under that contract.   Failure to show such compliance can relieve the subcontractor from its remaining obligations under the subcontract. 

In U.W. Marx, Inc. v. Koko Contracting, Inc. (124 AD3d 1121 [3d Dept 2015]), the general trade contractor did not pay its roofing subcontractor for three months, alleging that the subcontractor failed to provide all the necessary documentation required under the terms of the subcontract and a supplementary contract.  After not being paid for July, August and September, on October 31 the subcontractor removed its workers from the project site.  On November 3, the general contractor gave the subcontractor a three-day notice to cure its default. On November 6, the subcontractor belatedly gave the general contractor a seven-day notice of its suspension of work, based upon non-payment, under Section 4.7.1 of the contract.  Section 4.7.1 followed the AIA standard form, which provided:

“If the Contractor does not pay the Subcontractor through no fault of the Subcontractor, within seven days from the time payment should be made as provided in this Agreement, the Subcontractor may, without prejudice to any other available remedies, upon seven additional days’ written notice to the Contractor, stop the work of this Subcontract until payment of the amount owing has been received.  The Subcontract Sum shall, by appropriate adjustment, be increased by the amount of the Subcontractor’s reasonable costs of demobilization, delay and remobilization.”

The general contractor sued the subcontractor for breach of contract based on its failure to perform its work.  The subcontractor commenced a separate suit against the general contractor and its payment bond surety, and the two actions were joined for trial. After that (non-jury) trial, the lower court found that the general contractor’s proffered reasons for withholding payment were unsubstantiated and unjustified and, therefore, the general contractor’s failure to pay was a material breach of the contract.  The general contractor and its bonding company appealed.

Conceding its material breach, the general contractor argued to the appellate court that the subcontractor was precluded from any recovery against the general contractor because the subcontractor suspended its work without complying with the provisions of section 4.7.1. of the contract.

The appellate court was not persuaded by the general contractor’s argument.  While it was clear that the subcontractor did not comply with section 4.7.1, the general contractor’s material breach, said the appellate court, was an uncured failure of performance that relieved the subcontractor from performing its remaining obligations under the contract.

      One practice that all contractors should get in the habit of is to provide timely written notifications of all delay and extra work claims. Simply put, do not be lulled into noncompliance even if you believe the owner/general contractor is aware of your claim—it will likely result in a loss of an otherwise viable claim. Of course, delivering high quality construction services is important, but it is also important to keep “high quality records”. Undoubtedly, if reviewing well-kept records and notifications permits an owner/general contractor to more efficiently complete a project and minimize delays, they are more likely to pursue a continued business relationship with that contractor. Again and again, contractors are advised to document all claims on a construction project, provide timely notice and to familiarize themselves with any contractual notification requirements. In the recent decision in Fahs Construction Group, Inc. v. State of New York (123 A.D.3d 1311 [3d Dept 2014]), the Appellate Division, Third Department, highlights the costs of a failure to do so.

      The dispute in Fahs Construction Group arises out of a 2003 project for the reconstruction of a bridge and stretch of a state highway. The contractor completed the project after the project deadline, allegeing that the delays were caused by the owner’s addition of work to the contract without a sufficient extension of time. The contractor filed a breach of contract claim, which was dismissed upon the owner’s motion for summary judgment. The contractor appealed.

      The Appellate Division upheld the lower court’s decision, finding that contractor failed to provide contractual notification for its delay and extra work claims, and failed to keep and furnish certain records of damages to the owner. The contractor had argued that the owner had waived its noncompliance, had actual knowledge of the contractor’s claim, and had prevented it from complying with the contractual requirements. The Appellate Division was not persuaded by these arguments and enforced the contractual provision that required strict compliance with all notice requirements and explicitly made all such requirements a condition precedent to payment. Importantly, the Appellate Division was unmoved by the contractor’s claims that the owner had actual timely knowledge of the delay and extra work claims. The contractor’s “actual notice” argument was doomed by a contractual provision stating that even if the owner may “have actual notice of the facts and circumstances which comprise such dispute”, its failure to supply required notice and records is deemed a waiver of any related claim.

