10 Things Your Construction Lawyer Wants You to Know

The construction industry if complex, full of risk, and highly regulated. Contractors must know how to navigate tight timelines, how to handle changing cost of supplies, labor shortages, and difficult clients. Despite those difficulties, contractors are expected to deliver quality work efficiently and safely. But often, legal issues are at the bottom of contractors' minds, at least until something goes wrong. By then, damage control can be expensive and time-consuming.

If construction lawyers could sit down with their clients before the first shovel goes in the ground, here's what we would want you to know:

1. Don't rely on a handshake

We've seen it all: multi-million dollar projects started with vague emails, text messages, or verbal promises. In construction, that's a recipe for disaster. A written contract isn't just paperwork, it's your playbook, your protection, and your first line of defense if something goes wrong during the project.

Even if you have a great relationship with an owner or supplier, put the terms into writing. You will want to spell out the scope, payment terms, change order procedures, timelines, and dispute resolution. If you're in California, some contracts are required by law to be in writing, especially for residential jobs. (Cal. Bus. & Prof. Code section 7159 et seq.). Do not cut corners when it comes to your written contract!

2. Change orders are modifications, not "just extra paperwork"

We will frequently hear our clients say "we'll get the change order signed later." Often, the "later" doesn't happen, and we end up in a dispute when an owner refuses to pay for the extra work. Change orders modify the original agreement, and without written approval, you might not be able to recover the extra costs.

Implement a clear change order process in every job. Train your team to document all changes in scope, cost, and time. If the owner won't sign it, think twice about proceeding. Again, don't rely on emails or text messages either.

3. Lien rights are powerful, but easily lost

Mechanic's liens are one of the best tools contractors have to ensure payment. But the rules are strict. In California, for example, preliminary notices must be served within 20 days of beginning work (or, rather, they are only retroactive 20 days). In Texas, notice requirements vary depending on how far removed you are from the owner (do not rely on a right to a constitutional lien).

If you miss a deadline, sign an overly broad waiver/release, or forget some procedural requirement, your lien rights could vanish. Work with an attorney to develop a notice (and waiver) system that protects your rights, not just the general contractor's or owner's.

4. You might be assuming more risk than you realize

Some contracts contain harsh risk-shifting provisions. Your eyes might glaze over at words like "indemnity" and "insurance," or different types of warranties. But these can push liabilities onto you for issues that are out of your control (e.g., delays caused by other trades, design errors, site conditions, supply chain issues).

Always review these clauses carefully. In some states (like California), certain indemnity provision in construction contracts can be unenforceable. But you need to know what is in your contract, and negotiate before signing!

5. Pay-when-paid is not the same as pay-if-paid

There's a huge difference between when you'll get paid and if you'll get paid. A "pay-if-paid" clause means a subcontractor may not get paid if the owner doesn't pay the general contractor. Some states (like California) limit or prohibit these clauses, while others (like Texas) allow them in some circumstances.

Contractors often gloss over this language, not realizing they're taking on the owner's credit risk. If your payment depends on someone else getting paid first, know what you're agreeing to, and talk to your attorney before signing.

6. Insurance doesn't always cover everything

Insurance policies might not cover certain claims (e.g., breach of contract, some types of negligence). I've seen insurance refuse to defend a simple negligence claim against a contractor because the owner didn't plead it adequately! And you could be personally liable as well: if you're operating as a sole proprietor or general partnership, your personal assets could be at risk.

Make sure to read and understand your insurance policies, and make sure you know the insurance requirements of your contract.

7. Project documentation can make or break a case

Your daily logs, emails, photographs, RFIs, and even text messages may end up in court. The more detailed and organized your records are, the better chance your attorney has of defending you or making a compelling affirmative claim.

Document delays, weather impacts, access issues, change requests, and all communications with the owner or general contractor. Train your foremen and project managers to document events in real time. Don't rely solely on memory when litigation arises a year or more later.

8. Prompt payment laws exist and can be enforced

Both California and Texas (as most states) have prompt payment statutes. These statutes require owners and general contractors to pay subcontractors within a certain time after receiving payment. If not, the subcontractors might be entitled to a higher interest rate, penalties, or even attorney fees. (Cal. Civ. Code section 8800 et seq.; Tex. Prop. Code, Chapter 28).

But many subcontractors don't enforce these rights (or don't know about them). Many subcontractors worry that simply threatening their enforcement will cost them business. You don't have to be confrontational, but you should know all the leverage you have. Prompt payment laws are designed to protect your cash flow, and prevent subcontractors from becoming (effectively) lenders.

9. Dispute resolution clauses matter!

Many construction contracts will include dispute resolution clauses. That is, you may be required to submit your case to arbitration rather than litigation. Sometimes they'll require mediation first. Many contracts contain provisions saying you waive your right to attorney fees (even if you win at trial!) if you fail to attempt mediation first.

Perhaps you want arbitration or mediation, and perhaps you don't. It's worth familiarizing yourself with these provisions of your contracts and negotiating them.

10. Involve your attorney before there's a problem!

Many contractors only call their attorneys (or start looking for one) after they've been sued or are engaged in a dispute. But construction attorneys can add the most value early on: reviewing contracts, advising on risk allocation, setting up lien procedures, and helping with collections (if it comes to that).

Don't wait until the project blows up to hire an attorney. A few hours of preventive legal work can save thousands or more down the line.

Final Thoughts

Contracting is already one of the most high-risk professions out there. But legal problems don't have to be inevitable. By understanding your rights, tightening up your contract practices, and involving counsel early, you can reduce your exposure and avoid liability.

Construction attorneys aren't here to slow you down. We're here to keep you protected, paid, and focused on what you do best: building.