Category: Construction
Clear ResultsConstruction
The Saga of Economic Volatility Continues — Construction Contract Approaches for Potential Economic Issues Arising from the Iran Military Conflict
Six years ago, the COVID pandemic caused a shutdown of the economy. Since then, continued issues of economic volatility have occurred: supply chain woes; inflation and cost escalation; tariffs; and various other natural disasters. Now, with the Iran military conflict, specific materials and oil prices appear to be at risk. This article presents approaches for addressing these risks in construction contracts. As a starting point, military conflict is a typical type of force majeure event. But that alone does not necessarily dictate a remedy or relief for impacts. Generally, the best approach is for the construction contract to specifically address both the issue and the afforded relief. One initial issue in negotiating such contract clauses is the definition of the Iran military conflict itself. Does the military conflict constitute a war? Does the clause protect from war, terrorism, or a specifically identified military conflict? Does the current conflict constitute an unusual, unforeseen event? What if you sign a contract today—at this point, does it still remain an unforeseen event? Because of these complications, it is best to specifically address the issue with a custom contract clause. Instead of relying solely on vague or broad language, any negotiated clause should specifically identify the issue and all broad concerns—impacts of any terrorism, vandalism, armed conflict, military conflicts, or any widening military or government action, including but not limited to, events arising from the Iran/U.S. military conflict. And it should identify the potential problems (price escalation and delay of materials) and the respective relief (increase in price and extension of time through a change order). Even if a standard construction contract form includes a force majeure clause for “war,” it might not cover all incidents or events. And it might only afford relief of a time extension, but not necessarily additional compensation for price issues. Relying upon generic common law doctrines, such as commercial impracticability are risky because a court might rule that the issue was foreseeable, especially if the contract is signed while the pending conflict is developing. And a court might rule that the impacts from the event do not rise to the level of commercial impracticability. Also, when the issue of concern is economic volatility, the more that the event is known as a potential issue at the time of contracting, the more reason to specifically identify the issue and the mechanisms for relief. This is generally true for all the economic issues identified in this article—pandemics; supply chain issues; inflation and cost escalation; and tariffs. If an event is known to exist and might impact the project, best practice is to specifically address the event with a clause that affords either an extension of time, increase in price, or both. Other specific clauses to consider include: Price escalator clauses for either tariffs, price increases, or specified categories of materials (e.g., specific oil-based materials or fuel price increases) Contingencies or allowances for materials of concern or tariff costs Greater flexibility for substitutes or alternatives to allow for the sourcing of differing materials Extensions of time if materials are difficult to source Termination for convenience clauses if projects become impracticable due to any war-time orders or governmental orders that severely impede the project Segregated pricing by agreement for time-and-material budgets for carved-out scope packages that might be more volatile Prompt procurement, buy-out administration, and warehousing of goods in advance to avoid potential volatility on specified goods Value-engineering during the preconstruction phase to identify different (more easily accessible) materials Increased buffers in the contract price to account for the risk of potential tariff impositions When negotiating and drafting custom contract clauses to address risk on projects, or if litigating claims for equitable adjustments or change orders, best practice is to consult with trusted, experienced counsel that is knowledgeable on the intricacies of construction law. JEFFREY C. BRIGHT is a Principal attorney in Offit Kurman’s Construction Practice Group and maintains a multi-state construction law practice, representing contractors, subcontractors, owners, construction managers, design-builders, and design professionals. He is licensed and active in construction law matters in PA, MD, DC, VA, and CA. In addition to handling construction litigation and project disputes, including time impact claims for liquidated damages, delays, or disruptions, he regularly advises on the preparation, revision, and negotiation of construction contracts for various project delivery systems. He can be reached at jeff.bright@offitkurman.com.
