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Prime Contract Template Suggestions (Owner <> General Contractor)

CaliforniaConstruction Contract

After growing a successful GC business from $0 to $15M over the last 5 years, me and my partner are now starting anew with our own company, Carbon Zero Buildings. We develop design and install multitrade energy and water upgrades like heat pumps, boilers solar, etc. Our customers are owners and operators of large multifamily properties. Our typical project size is $150,000, but ranges from $20,000 to $2M. We would like to start our business with a solid prime contract template that works for our business and our customers. And we will need the same for our subcontractor agreements, too. Can we get by with using standard templates like AIA or ConcensusDocs? Or LegalZoom or RocketLawyer? Or would we be better off hiring a lawyer to provide us with a custom template who understands the nuances of California law and/or multifamily real estate? We are on a start up budget but willing to make the investment if necessary. Any advice would be greatly appreciated.

10 replies

Oct 20, 2022
Hi Greg, There are a lot of good options out there, but AIA isn't among them. Even the symposium panelists that teach on the AIA forms say that the amount of editing that is necessary to get something workable is immense, and that they are skewed heavily in favor of architects, who probably aren't even going to be that involved in your projects. In over 38 years in this business, we have rarely seen any of them fully perform all of the tasks allocated to them in their own industry contracts. ( Probably because they are comfy thinking that the limitation of liability clauses in the AIA insulates them, and exposes the contractor who touched it last, instead.;) Since you are just beginning, you have the opportunity to get a contract structure that works for you. and that is what KWCL recommends and does. Whatever template you choose though, it should include subcontracts that are not only consistent with the master contract with the owner, but that comply with your insurance policies, which have their own minefields. Also, many policies exclude multi family, so whichever direction you take, be sure to clear the project scope with your broker to assure that the project is covered. Ask the broker if your project(s) might qualify for OCIP policies that would sweep all the subs into a policy. You should also check to see if the exposures you are taking on are covered as well. Many contractors are surprised to learn that things like paying the attorneys fees of a prevailing disputant, or the statutorily mandated interest on a claim are not covered, even though the contracts say they are to be paid. KWCL has prepared tailored contract packages for many well known industry leaders and has established relationships with many industry consultants. If you are interested in chatting with one of our team members to see if we can help or you want us to, let us know.
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Oct 20, 2022
On something like this you get what you pay for. I think you could get by with the AIA but it won't be tailored to what you want. If you want a contract and subcontracts that are tailored to you, in favor of you, you need a lawyer to draft it. You should expect to spend anywhere between $5-10,000 for a really well drafted set of contracts. Less than that (and there are lawyers who will do it for less) would be concerning to me. I would also make sure you use a lawyer experienced in construction, really someone who solely focuses on construction and who is essentially an expert.
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Oct 20, 2022
Good morning Greg, we are a firm specializing in construction and have an attorney who does only this type of work. While I agree with the other comments, you can obtain the highest quality work product at a very good price.
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Oct 20, 2022

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Oct 20, 2022

Thanks for your detailed response Kate. Yes, I would like to connect with one of your team members to see if there is a good fit.

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Oct 22, 2022

Hi Greg,

I agree that contractors should avoid the AIA contracts, they really are the worst.  

That said, it is a smart choice to use template contracts. Here is why: 

- Most construction attorneys are familiar with the standard template contracts, which means it reduces their time to negotiate them. If opposing counsel receives a custom contract, they likely need to spend more time reviewing and cross-referencing its provisions.

- Many times owners will refuse to use a contractor's contract, and if it comes down to it, will force the contractor to use their custom contract instead. In that situation, I have had luck suggesting a template contract as a neutral choice.

- Template contracts are regularly updated by industry experts as the law changes. Typically they are put out by organizations (such as the Associated General Contractors of America) that have legal committees that review them.

- Template contracts are cheaper than custom contracts. There are typically a family of associated contracts of different types. Some examples: Construction Management; Design Build; Subcontracts; Lump Sum - having attorneys custom draft each of these can get fairly costly.

- If the attorney who drafted your custom contract leaves or is not available, the next one who picks it up will have to do a thorough review of it before advising you on it. The same is true of template contracts, but since most construction attorneys are familiar with the tempate constuction contracts their review time can be quicker.

All that said - stay away from AIA contracts! 

I would highly recommend using Consensus Docs (see: https://www.consensusdocs.org/), even if you hire an attorney. The cost of accessing their database full of contracts is likely less than the cost to have just one custom drafted. 

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