MARYLAND CONSTRUCTION LAW
TABLE OF CONTENTS
 

PREFACE.. 13
ABOUT THE AUTHOR.. 17
ACKNOWLEDGEMENTS. 19
DEDICATION.. 21
 
CHAPTER ONE.. 23
LICENSING.. 23
1.1       INTRODUCTION.. 23
1.2       GENERAL CONSTRUCTION LICENSES. 23
1.3       HOME IMPROVEMENT CONTRACTING LICENSES. 24
1.3.1        Exceptions. 24
1.3.2        Qualifications. 25
1.3.3        Violations. 25
1.4       HEATING, VENTILATION, AIR CONDITIONING, AND REFRIGERATION   26
1.4.1        Exceptions. 26
1.4.2        Qualifications. 27
1.4.3        Local Licensing Requirements. 28
1.4.4        Violations. 28
1.5       PLUMBING AND GAS FITTING LICENSING.. 28
1.5.1        Exceptions. 28
1.5.2        Qualifications. 29
1.5.3        Violations. 30
1.6       ELECTRICAL LICENSING.. 30
1.6.1        Exceptions. 30
1.6.2        Qualifications. 30
1.6.3        Local Licensing Requirements. 31
1.6.4        Violations. 31
1.7       CONCLUSION.. 31
 
CHAPTER TWO.. 33
BIDDING.. 33
2.1       INTRODUCTION.. 33
2.2       COMPETITIVE BIDDING.. 34
2.2.1        Private Projects. 34
2.2.2        Public Projects. 34
2.2.2.1     Construction. 35
2.2.2.1.1      Bid Process – Invitations to Bid. 35
2.2.2.1.2      Bid Submissions. 35
2.2.2.1.3.     Bid Selection. 36
2.2.2.1.4.     Notice of Award. 36
2.3       BID ERRORS. 36
2.3.1        Enforceability of Bids. 36
2.3.1.1     Contractor's Bid. 36
2.3.1.2     Subcontractor/Supplier Quotations. 37
2.3.2        Bid Mistakes. 37
2.3.2.1     Unilateral Mistakes by Contractor 37
2.3.2.1.1      Mistakes of Fact 37
2.3.2.1.2      Mistakes of Judgment 38
2.3.2.1.3      Mistake of law.. 39
2.3.2.2     Mutual Mistakes. 39
2.3.2.3     Mistakes in Bids to Maryland State Agencies. 39
2.3.2.4     Practical Effects of Bid Mistakes. 40
2.3.2.5     Bid Bonds. 40
2.3.3        Relief from Bid Mistakes on Maryland Projects. 41
2.3.3.1     Minor Irregularities. 41
2.3.3.2     Bid Errors. 41
2.3.3.3     Unbalanced Bid. 41
2.3.4        Post-Award Relief 42
2.3.5        Federal Construction Contracts. 42
2.4       BID PROTESTS. 42
2.4.1        Where to Protest 42
2.4.2        When to Protest 43
2.4.3        Contents of Bid Protest 43
2.4.4        Procedure Following Submission of Bid Protest 43
2.4.5        Bid Protest Appeal from Procurement Agency Decision. 43
2.4.6        Bid Protest Appeal from MSBCA Decision. 44
2.5       CONCLUSION.. 44
 
