Coronavirus and Considerations for Real Estate Transactions: CONSTRUCTION

March 19, 2020

For real estate undergoing development or rehabilitation, the current and potential future impacts of the pandemic are far-ranging. Owners and developers are already experiencing delays in permitting and approvals, supply chain and labor disruptions, and project stoppages. The pandemic is likely to cause scheduling impacts to many planned and ongoing projects, which raises the possibility of contractor delay claims. 

  • The first step in the analysis of a delay claim is a review of the construction contract to consider:
  • Whether excusable delay and/or force majeure provisions have been contracted for and the circumstances which permit contractors to make claims for additional time;
  • Allocation of responsibility for additional costs arising from delays caused by circumstances outside of a contractor’s control;
  • What mitigation obligations, if any, does a contractor have to limit the effects of delays;
  • Notice obligations of contractors in making a delay claim;
  • Suspension and termination rights of owners and contractors in the event of delay outside of the parties’ control; and
  • The ability of subcontractors to claim monetary delay damages.

Where a claim for additional time and/or money has been contemplated or asserted by a contractor, the second part of the analysis for owners and developers is a fact specific evaluation of the circumstances surrounding the project for which delay is being claimed. Ultimately, the analysis likely depends on the factual circumstances of any given project, considered together with the terms of the construction contract.

Herrick is actively monitoring the situation and accumulating a broad range of market intelligence from our discussions. We are here to help owners and developers devise creative solutions to address the most complex problems presented to us.

© 2020 Herrick, Feinstein LLP. This alert is provided by Herrick, Feinstein LLP to keep its clients and other interested parties informed of current legal developments that may affect or otherwise be of interest to them. The information is not intended as legal advice or legal opinion and should not be construed as such.