Scarinci Hollenbeck, LLC, LLCScarinci Hollenbeck, LLC, LLC

Firm Insights

Understanding Construction Law

Author: Donald M. Pepe

Date: February 10, 2024

Key Contacts

Back
Understanding Construction Law

As property owners, developers, contractors, construction managers, subcontractors, design professionals, engineers, and lenders can attest, the legal issues that can arise in the construction industry are unique and complex. The stakes are also extremely high, which makes it imperative to have a solid understanding of construction law and how it impacts your legal interests.

Construction Law 101

Construction projects are generally subject to a myriad of federal, state, and local laws. For instance, a project may be subject to federal regulations involving the workplace and environmental safety, state laws governing licensing and building codes, and local ordinances establishing zoning and permitting requirements. Further complicating matters, the legal standards often differ for commercial, industrial, and residential projects.

Construction law is also unique in that it encompasses several distinct areas of law and often overlapping areas of responsibility. Below are some examples:

  • Contract law: All construction projects are governed by at least one contract (often, there are many.) Well-drafted agreements help ensure that everyone is on the same page about key issues such as the scope of work, project timelines, and payment terms. Solid provisions governing project delays, late payments, early termination, and breach of contract can often prevent costly disputes in the first instance or maximize your chances of winning the unavoidable disputes that often arise.
  • Environmental law: Many projects are subject to environmental regulations, whether due to the location or scope of the project. For instance, prior contamination of the property may require compliance with federal and state remediation laws. Projects may also be subject to regulations requiring property owners, developers, and others to take steps to minimize or remediate environmental impacts.
  • Financing law: Construction and development costs are often financed through construction loans and other financing structures. Lenders, property owners, investors, and even contractors are often involved in structuring, negotiating, and drafting the financing documentation that accompanies construction projects, including loan agreements and various types of security agreements.
  • Insurance law: Insurance policies play a key role in mitigating risk for many construction industry players. Certain types of insurance, such as workers’ compensation insurance, may be mandated by regulation. Other types of coverage, such as construction general liability insurance, builder’s risk, contractors’ errors, and omissions insurance, contractors’ pollution liability insurance, and excess liability insurance, may be required under the contract. Entities may also be required to carry a surety bond to back their obligations and contracts financially.
  • Labor law: Entities that employ workers on a construction project are generally subject to health and safety regulations, including the Occupational Safety and Health Act of 1970. Additional employment issues, such as those related to hiring, termination, hours, and wages, are also common in the construction industry.
  • Land Use and Zoning Law: Construction projects must comply with a host of laws that govern the suitable use of land and establish requirements for both planning and construction. Large and complex projects may involve a complex web of federal, state, and local regulations related to permitting, zoning, project closeout, and other land use matters.  

While it may seem overwhelming, understanding construction law has numerous benefits, including ensuring enforceable contracts, maintaining regulatory compliance, protecting your company’s legal rights, and reducing the risk of legal disputes.

Navigating Construction Litigation

The legal complexities of the construction industry often result in disputes. Lawsuits often arise around issues such as breach of contract through late or non-payment for work and services, late or non-complete work, material selections, and design and workmanship defects.

Because lawsuits can be costly and time-consuming, alternative dispute resolution (ADR) is often preferred over traditional construction litigation. As discussed in greater detail here, mediation relies on a neutral third party to help negotiate the differences in the parties’ positions in order to lead to the settlement of all or some of the issues in dispute. Unlike a judge or jury, the role of the mediator is to help the parties settle rather than make any binding decision regarding the dispute.

Arbitration is similar in that a neutral third party is appointed to resolve the dispute; the key distinction is that an arbitrator renders a decision, which is generally final. The process is much more formal than mediation but still offers many advantages over litigation, including a significantly faster and less costly resolution. In both forms of ADR, the parties can select a mediator or arbitrator who specializes in construction industry claims and, therefore, may be more knowledgeable than a judge or jury. Another key advantage of ADR is the ability to privately resolve disputes out of the public eye.

Litigation is sometimes unavoidable. Some legal remedies, such as mechanic liens, must be pursued in strict accordance with applicable statutory provisions. In some cases, it can also be advantageous to file a lawsuit because any court decision, whether rendered by a judge or jury, is eligible for appellate review. Since every legal dispute involves different legal and factual issues, it is advisable to consult with an experienced construction litigation attorney who can help determine the best dispute resolution mechanism.

Complex Construction Projects Require Comprehensive Legal Guidance

Construction projects involve a complex web of regulations and contracts involving numerous entities, many of whom have diverging financial and legal interests. It is imperative to legally protect your business and your projects.

