Contract Question - Are Architectural Services Permit Costs?

Question

Hi BP Team,

I have a question related to my recent bathroom addition & kitchen remodel.  I hired a contractor for the project and we spelled out all of the different items that I wanted them to complete.  Two of the items in the contract were the following:

• - Client to Reimburse for all Permit Costs
• - Contractor responsible for obtaining all permits.  Contractor will complete the permit process and get all necessary inspections

I just got a final bill that was quite a bit higher than expected.  $1,300 of it was due to architect costs.  They are saying that the architect services fall under the category of "permit costs".  Based on the language above in the contract, would you say it's reasonable for them to expect me to pay for the architect costs?

I had also provided plans and drawings prior to the start of the project.  In total the project was fairly large - around $40k cost ($30k of that going to this general contractor I mentioned above)

Was hoping to get the BP communities feedback on this.  Thanks for all of your insights!

Samuel Pavlovcik · Answer

As an Architect, I can definitely confirm that "Architect Costs" are Not "Permit Fees". As others have mentioned, permit fees may be included in the cost of your Architect (All though I prefer to keep this separate and let the Owner's pay directly) the "Permit Fees" are whatever the City, Village, County (etc.) are charging for you to obtain the permit. That money goes to the Municipality and not to the Architect. The "Architect Fees" go to the Architect for the services they provided.

That being said, your contractor's agreement stated that he was responsible for obtaining all permits. If he hired an Architect to process the paperwork and male the permit run, that was His decision, and it took work off His plate which means He should be paying for it. I wouldn't be surprised if he assumed he could handle it and then the local municipality informed them that they needed "Plans Stamped by an Architect" at which point he decided to get an Architect on board to get stamped plans done. The issue is he should have come to you and informed you that the Municipality was requiring this, and inform you that the plans you provided were not going to be usable for obtaining the permit without having an Architect's stamp, and therefore needs to charge you extra... Since your contractor did not do this, it is your Contractor's responsibility to pay the "Architect Invoice", as well as the "Permit Runner costs". All you would contractually be obligated for would be the "Invoice from City for Permits". I would also Highly recommend that you get a copy of the receipt from the Permit Fee payment, proving that the permit fee for your $40K project was actually that high. While I do know of some cities/villages that have pretty high permit fees, $1,200 for a $40K project is definitely on the highest end, and in most other cities, it would likely be closer to $300-600. I also think that the Architect's Invoice sounds pretty low. Not to say that your Contractor is lying to you, but your they may be trying to hide some of the Architect's fees in the permit costs in case you fight them on paying for the Architect.

All of that being said I am really hoping that the Architect is not the one getting screwed over in this, and hasn't collected any/all of their payment from the contractor at this point because I have seen many times where that ends up being the case and the Architect had to put in time and effort that he never gets paid on, due to a miscommunication from the Contractor that hired them, and due to a bad fee schedule that only required payment at completion of their work... Professionally speaking, I think we have all lost out on some billable work in our careers; and that becomes the Tuition fee you just paid to learn to work with better contractors, or have better contracts.

Trenton Miller · Answer

Architect fees don't fall into Permet Fees when we do our contracts.  Architecture work is a completely different task.  Yes, their drawings are used in the permitting process, however, it definitely isn't a permitting cost.

As stated above, if the contractor hired the architect without your knowledge or consent, I would argue that those costs fall on him or her.  However if architectural plans were needed in order to obtain permits, then you should have been notified of that by the contractor as well as incurred costs prior to the fact.

Simon W. · Answer

I was a developmental controller so I had to deal with the accounting side of it. Architect is not permit cost UNLESS the Architect paid the permit cost first and you had to reimburse it.

Were you aware that there was an architect involved considering you already provided plans/drawings already?

Simon W. · Answer

@Matthew Holland You should ask the contractor for the Architect Invoices that shows the paid the permit costs. However, if the contractor hired the architect without your approval then I would argue that architect fees should've been in the contract.

Lorenzo Wright · Answer

Sounds to me a pretty clear case of the contractor didn't account for the cost of architectural plans and tried to wrap the costs into permit costs based off of the need for the plans to acquire the permit.

Simon W. · Answer

In Accounting, Architect Fees are separated with Permit Fees. This falls on the Contractor to eat the bill. Contractor's price to you should be included the Arch. fees. Especially, if you haven't approved the architect or had an agreement in writing with the architect. I had read 20 pages agreement with the Architect before both parties signs.

Just food for thought.

Matthew Holland · Answer

@Simon W. - They provided all of the invoices.  There are separate invoices for the permit costs and architect.  The architect didn't pay any of the the permit costs.  The full description of services they had with the architect was: "The architect shall prepare the architectural submittal set for conversion of bedroom into a bathroom at the single family house located at {address inserted}"

The invoices for permits & architectural services broke down to the following:

Architect Invoice - $1,300

Invoice from City for Permits - $1,200

Permit Runner Costs - $300

Matthew Holland · Answer

Hi @Simon W., really appreciate your insight on this.  The plans/drawings that I provided were made by an experienced real estate professional however they are not a licensed architect.  They had made drawings in the past for other renovation projects which were sufficient for obtaining the permits from the city

Contract Question - Are Architectural Services Permit Costs?

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