CHAPTER THREE.. 47
THE ARCHITECT/ENGINEER.. 47
3.1       INTRODUCTION.. 47
3.2       STATE LAWS GOVERNING THE PRACTICE OF ARCHITECTURE & ENGINEERING   48
3.2.1        Statutory Regulation of Architects. 48
3.2.2        Statutory Regulation of Engineers. 49
3.2.3        Statutory Exemptions. 50
3.2.4        Penalties for Violations. 51
3.3       OWNER-ARCHITECT/ENGINEER AGREEMENT.. 51
3.3.1        Types of Agreements. 53
3.3.2        Limitation on Services. 54
3.3.3        Additional Services. 55
3.4       ARCHITECT-CONSULTANT AGREEMENTS. 56
3.5       THE ARCHITECT/ENGINEER'S RESPONSIBILITIES. 57
3.5.1        Design. 57
3.5.2        Bidding and Negotiation. 58
3.5.3        Construction. 58
3.5.3.1     Inspection. 59
3.5.3.2     Review of Applications for Payment 59
3.5.3.3     Review and Approval of Contractor Submittals. 60
3.5.3.4     The Architect as Judge. 60
3.5.3.5     Post Construction. 60
3.6       THE ARCHITECT/ENGINEER'S LIABILITY.. 61
3.6.1        Liability to the Owner 61
3.6.1.1     Exceeding Project Cost Limitations or Estimates. 61
3.6.1.2     Design Errors and Omissions. 62
3.6.1.3     Defective Plans and Specifications. 63
3.6.1.4     Inadequate Inspection of the Work. 64
3.6.1.5     Erroneous Certification of Payment 64
3.6.2        Liability to the Contractor 65
3.6.2.1     Inadequate Plans and Specifications. 66
3.6.2.2     Negligent Construction Administration. 66
3.6.3        Liability to Subcontractors. 66
3.6.4        Liability to the Surety. 67
3.7       PROFESSIONAL LIABILITY INSURANCE.. 67
3.8       CONCLUSION.. 68
 
CHAPTER FOUR.. 73
THE OWNER.. 73
4.1       INTRODUCTION.. 73
4.2       ADMINISTRATIVE RELIEF VS. BREACH OF CONTRACT   74
4.3       WARRANTY OF PLANS AND SPECIFICATIONS. 74
4.4       DUTY TO DISCLOSE SUPERIOR KNOWLEDGE.. 75
4.5       DUTY NOT TO DELAY, HINDER OR INTERFERE WITH THE CONTRACTOR'S PERFORMANCE   76
4.5.1        Owner's Expressed Duty Not To Delay. 77
4.5.2        Owner's Implied Duty Not To Delay. 77
4.5.3        Specific Types of Owner-Caused Delays. 77
4.5.3.1     Failure to Obtain Necessary Clearances or Permits. 77
4.5.3.2     Failure to Make the Project Site Available. 78
4.5.3.3     Owner's Delay in Supply or Removal of Materials. 78
4.5.3.4     Owner's Failure to Make Progress Payments. 78
4.5.3.5     Time For Payment to Subcontractors. 79
4.5.3.6     Owner's Delay in Issuing Notice to Proceed. 79
4.5.3.7     Owner's Delay in Administering Change Orders. 79
4.5.3.8     Owner's Failure to Timely Provide Information. 80
4.6       CONCLUSION.. 80
 
CHAPTER FIVE.. 83
THE CONTRACTOR.. 83
5.1       INTRODUCTION.. 83
5.2       BIDDING.. 83
5.3       THE CONSTRUCTION CONTRACT.. 84
5.3.1        Integration Clause. 85
5.3.1.1     Flow-Down or Pass-Through Provisions. 85
5.3.2        Site Visit 86
5.3.3        Order of Precedence Clause. 86
5.3.4        Permits and Fees. 87
5.3.5        Owner's Right to Carry Out the Work. 88
5.3.6        Review of Contract Documents and Field Conditions by Contractor 90
5.3.7        Compliance with Codes and Ordinances. 91
5.3.8        Contractor's Construction Schedule. 91
5.3.9        Shop Drawings, Product Data and Samples. 94
5.3.10      Aesthetic Determination. 95
5.3.11      Claims and Disputes. 95
5.3.12      Differing Site Conditions. 95
5.3.13      Changes in the Work. 95
5.3.14      Time. 96
5.3.15      Payments. 96
5.3.15.1       Schedule of Values. 97
5.3.15.2       Progress Payments. 98
5.3.15.3       Punchlist 99
5.3.15.4       Retainage. 100
5.3.15.5       Final Payment 100
5.3.15.5.1    Separate Contractors. 101
5.3.16      Insurance. 102
5.3.16.1       Property Insurance. 102
5.3.16.2       Loss of Use Insurance. 103
5.3.16.3       Commercial General Liability Coverage. 103
5.3.17      Statute of Limitations. 104
5.3.17.1       Generally. 104
5.3.17.2       Written Contract 104
5.3.17.2.1    Discovery Rule. 105
5.3.17.3       Oral Contract 105
5.3.17.4       Public vs. Private Contract Limitations Periods. 105
5.3.18      Termination. 106
5.3.18.1       Termination by Contractor 107
5.3.18.2       Termination by Owner 107
5.3.19      Attorney's Fees and Interest 122
5.4       CONCLUSION.. 122
 