April 21, 2026
Construction
A (Simple) Primer on the Voiding of Tariffs by the Supreme Court and Its Impact on the Construction Industry
On February 20, 2026, the United States Supreme Court voided the tariffs on international goods imposed by President Trump under the IEEPA. The initial, immediate effect is that the recently imposed (and relatively high) tariffs on imported goods are immediately void. This has raised various questions in the construction industry. Will prices go down? Will new tariffs be imposed? Simply because the tariffs were voided does not necessarily mean that prices will go down. Prices are affected by other market forces, not just tariffs. Also, there is the likely prospect of other tariffs being imposed. In fact, that is exactly what the Trump Administration immediately did in response to the Supreme Court ruling. The tariffs are less onerous, however, and they might be temporary. Still, there is the potential for additional or increased tariffs to be imposed on goods. Also, not all construction materials were exclusively under the new tariffs; some materials, such as steel, had longstanding protectionist tariffs dating back decades. If the tariff was through something other than IEEPA, then, the refunds are inapplicable. Thus, even with the voiding of the recent Trump Administration Tariffs, other tariffs or price volatility may still affect certain goods and materials. Contractors should carefully examine the specific tariffs that apply to specific goods and should continue to account for forthcoming tariff volatility risk in all contracts by negotiating clauses (or prices) that address economic volatility. What about the tariffs that I already paid on imported materials and goods? Generally, the key point to understand is that the “Importer of Record” has the right to seek a refund of moneys paid on the tariffs. If you are not the Importer of Record, then, it is likely difficult for you to seek a refund. Refunds are to be sought directly from Customs and Border Protection (“CBP”) or the Court of International Trade (“CIT”). Refunds from CBP generally require filing specific documents within 180 days of the “liquidation” of the initial entry of the goods. Consult with an attorney to identify the correct filing(s) for which you might be eligible, as the filings are time-sensitive with deadlines. Even if you ultimately paid the tariff cost through pass-through clauses in your contracts, if you were not the Importer of Record, you likely do not have eligibility to file a refund claim against the government. Still, each circumstance should be reviewed by an attorney. Theoretically, depending on your contract clauses, the Importer of Record could seek a refund and pass the refund dollars to you. Why did I pay all those tariff costs if the whole thing was void from the start? Shouldn’t I have refused to pay them from the start? Once the executive branch of the federal government imposed the tariff, it became required to be paid in order to receive the imported good. There really was no other option in real time (other than refusing to receive the good). You could negotiate in your contract who would bear the cost of the tariff, but refusing to pay it meant that you would be unable to receive the imported goods. Theoretically, you could have filed a protective claim with CIT with the intent of appealing to the United States Supreme Court; but realistically, that is a very expensive and burdensome process. Typically, for significant matters of this nature, a single contractor importing a good would not want to carry the cost and burden of a Supreme Court case. Thus, you did what everyone did—paid the tariff to get the goods imported and attempted to price and account for the risk in your contracts accordingly. But, with the recent Supreme Court ruling, refunds are available for certain eligible claimants, including interest. JEFFREY C. BRIGHT is a Principal attorney in Offit Kurman’s Construction Practice Group and maintains a multi-state construction law practice, representing contractors, subcontractors, owners, construction managers, design-builders, and design professionals. He is licensed and active in construction law matters in PA, MD, DC, VA, and CA. In addition to handling construction litigation and project disputes, including time impact claims for liquidated damages, delays, or disruptions, he regularly advises on the preparation, revision, and negotiation of construction contracts for various project delivery systems. He can be reached at jeff.bright@offitkurman.com. Special thanks to Janine Campanaro and Matthew Reddington from the Offit Kurman tax law group for contributing to this article.
