{"id":899546,"date":"2022-01-26T14:33:55","date_gmt":"2022-01-26T21:33:55","guid":{"rendered":"https:\/\/www.myconstructionexpert.com\/blog\/?p=899546"},"modified":"2022-01-26T14:34:01","modified_gmt":"2022-01-26T21:34:01","slug":"substantial-completion-explained","status":"publish","type":"post","link":"https:\/\/www.myconstructionexpert.com\/blog\/substantial-completion-explained\/","title":{"rendered":"Substantial Completion Explained: What Contractors &#038; Owners Should Know"},"content":{"rendered":"\n<p>Travis Colburn | <a href=\"https:\/\/www.acslawyers.com\/contracting\/substantial-completion-explained-what-contractors-owners-should-know\/\" target=\"_blank\" rel=\"noreferrer noopener nofollow\">Ahlers, Cressman &amp; Sleight<\/a><\/p>\n\n\n\n<p>A project\u2019s <a href=\"https:\/\/www.myconstructionexpert.com\/blog\/substantial-completion-why-does-it-matter\/\" target=\"_blank\" rel=\"noreferrer noopener\">Substantial Completion<\/a> date is a critical construction milestone for contractors and owners.\u00a0 Depending on the contract, the date of Substantial Completion has project-specific contractual and statutory consequences.<\/p>\n\n\n\n<p>Substantial Completion is an \u201cevent\u201d \u2013 there is no universal definition of the term.&nbsp; It is generally understood to be (1) a point in time (2) when work performed by the contractor is sufficiently complete (3) where it can be used or occupied for the owner\u2019s intended purpose.&nbsp; The date of Substantial Completion is generally established at the time of contract formation (either as a negotiated or a contract set date), and that date may be adjusted over the course of a project to account for excusable delays.<\/p>\n\n\n\n<p>As a construction professional, your attorney should review and tailor any written agreement to your project-specific needs and risk tolerances prior to execution.&nbsp; Savvy construction professionals often start with standard form agreements promulgated by the American Institute of Architects (\u201cAIA\u201d), the Design-Build Institute of America (\u201cDBIA\u201d), or the Engineers Joint Contract Document Committee (\u201cEJCDC\u201d) as the basis for their construction contracts.&nbsp; The AIA, DBIA, and EJCDC standard forms each contains contract provisions relating to when and what happens once Substantial Completion has occurred, subject to any agreed-to, project-specific deviations.<\/p>\n\n\n\n<p>As you might expect, the AIA\u2019s, DBIA\u2019s, and EJCDC\u2019s definitions of Substantial Completion are remarkably similar:<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>Section 9.8.1 of AIA Document A201 \u2013 2007,&nbsp;<em>General Conditions for the Contract for Construction<\/em>, defines Substantial Completion as \u201cthe stage in the progress of the Work when the Work or designated portion thereof is sufficiently complete in accordance with the Contract Documents so that the Owner can occupy or utilize the Work for its intended use.\u201d<\/li><li>Section 1.2.18 of DBIA Document #535,&nbsp;<em>Standard Form of General Conditions of Contract Between Owner and Design-Builder<\/em>, defines Substantial Completion as \u201cthe date on which the Work, or an agreed portion of the work, is sufficiently complete in accordance with the Contract Documents so that the Owner can occupy and use the Project or a portion thereof for its intended purposes.\u201d&nbsp;<\/li><li>Article 1, Subsection 1.01(A)(40) of EJCDC\u2019s C-700,&nbsp;<em>Standard General Conditions of the Construction Contract<\/em>, defines Substantial Completion as \u201cthe time at which the Work (or a specified part thereof) has progressed to a point where, in the opinion of the Engineer, the Work (or a specified part thereof) is sufficiently complete, in accordance with the Contract Documents, so that the Work (or a specified part thereof) can be utilized for the purposes for which it was intended.\u201d&nbsp;<\/li><\/ul>\n\n\n\n<p>Washington\u2019s statutory language is understandably similar to the definitions of Substantial Completion in the AIA, DBIA, and EJCDC standard form agreements.&nbsp; Substantial Completion is defined by statute as \u201cthe state of completion reached when an improvement upon real property may be used or occupied for its intended use.\u201d&nbsp;&nbsp;<em>See&nbsp;<\/em>RCW 4.16.310.&nbsp; The fact that additional contract work remains, including punch list work, does not affect the conclusion that&nbsp;a project is substantially complete if it is otherwise fit for occupancy.&nbsp;&nbsp;<em>Dania, Inc. v. Skanska USA Bldg. Inc.<\/em>, 185 Wn. App. 359, 371, 340 P.3d 984, (2014).<\/p>\n\n\n\n<p>The date of Substantial Completion of a construction project is significant for several reasons:<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>First, in Washington, the construction statute of repose bars construction-related claims not filed within the six-year repose period.&nbsp;&nbsp;<em>See&nbsp;<\/em>RCW 4.16.310.