Contract documents

February 28, 2022

The residential housing market became a frenzy after the start of the pandemic. Government shutdowns and mandated quarantines caused many of us to find ways to entertain ourselves at home. Many found themselves spending their free time performing Do-It-Yourself work and remodeling their home, or even purchasing new property to gut and flip. At the same time, many cramped city dwellers realized they wanted more space and bought properties in suburban and rural areas with the intent to redo some outdated features. There was, and continues to be, no shortage of first-time home buyers, or residential owners with little experience in the construction industry.

A surprise that may come to new homeowners, or those new to construction, is the requirement to obtain permits before performing residential work. Depending on the type of work you’re performing, such as remodeling a bathroom, tearing down a wall, or putting up a new fence, local jurisdictions may require that a permit be procured prior to starting construction. Types of work that usually require a permit include plumbing, electrical, or structural changes. Generally, aesthetic changes such as repainting walls or replacing appliances do not require a permit, but it is best to contact your local municipality in advance to confirm whether a permit is needed.

Owners who are performing residential construction may have questions about their responsibility in obtaining and paying for permits. As a general notion, property owners are responsible that the work is properly performed in accordance with governing laws, but owners may contractually delegate this responsibility to a different party. So, if you’re a homeowner who is hiring a local contractor to perform residential construction, who exactly is responsible for obtaining the permits and the associated costs? The answer is: it depends. The first place to look is likely the underlying contract to determine each parties’ responsibilities. If you’re using the AIA’s new A111™– 2021, Owner and Home Builder Agreement for Construction of a Single Family Home or A112™– 2021, Owner and Home Builder Agreement for Design and Construction of a Single Family Home for your residential project, then the answer is clear. Under these new documents, the Home Builder is responsible for obtaining the proper permits for the work performed on the residential property. These documents specifically delegate to the Home Builder the responsibility in obtaining proper permits for the project:

§ 5.6.1 The Home Builder shall obtain and pay for the building permit and other permits and governmental fees, licenses and inspections necessary for proper execution and completion of the Work. The Home Builder shall provide the Owner with copies of all permits, licenses, and inspection approvals.

§ 5.6.2 The Home Builder shall comply with notice and other requirements of agencies having jurisdiction over the Work.

Under the A111 and A112, the Home Builder also pays the cost for the permits, governmental fees, licenses, and inspections in order to complete the Work, and provide copies of these approvals to the owner. A Home Builder’s failure to obtain the proper permits may result in unnecessary delays, shutdowns of the project, or fines by the governing jurisdiction, among other consequences.

The Home Builder is likely in a better position than the owner to expeditiously pull permits because it may have a preexisting relationship with the municipality, or it may have previously applied for similar permits on past projects. By contractually delegating the permitting responsibility to the Home Builder, owners and contractors alike should agree upfront on a proper allowance in the contract for the permit costs as well.

For homeowners looking to remodel or perform residential construction, the A111 and A112 cover the necessary grounds for an uninterrupted construction project. These new documents provide the important contractual provisions that Home Builders and owners need to manage expectations and achieve a successful completion of a residential project.

AIA Contract Documents has provided this article for general informational purposes only. The information provided is not legal opinion or legal advice and does not create an attorney-client relationship of any kind. This article is also not intended to provide guidance as to how project parties should interpret their specific contracts or resolve contract disputes, as those decisions will need to be made in consultation with legal counsel, insurance counsel, and other professionals, and based upon a multitude of factors.