March 24, 2026
Construction
Pennsylvania Supreme Court Entertains Oral Argument on Significant Construction Statute of Repose Appeal in Aloia v. Diament Building Corp
On March 12, 2026, the Pennsylvania Supreme Court heard oral arguments in Aloia v. Diament Building Corp., a closely watched appeal that could significantly affect the future of Pennsylvania’s Construction Statute of Repose. The key question presented to the Court is how the statutory phrase “lawfully performing” design or construction services will be interpreted. Pennsylvania’s Construction Statute of Repose has long provided architects, engineers, and contractors with a defined endpoint for liability arising from improvements to real property. Unlike the statute of limitations, which begins to run when an injury occurs or is discovered, the Pennsylvania statute of repose establishes a firm cutoff for claims, without regard to discovery or other equitable tolling. The dispute in Aloia arises from a residential construction project completed in the mid-2000s. Certificates of occupancy were granted in 2006 and 2007 to the original owner. In 2021, more than a decade later, homeowners who purchased the home in 2016 filed suit alleging latent construction defects. The contractor invoked the construction statute of repose as a complete bar to the claims. Both the trial court and the Superior Court determined that the twelve-year repose period applied to the claims alleging building code violations, dismissing the homeowners’ claims. Key Themes from Oral Argument On appeal to the Pennsylvania Supreme Court, the homeowners advance an interpretation of the statute, asserting that the repose period did not apply where the construction work was alleged to violate the applicable building code. The homeowners asserted that a design professional or contractor who was alleged to have violated the building code was not a person “lawfully performing or furnishing” construction services, and, therefore, the construction statute of repose was inapplicable to the homeowners’ claim. At argument, the Court repeatedly framed the central issue as whether “lawfully performing” requires compliance with all code requirements or, instead, requires that the individual or person be lawfully entitled to perform the services (i.e. authorized). Interpreting the phrase “any person lawfully performing” to require full compliance with any and all applicable statutes, building codes, and regulatory requirements would effectively nullify the construction statute of repose, exposing design professionals, contractors, and subcontractors to claims decades after substantial completion. At argument, the Court discussed the statute’s underlying purpose was to promote a robust building industry, preventing unlimited liability by protecting those who work within the industry’s regulatory framework (i.e. licensing and permitting requirements). Additionally, the Court engaged in questioning focused on the fact that the failure to comply with building codes constitutes a construction deficiency, and that the homeowners’ reading makes other provisions of the statute, which require claims for design or construction deficiencies to be brought within 12 years, mere surplusage. Further along these lines, the Court also questioned the statutory or regulatory authority of an individual to bring a private cause of action to enforce the building code, noting that no violations were issued by the code official and, therefore, the homeowners were necessarily pursuing deficiency claims squarely within the construction statute of repose. The Court also engaged in a robust discussion regarding the structure of the statute itself. Looking to the grammatical structure, justices noted that the structure of the statutory phrase, “a person lawfully performing or furnishing,” in which the term “lawfully performing” modifies the term person rather than the terms building or improvement. The Court also scrutinized the statutory structure, as the contractor emphasized that the homeowners’ interpretation effectively rewrites the statute by inserting an additional exception into subsection (a), which establishes the general rule, rather than looking to subsection (b), in which the legislature expressly set forth the statutory exceptions. The Supreme Court’s decision in Aloia stands poised to shape the contours of construction liability in Pennsylvania and will determine whether the Commonwealth’s longstanding statute of repose will remain a meaningful barrier against stale claims against design professionals and contractors. Offit Kurman through Anthony S. Potter, Franklin C. Miller, and Robyn St. Hilaire represented the American Institute of Architects ("AIA"), AIA-Pennsylvania, the American Council of Engineering Companies (“ACEC”), ACEC/PA, the Structural Engineers Association of Pennsylvania, the Pennsylvania Society of Professional Engineers, the Pennsylvania Society of Land Surveyors, and the Pennsylvania-Delaware Chapter of the American Society of Landscape Architects as Amici Curiae before the Pennsylvania Supreme Court.