       The contractual notice and record keeping provisions clearly placed a burden on the contractor and required it to document any delay or extra work claims. However, from the owner’s perspective, such provisions are in place to ensure that costs and delays are minimized. In this case, the contractor has only itself to blame for the failure of its claims because it either failed to read and understand the notice requirements or ignored them to its detriment.

       Fahs Construction Group provides a reminder to all contractors to carefully read and understand the notice and record keeping requirements set forth in the contract. For more complicated contractual provisions, it is advisable to review these requirements with an attorney—both before entering into the contract and during a project so as to ensure continued compliance. Moreover, even without contractual notice and record keeping requirements, contractors should strive to follow the best practice of providing notice of any potential claim at the earliest possible time—and supplementing the claim with additional information as it becomes available. In doing so, a contractor may avoid the fate of Fahs Construction Group and recover for meritorious delay and extra work claims.

This Legal Alert is supplied for informational purposes only and it is not intended to constitute legal advice. You should consult competent legal counsel depending on the specific issues of your matter.

When it comes to construction project delivery systems, for everyone involved, efficiency is king. Increased efficiency in the contracting, design and construction phases of a project means tremendous added value. Of course, the overall quality of the project design, in terms of functionality, safety, and durability, is also important. The latter concern has been translated into legislation requiring that construction design services only be provided by licensed design professionals and enforcing legal penalties against those entities that provide or aid in provision of unlicensed design services. See, N.Y. Educ. Law § 7200 et. seq. and § 6512-6516. This legislation, while promoting important public policies, can be a hurdle to the overall efficiency of project delivery by forcing owners to retain separate entities and enter separate contracts for the design and construction aspects of their projects.

One type of project delivery system, known as Design-Build, attempts to avoid this hurdle by providing, in a single contract between the contractor and the project owner, that the contractor will use an independent licensed design professional to perform all design work on the project; there is no separate contract by the owner for the design.  Design-Build contracts offer owners efficient full-package project delivery in a single contract while also fostering coordination of work by increasing the contractor’s familiarity with the project design. Design-Build contracts have been utilized in both public and private construction and are noted for a handful of benefits including schedule acceleration, lowered costs, superior risk allocation and encouragement of investment in New York infrastructure.

The current authorization for the use of Design-Build in private construction is attributed to the 1988 New York Court of Appeal’s decision in Charlebois v. J.M. Weller Associates, Inc.¹ where the Court of Appeals determined that a contract which provided that the general contractor would subcontract design work to a licensed professional engineer was not in violation of the Education Law or its underlying policies. As for public construction, the use of Design-Build contracts is generally seen as a violation of the Education Law in the absence of legislation to the contrary. For instance, New York State Assembly Bill S50002-2011 explicitly allowed a few state agencies to use a Design-Build project delivery system for contracts costing $1.2 million or more for three years after passage of the bill.²

Interestingly, at the same time that Bill S50002-2011 authorized Design-Build contracts, it also seemingly condemned their use on other public and private construction projects. The bill included a paragraph stating that under existing law, pre-bill, public entities were not authorized to use a Design-Build delivery system. This poses a problem because the Education Law governs both public and private construction, without distinction, and thus its application to public construction could translate to private construction.

So where does that leave the status of Design-Build in New York? In the public realm, contracts that were entered into pursuant to the Bill S50002-2011 Design-Build authorization are unaffected. However, the limited authorization provided by the bill expired at the end of 2014 and due to discord in the state senate over labor-related portions of the bill, the anticipated extension of the Design-Build authorization never occurred. Thus, use of Design-Build is currently unauthorized on public contracts entered into in 2015 or later and will remain so until passage of new Design-Build legislation. The failure of the state legislature to extend the authorization of Design-Build contracts potentially prevents New York agencies, and therefore taxpayers, from reaping prospective savings exemplified by the estimated $1.5 Billion saved through the use of Design-Build on the new Tappan-Zee Bridge Project alone, not to mention a handful of other transportation related projects.³

As far as private construction goes, the use of Design-Build appears to be in less jeopardy. New York case law since Charlebois has upheld the notion that a design-build project delivery method does not violate the provisions of the education law licensing protections or the public policies that stand behind said protections. Until a New York State court decides otherwise, Design-Build appears to rest on stable ground for private construction in New York.

