In a few weeks, or whenever the COVID-19 coronavirus is under control, affected businesses and individuals are going to have to assess their losses. This checklist should assist you so that you can either minimize or altogether avoid issues that may be the subject of litigation or cause payments to be withheld indefinitely. The cordial demeanor of owners, general contractors, subcontractors, laborers, suppliers and materialmen, will likely disappear as bank accounts are drained and invoices pile up. Here are 7 things you need to know or do:
1. NOTICE PROVISION/NOTICE REQUIREMENT
Many contracts, bid documents, general conditions contain a specific number of days (in some instances hours) to provide Notice of any delay. A delay caused by COVID-19 Coronavirus is no exception. If, you either anticipate or have evidence of a delay of any type (materials, labor, transportation, etc.) you should look to your contracts, bid documents, and general conditions to determine how many days you have to provide the written notice.
If the contracts, bid documents and general conditions are silent as to Notice relating to delays, you should still draft a Notice Letter to ensure that you have attempted to provide notice of a delay. Even if a directive comes from the federal, state, municipal or administrative government, you should still be intimately knowledgeable about the Notice requirements in each of your contracts, to leave no room for interpretation later.
For those of you who may be working based on work orders, purchase orders, oral or “handshake agreements,” providing a written notification of a delay may provide you with additional time and possibly money, if you are affected by COVID-19-related delays.
2. DELAY LANGUAGE
It is inevitable that your projects are going to face some delays, whether directly or indirectly caused by COVID-19. Do not rule out any type of delay which may be remotely related to your work or your trade. Suppliers, delivery trucks and laborers will be slowed down as time progresses and the coronavirus remains unresolved.
While delays caused by an Order from a federal, state, municipal, administrative or similar agency may not be directly addressed in your contract, there may be language there which helps. If your contract does contain an express provision it will likely contain the words force majeure or acts of God. In certain instances, especially in contracts for work with the federal government, there are express provisions for fire, floods, epidemics, quarantine restrictions, strikes, freight embargo, etc.
Be absolutely certain that any potential delays, actual delays, or even inevitable delays are documented. Take time to think of every aspect of your specialty, and how it may consequentially impact your schedule. Better to be safe and provide a delay notice, than to waive some of your rights.
3. LIQUIDATED DAMAGES/SUBSTANTIAL COMPLETION
Although it may seem clear to you that the federal, state, municipal and local administrative governments and agencies are asking everyone to stay home, and avoid workplace contact, once the dust settles from the coronavirus, owners, general contractors, suppliers and laborers may not agree with your assessment. Most contracts that refer in any way to schedules, will contain a provision for delay damages in favor of the owner or the contractor. They may also contain similar language in subcontractor agreements, purchase orders or rental agreements.
Again, it is imperative that you review your contracts to determine whether there are liquidated damage or substantial completion provisions or clauses.
4. EXTENSIONS OF TIME
Liens, permits, notices of commencement, termination, lawsuits all are impacted as this is being written. Recording offices, clerks of court and building permit offices are closing their physical locations in order to minimize human interaction and to comply with government-ordered health mandates. However, despite the fact that they have closed physical access to their locations and are relying on electronic submission may not mean they have created a procedure for immediate or emergency filing. If you have a Claim of Lien, Satisfaction of Lien, permit, Notice of Commencement or other any other documents which has a recording or any other record deadline, electronic submission may not ensure that it will be timely recorded or filed.
Electronically submitted documents are subject to the date which the document is actually recorded or filed NOT THE DATE OF SUBMISSION. For example, if you electronically submit a Claim of Lien on the 83rd day and the records office does not actually record the Claim of Lien until the 91st day, your Claim of Lien will be subject to invalidation. Thus, it is very important that you check all of your deadlines and immediately submit the following for recording or filing:
- Claim of Lien
- Satisfaction of Lien
- Notice of Commencement
- Notice of Termination
- Building Permits
- Potential lawsuits
5. BUSINESS INTERRUPTION INSURANCE
Check all your insurance policies. Although it is unlikely that you have a Business Interruption Policy, Rider or Clause, it would not hurt to review your policy. Most insurance policies that relate to business interruption require physical damage, however, your policy may be different.
6. LIST EXPENSES
Make lists of every single item for which payment is required such as:
- Rental equipment
- Cement mixers
- Screws and nails, etc. . .
The list is yours to complete. I highly recommend that you call and write to each of your suppliers/providers, and establish written plans with each. A supplier that you called today to ask for a more flexible payment plan, is going to be less inclined to agree to any plans in 2 weeks with accounts receivables piling up. Suppliers who have dumpsters, porta-potties, equipment, etc., may not have the manpower available to demobilize and may prefer to waive fees during any quarantine period.
7. SECURE YOUR WORKSITE
Equipment, supplies and tools should be secured on a daily basis (more so than usual), in case there is an overnight mandate or government order which limits access to your construction site. This may seem like a foregone conclusion or part of your nightly procedure, however, given the current state of affairs, you should take extra precautions so that you don’t accidently overlook or neglect the equipment, supplies and tools that are on a worksite and for which you are responsible.