March 17, 2026
Construction
A Primer on Mechanics’ Lien Claim Waivers in Pennsylvania
Waiver of mechanics’ lien claims is an important and frequent issue on construction projects. There are various approaches to lien claim waivers, depending on the type of project and the preferences of the parties. Because of the various types of lien claim waivers, there is often confusion. This article explains the different types of lien claim waivers. An initial fundamental point regarding mechanics’ lien claims and waivers, is that they are creatures of statute. Each state has its own laws that govern mechanics’ liens and waivers. There is no universal, national law that governs. Instead, each state has its own statutes and interpretation of the law. Additionally, mechanics’ liens generally cannot be asserted against public projects. Advance Lien Claim Waiver Versus Progress or Final Lien Claim Waiver One categorical distinction between lien claim waivers is whether they apply in advance of the work, versus lien claim waivers that are executed during the progress of the project and apply to work performed as of the date of the waiver. An “advance” lien claim waiver is executed prior to the work being performed. Accordingly, it waives lien claim rights before doing the work. Most states prohibit advance lien claim waivers. In Pennsylvania, however, advance lien claim waivers are enforceable, but only on specific types of projects, and only if specific requirements are met (more on that below). In contrast, a progress or final lien claim waiver is executed during the project, or after the work is completed, and it typically clarifies that it applies to the work already performed. The standard approach is to identify a “through date,” which means that the waiver applies to all work performed “through” a certain date. Typically, the “through date” would be a prior date that has already passed, and the lien claim waiver states that it is effective to waive lien claim rights for all work performed up to and including that date. Typically, progress lien claim waivers are executed with each payment application. None of the “through dates” are future dates—which would instead be an advance lien claim waiver. Progress and final lien claim waivers are effective and enforceable. In Pennsylvania, for advance lien claim waivers to be effective, it must be a commercial project (non-residential), and a payment bond must be posted that covers the project. Also, the advance lien claim waiver is only effective to waive downstream (subcontractor/supplier) lien claim rights. The prime contractor with a direct contract with the owner cannot waive lien claim rights in advance, and the payment bond is posted by the prime contractor (so the payment bond does not cover the prime contractor’s demands for payment). Conditional Versus Unconditional Lien Claim Waivers Another categorical distinction in lien claim waivers is “conditional” versus “unconditional.” A conditional lien claim waiver identifies that it is only effective if certain conditions (typically pending payment) occur. Thus, for example, with a conditional lien waiver, it will expressly state that the waiver is “conditioned” on the future receipt of the identified payment. If the identified payment is not received, then, the waiver (even if executed) is unenforceable. Unconditional lien claim waivers, on the other hand, expressly state that the payment has already been received, and that there are no other requirements or events to occur for the lien claim waiver to be effective. Typically, these lien claim waivers identify themselves with the words “unconditional,” and they often state that the payment identified has been “received in fact,” or “received in hand.” Complications can arise when payment has not in fact already been received; yet, an unconditional lien claim waiver (stating that payment has already been received) is erroneous executed. Generally, it is fair and reasonable to insist that lien claim waivers accurately express whether the payment has in fact already been made, or whether a conditional lien claim waiver should be used instead, because the payment is pending and not yet received. It is also appropriate to revise or annotate a lien claim waiver to expressly state that certain claims, disputed amounts, open change orders, etc., are preserved and not waived. This avoids confusion on whether the payment was intended to cover any disputed, open, or unresolved items. Preliminary Notices of Lien Rights, Construction Notices Directory, and Other Requirements Lien claim waivers are specific documents that address whether a lien claim has been waived or preserved. Different and separate from lien claim waivers are statutory requirements that must be satisfied in order to preserve or pursue lien claims. Most states, including Pennsylvania, have requirements to notice and enforce lien claims. If you fail to satisfy all the requirements, including timeliness, it is likely that your lien claim will be lost. Pennsylvania, similar to most states, has certain requirements that must be fulfilled when pursuing lien claims. In Pennsylvania, certain projects may be eligible for registration on the Construction Notices Directory, which is maintained by the Department of General Services. If a project is registered, then, the requirements under the mechanics’ lien law that pertain to the Construction Notices Directory must be followed; otherwise, the lien claim may be lost. One such requirement is to provide (and file with the Directory) early notice of potential lien claim rights. Additionally, in pursuing a lien claim, certain processes must be followed; otherwise, the lien claim may be lost. In Pennsylvania, as a general rule, if the claim is by a subcontractor or anyone who is not in direct contract with the property owner, then, the claimant must give advance notice to the property owner of the intent to file the lien claim. Also, any claimant, whether a downstream subcontractor/supplier or the prime contractor must meet specific deadlines in pursuing the lien claim. And the substance of any notices or lien claim filings must fulfill the statutory requirements. Failure to timely notice or file any of the items, or failure to adhere to the substantive requirements, will often result in the lien claim being unenforceable. These requirements for noticing and pursuing the lien claim are not technically “waivers,” of the lien claim, but failure to follow the rules may result in the same outcome—the lien claim being lost and unenforceable. This article also appears in the February 2026 edition of the Spokesman, a publication of ABC Keystone.
