The American Institute of Architects (“AIA”) has nearly 200 different industry standard construction contracts and forms. Every so often, these forms are updated, and because they’re so widely used, the changes must be noted industry wide. Under the 2017 update of the AIA A201 general conditions, a general contractor must defend and indemnify the owner from mechanics liens under certain circumstances.
AIA A201 General Conditions
Let’s back up for a second and discuss what exactly the A201 general conditions are and when they will matter. AIA standard form contracts are used widely in the construction industry. Rather than reinvent the wheel for every project, these contract forms are used over and over. Revisions to the most commonly used forms are adopted every 10 years, and a lot of changes were recently released. One of the updates was to the A201 document, which contains general conditions.
delivered to your inbox
The AIA A201 general conditions are pretty self explanatory – they’re a collection of suggested general conditions for construction contracts. A201 is used as an “‘umbrella’ document for design-bid-build projects.” The provisions can be adopted as a whole, incorporated in part, or just incorporated by reference. When these conditions are present on a project, everyone providing work should understand them.
The National Law Review has a great 3- part breakdown of the changes to A201.
Indemnity for Subcontractor Liens
One of the many changes to the A201 general conditions calls for GCs to defend and indemnify some lien claims. It’s already fairly common for a contract to require a contractor to indemnify or defend an owner against lien claims. Now, that situation will occur more often since the A201 contract is so prevalent.
In the new form, if an owner has fulfilled its payment obligations to the general contractor, the GC will be required to defend and indemnify the owner when a lien is filed down the chain. This applies to lien claims for subs or suppliers of any tier. If a jurisdiction allows or requires that a general contractor bond off liens, the GC may still do so.
For down the chain lien claimants, the changes to the AIA A201 form won’t make a ton of difference. Often, GC’s are already involved in lower-tiered lien claims. Plus, this will only apply when a general contractor has already been paid themselves. While not much will change for subs and suppliers, GC’s will now be required to indemnify and defend more lien claims, which could be impactful. It’s worth mentioning that the AIA A201 general conditions are completely voluntary, so if industry members don’t like the new edition, they can carry on as they were. However, with the prevalence of AIA documents, expect many to adopt the new version.
Check out our Resources page for a virtual library of construction payment laws in all 50 states.