Experience With Construction Agreements?

Question

I'm closing on a 74k sq ft (5 warehouses) Class B Industrial facility this week.  This is the largest Adaptive Reuse project that I've taken on.  Each of the 5 warehouses on this campus will require updates (construction of offices/bathrooms, roof repairs, paint, siding repairs, new penetrations for doors, updates to electrical, insulation, and extension of water and sewer).  My Insurance Agent has strongly recommended that I put a Construction Agreement in place with my Contractor to shield me from liability, etc.  I'm curious as to whether others have walked this mile and whether you have any suggestions on how I can accomplish this.  Thanks in advance!

Chris K. · Answer

@Bart Tilly

There are various "standard" agreements available in the marketplace (e.g. AIA, ConsensusDOCS, etc.). Assuming you have an architect, my guess is that they will lean towards using the AIA docs. They will likely have the ability to generate them.

Disclaimer: While I’m a licensed attorney, I’m not your attorney. What I wrote above does not create an attorney/client relationship between us. I wrote the above for informational purposes. Do not rely on it for legal advice. Always consult with your attorney before you rely on the above information.

Henry Clark · Answer

OP.  Your primary strategy should be to have the Contractor and all Subcontractors add you to their insurance policy as Additional Insured.  You need to renew this annually.  I would look at their policies and make sure both the coverage and deductibles meet your needs.  Take a look at Personal Property versus Real property coverage, plus clean up costs to make sure your covered.

I would also look at covering your project from the Subcontractors.  Work with your attorney for what is needed to insure all subcontractors get paid by the General Contractor.

Make sure the insurance covers Construction period and also materials.

Talk with your Commerical insurance agent and they should address the above questions with you.

If this is an older facility make sure your engineering firm has covered Fire Suppression systems and any Storm pond or drainage systems.  Some of this may have been grandfathered in, but now need updating.

I would pay the extra say $50,000 to have an Engineer firm go over.

Ronald Rohde · Answer

Its definitely a big cost/premium risk allocation discussion

Experience With Construction Agreements?

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