They say time is money, and this adage rings especially true in the construction industry. Depending on the size and scope of the project, construction delays can mean thousands of dollars down the drain. Some delays are unavoidable, but you may have legal options when an unreasonable construction delay creates a hardship for you. Read this article to learn more about when you can sue your contractor for unreasonable delays.
You can sue your contractor for unreasonable delays, but you must prove the delay is indeed unreasonable.
What is an Unreasonable Delay?
Courts in the Tenth Circuit—which includes Colorado—have held that:
“unreasonable delay is a breach of implied obligation not to hinder or delay the other party’s performance, in the absence of a contract clause contemplating and excusing the delay.” Burgess Constr. Co. v. M. Morrin & Son Co., 526 F.2d 108, 114 (10th Cir. 1975)
If you sue a contractor for breach of contract based on unreasonable delays, the court will consider several factors such as:
- who caused the delays
- whether the delays were in bad faith
- whether the contract “contemplated and excused” the delays
Can I Win on an Unreasonable Delay Claim?
What you consider “unreasonable” as a homeowner may look different to a judge. It’s important to set expectations of timeliness in a written contract before the contractor begins the work. Otherwise, it is difficult to win on an unreasonable delay claim unless the holdup is egregious. That said, it’s certainly not impossible. Consider this example:
Let’s say your contractor starts the project and then doesn’t return for 30 days. They then show back up and do half a day’s work before leaving again for another 30 days. In this instance—even with no supporting documentation—your attorney may be able to claim and win a breach of contract based on unreasonable delays.
How Do I Protect Myself from Unreasonable Delays?
One of the best ways to protect yourself is to establish a clear deadline in your written contract. The deadline should provide a reasonable amount of time to complete the project, allowing for the fact that delays can occur through no fault of you or the contractor.
Define Substantial Completion
It is common for construction contracts to specify that a project must be “substantially complete” by a certain date.
You should spell out exactly what substantial completion means. For example, you could say that construction is “substantially complete” when the owner can occupy or utilize the property for its intended use. Caremeridian LLC v. Arch CMLITO01 LLC, 2018 Colo. Dist. LEXIS 1950, *22-23
The contract should also include a clause that allows for extensions in the event of unforeseen delays.
A homeowner might include a substantial completion clause that looks like this:
The work shall not be considered substantially complete prior to the receipt of approved O&M manuals and record drawings as required by paragraph X and as required elsewhere in the contract.
Add a Liquidated Damages Clause
If your contractor fails to substantially complete your project by the specified date, the builder may be responsible for damages. A liquidated damages clause makes clear the penalties your contractor faces if there are delays. For example, one Colorado contract required the contractor to pay the owner $100 per day for each day past the deadline with the penalty increasing to $300 per day after a certain date.
Colorado courts will typically enforce liquidated damages clauses as long as the specified dollar amount “bears a reasonable relation to actual compensation or damages… rather than for a penalty.” Swarman Bldg. Co. v. De Gette, 485 P.2d 917, 918 (Colo. App. 1971)
In other words, the amount of liquidated damages must be a reasonable assessment of losses rather than a means of punishing the contractor.
Here is what a liquidated damages clause may look like in your contract:
The parties agree that if the _______ is not timely completed, it would be difficult to ascertain the actual damages sustained by owner because of the delay. The parties estimate that the reasonable use value of the__________ to the owner would be $______ per day, and agree that contractor shall pay that amount daily as liquidated damages to the owner for each day’s delay in reaching substantial completion of the _______. The parties waive any defense to the validity of the liquidated damages on the grounds that such liquidated damages are void as a penalty or are not reasonably related to actual damages. The liquidated damages amount specified shall be owner’s sole remedy for delays against the contractor.
*This clause is for educational purposes only and does not constitute legal advice. We do not guarantee the accuracy or usefulness of this information, and using it is at your own risk. This information does not create an attorney-client relationship.
What if your contractor gets halfway through your bathroom remodel and you decide to go in another direction? If you make changes to the scope of the project, you may also need to change the completion date.
If a change is made after a contract is signed, this is typically referred to as a change order. Oftentimes, the change order will specify a new completion date.
Let’s take a look at how one Colorado couple successfully sued their contractor for unreasonable delays.
Background: Hirsch v. Saad
In 2014, Robert Hirsch and Belinda Begley hired Forte Construction to demolish the existing house on their Denver property and build their dream home in its place. The written contract required Georges Saad, who owned Forte Construction, to complete the home by June 30, 2015.
Unfortunately, the demolition and shoring installation were fraught with issues. This resulted in ongoing litigation with several neighbors, who claimed the demolition and shoddy shoring work caused significant damage to their homes. Hirsch v. Saad, 2018 Colo. Dist. LEXIS 2814, *2
Owners Fire Contractor
In March 2015, Saad demanded the owners sign a change order. The owners refused and instead terminated their contract with Saad. They hired another builder who determined that Saad’s installation errors had “created an unusually complicated site condition on the property that delayed the project.” Hirsch v. Saad, 2018 Colo. Dist. LEXIS 2814, *38
When the couple’s home was eventually completed in January 2017, they had overspent their original budget and did not use any materials from Saad.
The homeowners sued Saad for breach of contract, claiming—among other allegations—that he failed to substantially complete the home by the date specified in the contract.
Saad argued that the delays were due to deficiencies in the homeowner’s original construction plans. He further claimed that he only failed to complete the project by the agreed-upon date because the homeowners terminated his contract.
A Denver district court disagreed, finding that Saad’s actions prior to the termination constituted “unexcused material breaches.” Therefore, the owners were off the hook for their end of the contract:
“To the extent Contractor claims that he should have been permitted to continue to build the home until substantial completion, the Court finds that Contractor’s material breaches prior to the Termination Letter deprived him of the right to demand any further performance by Owners. Hirsch v. Saad, 2018 Colo. Dist.
Get a Case Assessment
Our real estate attorneys can determine whether you have a case against your contractor based on unreasonable delays. If you do, they can help you gather evidence to prove your case and help you reach a settlement or fight for you in court. Call 303-688-0944 today to begin your case assessment.