&nbsp; The practical effect and intent of this statute is simply to limit the period of time construction professionals are potentially liable for construction-related claims.<\/li><li>Second, the date of Substantial Completion is the date when many of the contractor\u2019s responsibilities at the jobsite transfer to the owner.&nbsp; Some of these responsibilities may include the responsibility for security, heat, maintenance, cleaning, utilities, and damage to the work.&nbsp; Substantial Completion is also when the owner generally assumes responsibility for insuring the work previously covered by the contractor\u2019s insurance policy or policies.<\/li><li>Third, the date of Substantial Completion is typically the day from which warranty periods and other periods for correction of the work run.<\/li><li>Fourth, contractors may submit an application for final payment following Substantial Completion, pending completion of any outstanding punch list work, and may be entitled to release of any retention.<\/li><li>Fifth, in the event a contractor has not achieved Substantial Completion by the agreed-upon date, the owner may be entitled to liquidated or other damages.<\/li><\/ul>\n\n\n\n<p>In practice, whether a project is \u201cdeemed\u201d substantially complete may simply be left up to the discretion of whomever the owner and contractor have agreed to make such a determination.&nbsp; In AIA\u2019s Document A201 \u2013 2017,&nbsp;<em>General Conditions for the Contract for Construction<\/em>, the architect makes that decision.&nbsp; Similarly, in EJCDC\u2019s C-700&nbsp;<em>Standard General Conditions of the Construction Contract<\/em>, the date of Substantial Completions is determined by the opinion of the engineer.&nbsp; In DBIA Document #535,&nbsp;<em>Standard Form of General Conditions of Contract Between Owner and Design-Builder<\/em>, Substantial Completion is determined after joint inspection by the owner and design builder.<\/p>\n\n\n\n<p>The determination by the architect or the engineer is not necessarily the final say, however, as the point in time when the work is sufficiently complete for use or occupancy is, arguably, a legal question of fact.&nbsp; In an unreported case, Division One of the Washington Court of Appeals referred to a California Court of Appeals opinion in which the California court remarked, \u201c[t]he date of substantial completion is an objective fact about the state of the construction of the improvement, to be determined by the trier of fact.&nbsp; It is a statutory standard, not a contractual one.\u201d&nbsp;&nbsp;<em>See Puget Sound Energy, Inc. v. Pilchuck Contractors, Inc.<\/em>, 15 Wn. App. 2d 1004 (2020),&nbsp;<em>rev. denied,<\/em>&nbsp;196 Wn.2d 1046, 481 P.3d 1060 (2021) (citing&nbsp;<em>Hensel Phelps Constr. Co. v. Super. Ct. of San Diego County<\/em>, 44 Cal. App. 5th 595, 616, 257 Cal. Rptr. 3d 746 (2020)).<\/p>\n\n\n\n<p><em><u>Comment\/Good Practice<\/u>: As is often the case, legal issues can be time-sensitive, and a one-day difference could result in liability for catastrophic losses or completely bar another\u2019s claim.\u00a0 While determination of Substantial Completion may be an objective event in certain circumstances, executing a Certificate of Substantial \u2013 evidencing an agreement as to the date the work was sufficiently complete for the owner to use and occupy a project for its intended purpose \u2013 will help to eliminate disputes and costly legal action as to the project\u2019s Substantial Completion date.<\/em><\/p>\n\n\n\n<p><\/p>\n\n\n\n<p><strong>When one of your cases is in need of a construction expert, estimates, insurance appraisal or umpire services in defect or insurance disputes &#8211; please call Advise &amp; Consult, Inc. at 888.684.8305, or email experts@adviseandconsult.net.<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Travis Colburn | Ahlers, Cressman &amp; Sleight A project\u2019s Substantial Completion date is a critical construction milestone for contractors and owners.\u00a0 Depending on the contract, the date of Substantial Completion has project-specific contractual and statutory consequences. Substantial Completion is an \u201cevent\u201d \u2013 there is no universal definition of the term.&nbsp; It is generally understood to&hellip; <a class=\"more-link\" href=\"https:\/\/www.myconstructionexpert.com\/blog\/substantial-completion-explained\/\">Continue reading <span class=\"screen-reader-text\">Substantial Completion Explained: What Contractors &#038; Owners Should Know<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false},"version":2}},"categories":[14,9],"tags":[9895,12,224,9835],"class_list":["post-899546","post","type-post","status-publish","format-standard","hentry","category-construction-2","category-construction-contracts","tag-advise-consult","tag-construction","tag-construction-contract","tag-substantial-completion","entry"],"jetpack_publicize_connections":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v25.0 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Substantial Completion Explained: What Contractors &amp; 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