Scarinci Hollenbeck’s construction lawyer team has extensive industry experience, particularly in New Jersey and metropolitan New York City. Our construction law attorneys also have the benefit of relying on their colleagues in related practice areas, such as Commercial Real Estate, Financing, Environmental, and Land Use, which gives our clients a tremendous advantage. By leveraging years of legal experience in every discipline related to construction law, our team can provide strategic legal guidance through every phase of a construction project.

No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.

Scarinci Hollenbeck, LLC, LLC

Related Posts

See all
Rule 26 Expert Discovery: When an Expert Witness Uses AI, Is It Discoverable? post image

Rule 26 Expert Discovery: When an Expert Witness Uses AI, Is It Discoverable?

Case law following the 2010 amendments to Federal Rule of Civil Procedure 26 offers guidance on how courts are likely to address whether an expert witness’s AI records are subject to discovery. Key Takeaways Rule 26 Expert Discovery After the 2010 Amendments This article addresses the question courts and lawyers have faced in recent cases: […]

Author: Chris Seelinger

Link to post with title - "Rule 26 Expert Discovery: When an Expert Witness Uses AI, Is It Discoverable?"
How Expert Witness AI Use Ends Up in Discovery post image

How Expert Witness AI Use Ends Up in Discovery

“Show how 3M is 0% at fault.” The absurd tale of how a 350-page ChatGPT history for 3M’s expert witness was produced during a deposition is more likely than you think. It’s an inevitable trend, and an unsettled question for federal courts as experts make generative AI part of their workflow. Key Takeaways Expert Witness […]

Author: Chris Seelinger

Link to post with title - "How Expert Witness AI Use Ends Up in Discovery"
The Screenshot Problem: Why Nothing Is Really Private Anymore post image

The Screenshot Problem: Why Nothing Is Really Private Anymore

Screenshots have changed the risks of electronic communications. The screenshot problem is that messages intended for one person or a small group can be copied, forwarded, preserved, and ultimately presented to opposing counsel, regulators, journalists, customers, or a jury. Businesses should recognize that a truly private digital conversation is increasingly unreliable and ensure their policies, […]

Author: Sean M. Pena

Link to post with title - "The Screenshot Problem: Why Nothing Is Really Private Anymore"
BESS Project Agreements: Allocating Risk Among Developers, EPC Contractors, and Equipment Suppliers post image

BESS Project Agreements: Allocating Risk Among Developers, EPC Contractors, and Equipment Suppliers

Developers, engineering, procurement, and construction (EPC) contractors, and equipment suppliers each play a critical role in completing a BESS project. However, when equipment costs rise, deliveries are delayed, or regulations change, determining who bears the financial consequences can become contentious. Well-drafted project agreements are essential to sound risk allocation. Key Takeaways This article is Part […]

Author: Nicholas Wall

Link to post with title - "BESS Project Agreements: Allocating Risk Among Developers, EPC Contractors, and Equipment Suppliers"
IP Infringement: What Steps Can You Take If You're Affected? post image

IP Infringement: What Steps Can You Take If You're Affected?

IP infringement occurs when someone uses your intellectual property without your permission or beyond the scope of the permission you granted. Common examples of IP infringement include copying a product’s patented features or using a trademarked logo in a way that is likely to confuse consumers about the source or affiliation of goods or services. […]

Author: Michael Mietlicki

Link to post with title - "IP Infringement: What Steps Can You Take If You're Affected?"
Public Allegations, Unfinished Investigation: What New Jersey Businesses Should Do Next post image

Public Allegations, Unfinished Investigation: What New Jersey Businesses Should Do Next

When facing public allegations of wrongdoing, companies should not let the speed of the public conversation dictate the speed of an investigation. An investigation designed to confirm a preferred narrative rather than establish the facts can create serious problems later, particularly if litigation, regulatory scrutiny, or employment claims follow. Key Takeaways When public allegations surface […]

Author: Sean M. Pena

Link to post with title - "Public Allegations, Unfinished Investigation: What New Jersey Businesses Should Do Next"

No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.

Sign up to get the latest from our attorneys!

Explore What Matters Most to You.

Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.

Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.

Let`s get in touch!

* The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form. By providing a telephone number and submitting this form you are consenting to be contacted by SMS text message. Message & data rates may apply. Message frequency may vary. You can reply STOP to opt-out of further messaging.
“If you would like to submit a file, please email it directly to info@sh-law.com.

Sign up to get the latest from the Scarinci Hollenbeck, LLC attorneys!