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Substantial Completion
Overview, Resources & FAQs

Understand substantial completion in construction, and how it affects your rights and requirements on a project.

What does substantial completion mean?

Substantial completion marks the moment in a construction project when the owner can occupy or use the property, but some punch list items remain to be completed. In many cases, substantial completion is used to calculate the deadlines for final payment, mechanics lien claims, and other rights and responsibilities for those who worked on the job.

The American Institute of Architects (AIA) defines substantial completion as “the stage in the progress of the work when the work or designated portion is sufficiently complete in accordance with the contract documents so that the owner can occupy or use the work for its intended purpose.”

However, substantial completion can be frustratingly difficult to pin down. In some cases, it’s spelled out in the construction contract. In others, it may be up to the courts to decide. It’s important for contractors and suppliers to understand how substantial completion is determined on their project, so they can take action if they don’t get paid for their work.

Ultimately, when there’s confusion or dispute about the date of substantial completion, it’s a good idea to play it safe and use the earliest of the events that occurred. Letting a deadline pass could mean losing out on your right to secure payment for your work.

Why substantial completion matters

Contractors and suppliers need to know the date of substantial completion in order to calculate future deadlines. Substantial completion may affect:

  • The deadline for payments to the GC and subcontractors (final payment & retainage)
  • A contractor’s deadline to file a mechanics lien or bond claim
  • The expiration date for liability & warranties

Read more: Why substantial completion matters on a construction project

Deadlines for payment

Once a construction project is substantially complete, most contracts require the property owner to submit final payments and retainage to the GC within a specific period of time. In addition, nearly every state has prompt payment laws that require payment by a specific date after substantial completion.

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Deadlines for mechanics liens & bond claims

Each state has their own method for determining the mechanics lien or bond claim deadline. Many states use substantial completion as the start clock for the deadline to file a claim.

In some states, the deadline for a contractor to file a lien or bond claim is based on their own date of last furnishing. This means the last day that the contractor or supplier did work or provided materials to the project. In these states, the deadline is generally much simpler to calculate.

Deadlines for liability

Statute of repose

A statute of repose sets an overarching limit for when a property owner can make a claim for defects. Generally, the expiration date for the statute of repose is based on the project’s substantial completion. In California, for example, the statute of repose for construction defect claims is 10 years from substantial completion of the project.

Warranty period

The warranty period is the amount of time for which a contractor has the responsibility to correct defects in their work or materials. The warranty period is generally defined in the construction contract. The deadline for the property owner to submit a warranty claim often starts ticking upon substantial completion.

Date of substantial completion

Substantial completion can be one of the most difficult points to nail down in a construction project.

Defined by contract

The construction contract should clearly define an event or action that constitutes substantial completion. However, in some cases, the contractual definition of substantial completion may not be enough. Ultimately, the definition in most cases is statutory – meaning that it will be up to a court to decide.

Certificate of Substantial Completion

Construction projects that use contract documents from the American Institute of Architects (AIA) will often use the AIA Certificate of Substantial Completion. The architect on the project will inspect the site and issue the certificate when the building is ready to use.

Notice of Completion

In some cases, if a Notice of Completion (NOC) is filed, the date of substantial completion is irrelevant.

In California, for example, the deadline to file a mechanics lien is 90 days from “completion” of the work. However, if a Notice of Completion is filed on a California project, the deadline to file a lien claim is reduced to just 60 days from the NOC filing.

Only 7 states require the property owner to file a Notice of Completion (also called a “Notice of Cessation” or “Affidavit of Completion”):

  • Alaska
  • Arizona
  • California
  • Massachusetts
  • Nevada
  • Tennessee
  • Utah

Some other states have voluntary Notices of Completion.

Notice of Termination

Most construction projects will contain a provision that allows the General Contractor or property owner to terminate a contractor or supplier on the job for breach of contract. In this case, they may be required to serve the contractor with a Notice of Termination. Depending on your project’s state laws, a Notice of Termination can affect your deadline to file a mechanics lien. In Louisiana, for example, if a Notice of Termination is filed, the deadline to file a lien or bond claim is calculated from that date – rather than from the date of project completion.

Certificate of Occupancy

A Certificate of Occupancy (CO) is issued by a local building inspector, and certifies that the building is ready for use. While a Certificate of Occupancy and a Certificate of Substantial Completion have similar standards for issuance, they may not necessarily coincide. Sometimes, a building inspector may require a Certificate of Substantial Completion before they will issue a Certificate of Occupancy. But that is not always the case.

Approach substantial completion carefully

Because substantial completion can be so hard to pin down, it’s important to communicate openly with the GC and property owner on the project. Keeping detailed, comprehensive records of your work and your communication with the project’s owners will be critical if there is a dispute about the date of substantial completion in the future. Ultimately, be conservative about calculating your payment deadlines and the timeline to protect your lien rights. If you’re waiting to get paid for your work, waiting for the deadline to approach could mean losing your rights.

Frequently Asked Questions About Substantial Completion

The date of substantial completion on a construction project is an important milestone that affects everyone involved. Get answers to some of the most frequent questions that contractors and suppliers ask.

What determines substantial completion?

The construction contract should spell out exactly what constitutes substantial completion. It may be the date a Certificate of Substantial Completion is, or the issuance of a Certificate of Occupancy.

See Substantial Completion: Why it matters

What's the difference between a Certificate of Substantial Completion and a Certificate of Occupancy?

While both documents certify that the building is ready for use, they are issued at different times and by different people. A Certificate of Substantial Completion is issued by the architect at the request of the prime contractor, while a Certificate of Occupancy is issued by a local building inspector.

Learn more about the Certificate of Occupancy (CO) and how it affects construction payments.

Does substantial completion mean that the project is finished?

Not exactly. Substantial completion means that the building is ready for occupancy or use, but some small tasks known as punch list items remain to be completed.

Learn more about punch lists in construction

Who needs to know the date of substantial completion?

Generally, anyone who provides work or materials on a construction project needs to track substantial completion - it can affect the deadline for them to get paid, or to file a mechanics lien or bond claim if they don't receive payment.

Does substantial completion vary depending on the project?

The date of substantial completion can be different on every project, since it depends on the contract document itself. The contract should clearly define the event or milestone that constitutes substantial completion.

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How is substantial completion different from last furnishing?

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Construction attorneys: Courtney Stricklen, Christopher Ng, Andrea Goldman, and Peter Ryan

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