February 25, 2026
Construction
Practical Steps to Take When a Schedule or Time Impact Dispute Arises
Construction projects are frequently delayed and take longer than originally anticipated. When a project is delayed, claims often arise for liquidated damages, delays, disruptions, and cost overages. Here are a few practical considerations for where to start when organizing your time impact dispute. Start with the Schedule Often, litigants immediately send threatening letters regarding costs, claims, losses, blame, etc.; however, it is best to start with a clear understanding of the delay as shown on the schedule. To do so, your project manager, attorney, and any expert consultant should start by reviewing key, fundamental information. Was there a written contract with a completion date or milestone deadlines? Were those deadlines extended by already approved change orders or extensions of time? Did the contract have a baseline schedule? Was the project schedule updated throughout the project? Were there updated as-built schedules (showing the work durations, as actually performed), as well as updated projected schedules for the work yet to be completed? Are the schedules available in the native software format? Are there accompanying schedule narratives? An initial analysis should start with a clear understanding of the schedule itself. Establish why the Project was Delayed Alongside the schedule for as-built and projected work, it is necessary to understand what events, incidents, acts, or omissions are the supposed causes of the delay. Frequently, claimants will identify a list of issues or problems on the project and assert that these caused the delays. That’s a good start. But even better: You should be able to identify a list of time-impact events (incidents, acts, or omissions) that are the cause of the delay. And for each event, identify how and to what duration/extent it impacted the critical path of the work. Additionally, for each event there should be proof. Text messages and emails are typically very burdensome, inefficient, and sometimes inadequate to show the event. For example, if your work is delayed because a separate trade’s predecessor work is incomplete (or incorrect), it is best to have more documentation than an email. There should be documentation showing the origin, investigation, remedial action, and conclusion of the incident. There should be photographs, daily logs, meeting minutes, RFIs, redesign, and/or change order proposals. For each event, you should be able to present a narrative and supporting proof that concisely explains what the event was and how it impacted the critical path for the work. Establish that Notice of the Event was Issued, and Progress it to a Formal Claim if Necessary Typically, the contract documents differentiate notice of the event as different than a formal claim. Notice of the event is for the purpose of addressing the issue. This serves both a legal purpose, as well as a construction purpose— to keep the project moving forward. Most contract documents will require notice to be given with reasonable promptness. This should be a documented written notice, which might accompany an RFI or other documentation, such as a change order proposal. Recognize that notice of the issue should clarify what the issue is, and if you believe it will cause additional costs or time. If you only request additional costs or additional time, but not both, you may be waiving your right to full relief. Generally, after the notice of the event has been issued, if the matter has not been resolved through some other means, it is best practice to issue a formal request for equitable adjustment, change order, or invoice, seeking the remedy of additional time, money, or both. It is important to track costs and delays with precision so that your requested relief is specific, reasonable, and supported by the evidence. If you fail to submit the REA/CO, then, it may be more difficult to obtain relief. Most contracts have deadlines for submitting such requests, and, further, most project players are unimpressed with end-of-project REA/CO, because it is preferred to address these issues while the item is pending and immediate. Most contract documents will then have a “claims process” for transitioning the proposed or rejected REA/CO to a formal claim. When consulting with your attorney or expert, the quantifications (and supporting proof) for the requested time or compensation should be organized to facilitate the most efficient approach to claims handling. To summarize: Start with clear, organized documentation of the project schedule and deadlines Prepare organized explanations and proof of the time impact events Accurately quantify the impact with supporting proof so that the requested time and compensation are based on credible data/evidence Promptly notice the time impact issue, the request for relief and, if the request is rejected, the claim When handling time impact issues on a project, whether that be delays, disruptions, liquidated damages, or related cost overages, it is best to consult with your attorney and experts. By properly organizing, supporting, and noticing requests/claims, the preference is to reach amicable resolutions without the need for lengthy claims processes or litigation. This article also appears in the January 2026 edition of the Spokesman, a publication of ABC Keystone.
