This week’s question comes to us from a materials supplier. Sometimes, the line between what’s contractually a separate job and what’s an addition to an existing one is difficult to decipher. But it’s important to figure out when figuring out how change orders, also known as add orders, could affect your lien rights on a project. Construction lawyer and payment expert Matt Viator weighed in to offer some perspective on change orders and lien deadlines.
Question: I work in the construction industry by selling windows and doors, mainly to builders. More times than not, we will have to add orders for a specific job (some taking up to 2 years to complete). Is it legal to treat each order and add order as a separate job? If not, how do I handle the furnishing dates so as to not lose our lien rights?
Answer: Luckily for this supplier, they may not have to do much extra work to maintain their lien rights on projects with new change orders. “Generally, change orders (or “add orders”) will be considered an addition to the job already at hand,” says construction lawyer Matt Viator.
Change orders are just one of the ways that you can alter the scope of an original agreement on a construction project, and usually, a contract will contain guidelines that specify how to execute one. If a change order has been validly made, it will qualify for lien rights with no issue.
“Regarding mechanics lien deadlines, the first furnishing date generally won’t be affected by change orders, though the last furnishing date would likely be effectively ‘reset’ where a change order is executed,” Viator adds.
Though add orders/change orders generally won’t affect lien rights, there are different extenuating circumstances that can modify the lien process when you’re changing the scope of work on a project. The distinction mainly depends on if agreements are considered the same as the original project agreement, or if they should be considered a new agreement altogether.
“Keep in mind that a dramatic change order that’s out of line with the original agreement or a substantial add order that exceeds the original agreement could indeed be treated as a separate job entirely,” Viator says.
Due to this, it’s important for parties to distinguish the difference between what is a modified agreement and a completely new agreement. Viator notes that any confusion about lien rights “might be overcome if the order clearly indicates it’s a continuation of the material being provided to the original agreement.”
Whatever you do, make sure that changes to the contract are made in writing and in line with the parameters of the original contract.
“Do yourself a favor: Don’t do any work if you don’t have proof of approval,” says Juan Rodriguez. “Working without approval increases your liability and risk of non-payment.”
“If the contract [calls] for written changes or additions, then everything should be done in writing,” Viator stresses. He agrees that keeping change orders in line with the original contract is a must, adding that “If any additions or changes aren’t validly made, in line with the contractual terms, then they may end up being not-lienable.”
Do you have a question you’d like answered?
Ask a question and have it answered by a member of Levelset’s community of attorneys, credit managers, and construction professionals.