CHAPTER SIX.. 127
THE SUBCONTRACTOR.. 127
6.1       INTRODUCTION.. 127
6.2       BIDDING.. 128
6.3       SUBCONTRACTING.. 129
6.3.1        Scope of Work. 129
6.3.2        Time. 130
6.3.3        Payment 130
6.3.3.1     "Pay When Paid" and “Pay if Paid” Clauses. 130
6.3.3.2     Prompt Payment Requirements. 131
6.3.3.2.1      Time For Payment 131
6.3.4        Contractor's Warranty of Plans and Specifications. 132
6.3.5        Contractor's Duty not to Hinder, Delay or Interfere. 132
6.3.6        Assignment of Subcontract 132
6.3.7        Arbitration. 133
6.3.8        Subcontractor Claims and Disputes. 133
6.3.9        Subcontract Changes. 133
6.3.10      Hold Harmless and Indemnity Clauses. 133
6.3.10.1       Indemnification of parties to the Contract 133
6.3.11      Insurance. 134
6.3.12      Subcontractor's Liability to Contractor 134
6.3.13      Termination. 134
6.3.14      Waiver of Consequential Damages. 135
6.3.15      Releases. 136
6.3.16      Attorney's Fees and Interest 136
6.4       CONCLUSION.. 137
 
CHAPTER SEVEN.. 139
CHANGES IN THE WORK.. 139
7.1       INTRODUCTION.. 139
7.2       CHANGES--WRITTEN VS. ORAL.. 139
7.2.1        Public Construction Projects. 139
7.2.1.1     Written Change Directive. 140
7.2.1.2     Oral Change Directive. 147
7.3       CHANGES CLAUSE - HOW DO THEY WORK?. 147
7.3.1        Agreed Changes. 150
7.3.2        Construction Change Directive. 151
7.3.3        Minor Changes. 155
7.4       WHO HAS AUTHORITY TO ORDER A CHANGE?. 155
7.5       CONSTRUCTIVE CHANGE.. 156
7.6       CARDINAL CHANGES. 157
7.7       DEDUCTIVE CHANGES. 157
7.8       NOTICE.. 158
7.9       CONCLUSION.. 159
 
CHAPTER EIGHT.. 163
DIFFERING SITE CONDITIONS. 163
8.1       INTRODUCTION.. 163
8.2       CONTRACTOR'S RIGHT TO RELY ON OWNER'S REPRESENTATION OF CONDITIONS  163
8.2.1        Duty to Investigate Site. 164
8.2.2        Duty to Disclose. 165
8.2.3        Disclaimers. 166
8.3       NOTICE.. 166
8.4       CONTRACTUAL REMEDIES. 168
8.4.1        Type 1 Conditions. 172
8.4.2        Type 2 Conditions. 173
8.5       CHANGED CONDITIONS NOT COVERED BY THE "CHANGED CONDITIONS" CLAUSE   175
8.5.1        Acts of God. 175
8.5.2        Manmade Conditions v. Naturally Existing Conditions. 175
8.6       CONCLUSION.. 175
 
CHAPTER NINE.. 179
DAMAGES AND DELAYS. 179
9.1       INTRODUCTION.. 179
9.2       THE OWNER'S DAMAGES. 180
9.2.1        Contractor's Defective or Incomplete Performance. 180
9.2.2        Contractor's Late Completion. 181
9.2.2.1     Liquidated Damages. 182
9.2.2.2     Actual Damages. 184
9.3       THE CONTRACTOR'S DAMAGES. 187
9.3.1        Late Payment Damage. 187
9.3.2        Termination Damages. 187
9.3.3        Delay Damages. 188
9.3.3.1     Owners-Caused/Compensable Delays. 190
9.3.3.1.1      Direct Job Cost 190
9.3.3.1.2      Home Office Overhead Costs. 191
9.3.3.1.3      Interruption Costs. 192
9.3.3.1.4      Lost Profits. 193
9.3.3.1.5      Acceleration Costs. 193
9.3.3.2     Excusable/Compensable Delays. 194
9.3.3.3     Excusable/Non-Compensable Delays. 194
9.3.3.4     Contractor Caused Delays. 198
9.3.3.5     Concurrent Delays. 198
9.4       "NO DAMAGE FOR DELAY" CLAUSE.. 199
9.5       PREJUDGMENT INTEREST.. 200
9.6       ATTORNEYS' FEES. 200
9.6.1        Contract 200
9.6.2        Equity. 201
9.7       MITIGATION OF DAMAGES. 202
9.8       PUNITIVE DAMAGES. 202
9.9       CONCLUSION.. 203
 
