Substantial Completion for Florida Contractors: Answers to Your FAQs
Contractors are well-familiar with the term “substantial completion,” and many have even had to deal with disputes arising out of it in a Florida construction contract. If you were forced to address some of the legal issues, the underlying concepts can be frustrating. The American Institute of Architects (AIA) defines substantial completion as the point at which enough work has been finished that the owner can occupy the space for its intended purpose. Unfortunately, this definition is so broad and subjective that it does not go far to alleviate frustrations.
While you will have specific issues to discuss with your Florida construction contracts attorney, you might benefit from reviewing these answers to common questions about substantial completion.
What is the legal meaning of substantial completion? The term itself carries a very special meaning in construction law, referring to the stage of finished work as described in the construction contract documents. A few points will expand upon the definition above.
- Substantial completion may apply to the entire project or designated portions;
- When it only covers some portions, the owner will not be able to use the space for its intended purpose; and,
- The concept of intended purpose can vary widely depending on the property owner’s business.
Why does substantial completion matter to a contractor? The milestone is an important one because it results in a transfer of rights and responsibilities between the property owner and the contractor. Depending on the contract terms, substantial completion may mean release of funds held in escrow for the benefit of the contractor. Insurance and obtaining a certificate of occupancy are other issues. For purposes of a claim against a contractor, such as for construction defects, substantial completion may trigger the Florida statute of limitations.
How are final and substantial completion different? Here, the term aligns with its everyday meaning: Substantial means mostly done. There may be quite a few tasks that remain, so a property owner will typically include these items on a punch list. The contractor may have additional time finish them up, but these efforts should not interfere with the customer’s ability to use and occupy the property.
What substantial completion details should I include in a construction contract? To avoid disagreements, the document should include a specifically defined date or a formula from which it can be derived. Options include:
- The effective date of the certificate of occupancy;
- When the owner occupies and begins to use the subject property; or,
- The date provided by an architect on AIA substantial completion form.
Trust a Florida Construction Contracts Lawyer to Protect Your Interests
These answers to your FAQs are useful as an overview, but every construction contract is unique as it applies to substantial completion, the parties, and the project. For more information, please contact Linkhorst & Hockin, P.A. today to schedule a consultation at our offices. Our team represents contractors throughout South Florida in a wide range of construction law matters, and we look forward to working with you.