Change orders are essential to California construction projects

Will your change order protect you if a California construction project spirals out of control? Follow these tips to help ensure that it will.

Anyone who has ever been involved in construction and real estate development knows that no project goes completely as planned. Despite the expectation that modifications will be necessary as a project progresses, far too many parties suffer losses due to changes to the original construction or real estate improvement contract. Most commonly, disputes arise when the parties fail to maintain a paper trail.

The importance of written change orders

Change orders can offer you protection, but they must be in writing. Long gone are the days when you could rely on a handshake or an oral promise. Although they may have worked for you in the past, if there is a question about an additional payment, a material substitution or another alteration to the original contract, the written word will prevail. The best way to avoid a lawsuit is to maintain documentation that backs up your position.

Will your change orders protect you during a legal dispute?

Whether you are a developer, contractor, subcontractor or property owner, the extent of protection you can expect from thorough documentation will depend on how your original contract and subsequent change orders are written and executed.

Here are some important aspects to keep in mind as you prepare to execute a real estate or construction contract:

  • Your construction contract must contain a provision that allows for changes. If there is no agreement to allow additions, adjustments or modifications to the original contract, you may be stuck with a contract you cannot honor or fulfill.
  • There is not a one-size-fits-all change order, at least not one that will protect you in every situation.
  • An excessive number of changes may lead to "abandonment" of the original contract in California. Know ahead of time where that line may be.
  • Ascertain who has authority under the contract to sign the change orders, and make sure that person signs off on each order before commencing work that varies from the original contract. This may not be easy or convenient when you are rushing to meet a deadline and alterations are needed quickly.
  • Have your attorney review your contracts and change order forms before you start using them to make certain that they comply with the California Contractor's Licensing Board guidelines.

When a legal dispute becomes unavoidable

If you find yourself involved in a project that is spiraling out of control or at the losing end of a deal gone bad, do not wait until the bitter end to seek legal help. A lawyer experienced with matters of real estate and construction matters may be able to provide you with options you never knew you had.