CHAPTER TEN.. 207
BONDS AND LIENS. 207
10.1     INTRODUCTION.. 207
10.2     BONDS. 207
10.2.1      Federal Construction Bond. 208
10.2.1.1       Parties Covered By Federal Payment Bonds. 209
10.2.1.1.1    First Tier Subcontractors and Suppliers. 210
10.2.1.1.2    Second Tier Subcontractors and Suppliers. 210
10.2.1.1.3    Parties Not Covered. 210
10.2.1.2       Notice Requirements. 212
10.2.1.2.1    Statutory language. 212
10.2.1.2.2    Ninety-Day Notice Requirement 213
10.2.1.3       Labor or Material Furnished in the Prosecution of the Work  214
10.2.1.3.1    Labor 214
10.2.1.3.2    Material 215
10.2.1.3.3    Furnished in the Prosecution of the Work. 215
10.2.1.4       Interest and Attorneys' Fees. 215
10.2.1.5       Subcontractor vs. Supplier 216
10.2.2      State Public Works Construction Bond. 216
10.2.2.1       Labor and Material 229
10.2.2.2       Delay/Other Costs. 229
10.2.2.3       Attorneys Fees/Interest 229
10.2.3      State Highway Construction Bond. 229
10.2.4      State Private Works Construction Bond. 230
10.3     LIENS. 231
10.3.1      Construction Liens. 232
10.3.1.1       Entitlement to a Construction Lien. 232
10.3.1.1.1    Who are the relevant parties and who may lien?. 233
10.3.1.1.2    What constitutes construction, rebuilding, repair or improvement on a permanent building or structure?  237
10.3.1.1.3    What property can be liened?. 238
10.3.1.1.4    Notice of Intent to File a Lien. 244
10.3.1.1.4.1    General Contractor Notice Requirements. 244
10.3.1.1.4.2    Subcontractor's Notice of Intent to File a Lien. 245
10.3.1.1.4.3    Form of Notice. 246
10.3.1.1.4.4    To Whom is Notice Given. 248
10.3.1.1.4.4.1    Corporation as Owner 248
10.3.1.1.4.4.2    Multiple Owners of the same property. 249
10.3.1.1.4.5.    Delivery. 249
10.3.1.1.4.6    Exceptions To Notice Requirements. 250
10.3.1.1.4.7    Owner's Options upon Receipt of a Notice. 251
10.3.1.1.5    Filing the Petition for a Mechanic's Lien. 251
10.3.1.1.5.1    Timing for Filing of the Petition. 251
10.3.1.1.5.2    What Must be contained in the Petition?. 252
10.3.1.1.5.3    Multiple Parcel Problem.. 254
10.3.1.1.5.3.1    Apportioning Materials. 254
10.3.11.5.3.2    Use of Materials at Site. 255
10.3.1.1.5.3.3    Multiple Lot Problems and the Bona Fide Purchaser 256
10.3.1.1.5.3.4    Lien Release and the Multiple Lot Case. 257
10.3.1.1.5.4    Contractor Lien Amounts. 257
10.3.1.1.5.5    Subcontractor Lien Amounts. 258
10.3.1.1.5.5.1    Commercial Buildings. 258
10.3.1.1.5.5.2    Single-family Dwellings. 259
10.3.1.1.5.6    Unfinished Buildings. 261
10.3.1.1.6    Establishment And Enforcement Of The Mechanic's Lien  262
10.3.1.1.6.1    Commencing the Action. 262
10.3.1.1.6.2    Proceedings. 262
10.3.1.1.6.2.1    Court Review.. 262
10.3.1.1.6.2.2    Show Cause Order 262
10.3.1.1.6.2.3    Answer 262
10.3.1.1.6.2.4    Timing. 262
10.3.1.1.6.2.5    Court Determination. 263
10.3.1.1.6.2.6    Joinder of Other Claims. 263
10.3.1.1.6.2.7    Trial Bond. 264
10.3.1.1.6.2.8    Final Order to Establish the Lien. 264
10.3.1.1.6.2.9    Bonding-Off and Release. 265
10.3.1.1.6.2.10    Entry of Satisfaction. 265
10.3.1.1.6.2.11    Statute of Limitations Upon Right to Enforce a Lien  265
10.3.1.1.6.2.12    Establish Boundaries to Liened Property. 265
10.3.1.1.7    Waiver of lien rights. 267
10.3.1.2       Priority. 267
10.3.1.3       Wrongful Filing of a Lien. 272
10.3.2      Lis Pendens Notice. 272
10.3.3      Wrongful filing of Lis Pendens. 277
10.4     CONCLUSION.. 277
 
