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Construction Law Basics
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Mechanic's Lien
A security interest granted to builders, contractors, and construction firms that have supplied labor or materials to improve a property.
Surety Bond
A three-party agreement in which the surety company assures the project owner that the contractor will perform the contract.
Change Order
A legal document that outlines changes to the scope of work, pricing, or time on a construction project.
Liquidated Damages
A predetermined sum agreed upon by the parties to a contract that will be forfeited as compensation for breach.
Payment Bond
A type of surety bond that ensures subcontractors and suppliers are paid for work and materials supplied.
Performance Bond
An assurance to the project owner that the contractor will perform the obligations of the contract.
Construction Defect
A deficiency in the design or construction process that leads to failure or does not meet intended usage.
Workman’s Compensation
Insurance that provides wage replacement and medical benefits to employees injured in the course of employment.
Certificates of Occupancy
A document issued by a local government agency or building department certifying a building's compliance with applicable building codes and other laws.
Indemnification
A contractual obligation of one party to compensate the loss incurred to another party due to the acts of the indemnifier or any other party.
Building Code
A set of regulations concerning building design, construction, alteration, and maintenance to protect public health, safety, and welfare.
Zoning
The legislative process for dividing land into zones for different uses, such as residential, commercial, industrial, etc.
Request for Information (RFI)
A formal process to gather information from the project owner or architect during construction projects.
Subrogation
The legal process by which an insurance company, after paying out a claim, seeks to recover the amount of the claim from those who are legally responsible for the loss.
Punch List
A document created at the end of a construction project listing work not conforming to contract specifications that must be completed prior to final payment.
Retention
A percentage of payment withheld from a contractor or subcontractor until the completion of the project to ensure all work is satisfactorily done.
Force Majeure
A contract clause that relieves parties from performing contractual obligations when certain circumstances beyond their control occur.
Joint Venture
A business arrangement in which two or more parties agree to pool their resources for the purpose of accomplishing a specific construction project.
Lien Waiver
A document from a contractor, subcontractor, material supplier, or other construction participant releasing their right to place a mechanic's lien on the property.
Scope of Work
The section of a construction contract that outlines the specific duties, deliverables, and expectations associated with the project.
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