Conclusion:    With the status of Design-Build in jeopardy, project owners, general contractors, and design professionals are faced with a perilous catch-22. One the one hand, the prospect of utilizing a design-build project delivery system seems optimal in terms of saving money and harmonizing work. On the other, all three parties risk financial and possibly criminal consequences for engaging in a seemingly benign, if not beneficial, process. Parties who plan to use a Design-Build project delivery method should consult with their construction attorney to ensure that the contract language provides for an authorized use of the design-build method and also to ensure that that language is being complied with at every step of construction.

Editor: Thomas S. Tripodianos, Esq.

The construction industry requires a contract for just about everything. The contract you enter into, whether it is a construction contract, a performance or payment bond, an insurance agreement, a design contract or some combination of the above, contains language that will determine whether you are protected if the project goes awry. The necessity of risk allocation in construction projects has led to the widespread use of form contracts developed to reduce to writing what the form’s author believes to be a fair transfer of risk between contracting parties. However, using a commonly employed form contract is no guarantee of optimal risk allocation and no excuse not to read and understand the language of your contract.

A recent decision of the Appellate Division, Second Department in Archstone v. Tocci Bldg. Corp. of New Jersey, 119 A.D.3d 497, 990 N.Y.S.2d 44 (2014), highlights the importance of familiarizing yourself with your contracts, even when a form is used. In 2004, Archstone, a project owner, enlisted Tocci as the general contractor for the construction of a 396-unit apartment complex. Before construction, Tocci secured a performance bond from Liberty Mutual Insurance Company (Liberty Mutual) to ensure the completion of the contract. The bond format was a commonly used form performance bond from the American Institute of Architects (AIA) known as A312 – 1984. After Tocci had substantially completed the project, Archstone discovered extensive water intrusion damage which it alleged was attributable to Tocci’s faulty design and construction. In 2008, Archstone brought an action against Tocci and Liberty Mutual.

Liberty Mutual argued in response that Archstone failed to comply with notice provisions of the performance bond and was thus precluded from asserting any claim on the bond. Paragraph 3.1 of the bond required that Archstone notify both Tocci and Liberty Mutual if it was considering declaring a default and to further request and attempt to hold a conference within 15 days of that notice to discuss alternative solutions to declaring a default. Archstone, admittedly, had not complied with 3.1. The Supreme Court, Nassau County agreed with Liberty Mutual and granted summary judgment dismissing Archstone’s claim against it. The decision was affirmed by the Second Department, which cited other New York courts interpreting non-compliance with Paragraph 3.1 of A312 – 1984 to be a bar to recovery on the bond.

The AIA makes changes to its forms on a regular cycle in order to better suit the needs of contracting parties. Interestingly, in 2010, the AIA updated form A312 adding a new paragraph after 3.1 explicitly stating that compliance with 3.1 was NOT a condition precedent to recovery under the bond and therefore recovery could be had without compliance with that paragraph. The change reflects AIA’s opinion that the notice provisions of 3.1 were meant to protect sureties from actual prejudice from non-compliance, not to be an escape rope. Unfortunately for Archstone, its contract predated the 2010 changes, and so, although the outcome is contrary to the AIA intention as described in the 2010 change, it was barred from recovering on the bond.

Practice Tip: The Archstone decision is a reminder of a couple key points. The first is that form contracts provided by entities such as the AIA are constantly changing and so the parties that use those forms should stay apprised of what changes are occurring and why. Second, form agreements are only a good starting point. Each project is unique and the agreements used on that project should be drafted to take that uniqueness into account. Third, and most importantly, carefully read each of your contracts including ancillary agreements such as bonds and insurance contracts. When doing so, pay close attention for provisions that affect your ability to assert your rights under the contract and when in doubt, consult your construction attorney to help you draft or identify and understand these key provisions.

See other changes to A312-1984 and related AIA documents at the link below:

http://www.aia.org/aiaucmp/groups/aia/documents/pdf/aiab083075.pdf