CHAPTER ELEVEN.. 285
EFFECTIVE COLLECTION TECHNIQUES. 285
11.1     INTRODUCTION.. 285
11.2     COLLECTION STEPS. 285
11.2.1      Carefully Select Your Customer 285
11.2.2      Obtain Project Documentation. 287
11.2.3      Properly Prepare the Schedule of Values. 287
11.2.4      Properly Apply for Payment 287
11.2.5      Demand Payment When Due. 287
11.2.6      Repeatedly Demand Payment when Past Due. 288
11.2.7      Stop Work. 288
11.2.8      Demand Adequate Assurance. 288
11.2.9      Contact an Attorney. 289
11.2.10        File Suit 290
11.2.10.1     Federal Court 290
11.2.10.2     State Court 290
11.2.10.3     Limitations of Action. 291
11.3     OPEN ACCOUNT CLAIMS. 293
11.4     BAD CHECK CLAIMS. 294
11.5     COLLECTION ASSISTANCE.. 296
11.6     BANKRUPTCY CLAIMS. 296
11.6.1      Bonded Work. 297
11.6.2      Projects Where Money is Held by the Owner at the Time of Bankruptcy  297
11.6.3      Executory Contracts. 299
11.6.4      Assistance of an Attorney. 299
11.7     CONCLUSION.. 299
 
CHAPTER TWELVE.. 303
ARBITRATION, LITIGATION, OTHER FORMS OF ALTERNATIVE DISPUTE RESOLUTION & SETTLEMENT.. 303
12.1     INTRODUCTION.. 303
12.2     ARBITRATION.. 303
12.2.1      Speed of Resolution of Disputes. 306
12.2.2      Expertise of the Fact Finder 306
12.2.3      Expense. 307
12.2.4      Discovery of the Other Party's Case. 307
12.2.5      Motions Practice. 307
12.2.6      Appeal 308
12.2.7      The One-Line Decision. 309
12.2.8      Multiparty Disputes. 309
12.3     LITIGATION.. 309
12.3.1      Federal Court System.. 310
12.3.1.1       Limited Jurisdiction of Federal Courts. 310
12.3.1.1.1    Diversity Jurisdiction. 310
12.3.2      What Law Governs -- State or Federal?. 310
12.3.3.     Forum Selection. 311
12.3.4      Gambling on a Jury. 312
12.3.5      The State Court System.. 312
12.3.5.1       Pleadings. 313
12.3.6      Discovery. 314
12.3.6.1       Depositions. 315
12.3.6.2       Interrogatories and Requests for Production. 315
12.3.7      Trial 315
12.3.8      Appeals. 316
12.4     OTHER ALTERNATIVE DISPUTES RESOLUTION METHODS  317
12.4.1      Mediation. 318
12.4.2      Mini-Trials. 319
12.4.3      Summary Jury Trials. 320
12.5     SETTLEMENT.. 320
12.6     CONCLUSION.. 320