January 14, 2026
Construction
Will New Rules Kill Mid-Level Construction in NYC?
In politics, in building, in personal goods, and in anything else, for years now I’ve been asking the same question…how is that going to be paid for? New government programs sound great if the funds are available, but if they will require raising taxes, in my lifetime, it has been a nonstarter. My kid wants a drone for Christmas, but I can’t afford it. And for builders and contractors, new legislation has led to another step in the direction of development being just too darn expensive. RPAPL 881 was amended and recently signed into law by New York Governor Hochul, and it contains provisions that will drive development costs even higher. In my opinion, amendments will either cause or contribute to pricing the small and medium size players out of the market, thereby impacting all construction projects other than the very, very biggest. Anecdotally, New York buildings have been turning over beautifully at all economies of scale. Many tenements of old have been replaced by new, more modern low and medium rises and other types of buildings. The city now has a vibrant new look, and I don’t just mean the skyscrapers. I would hate to see that stunted. The principle behind amending RPAPL 881 was a good one, to make an extraordinarily ambiguous statute more specific. Its aim was to provide guidance and to manage everyone’s expectations. However, in my reading of the final language, even though the governor has requested amendments, the bill primarily opens new cans of worms rather than closing them. For instance, there’s expanded consideration of the occupants of multiple dwellings. Under the old law, developers typically only dealt with neighboring boards and building owners. Now they are going to have to deal with the tenants and occupants, too. Litigation is going to be untenable insofar as requiring joinder of numerous parties, to effectuate service on that expanded number of people, and to engage with many more parties in the litigation process. Negotiations will be just as onerous. Agreements will have to specifically consider the needs and wants of everyone affected down to the individual. Each individual in a building will have expanded standing and a larger seat at the table to assert their own priorities. In addition, the new bill provides for the potential of a license fee for a reduction in value of a neighboring property. This will impact costs across multiple areas. In litigation, it will require expanded expert testimony and fact-finding, and in a negotiation context, practitioners will be seeking fees higher than what was previously available on this basis. In my humble opinion, the largest problem with this bill, actually benefits the developer over the neighbor. I read the legislation as having a private takings clause. The new bill permits a court to grant a developer the right to underpin the adjoining property. If you understand what underpinning is, you will know that this inclusion constitutes a permanent takings clause that does not have to involve any government. Eminent domain in a private context, is not permissible. Only governments may seize property from others on a permanent basis, and even in those cases they must provide fair market value (which, if implemented, would be an additional cost to the developer) as a result, I believe this provision to be unconstitutional. In this world where insurance costs for New York development are through the roof, or strict liability should cause any developer to look over their shoulder, anything that further drives up development costs, in my opinion, is going to kill mid to low-level development. Jobs that are under $5 million, those jobs that the big guys don’t want to do, the risk will simply be too high for the medium and smaller players. I fear that aside from the ivory towers, the buildings in NYC will be left to crumble. There will be too few willing to take the risk due to ever escalating costs. The underpinning rule is at least one portion of the bill that I believe to be unconstitutional, so if that can be attacked, perhaps they will go back to the drawing board and start again. **The impressions contained herein are the impressions and interpretations of the author based upon review of the new statutory language, synthesized with existing law; not on any updated decisional authority.
December 30, 2025
Construction
USDOT’s Interim Final Rule: A New Era for DBE and ACDBE Certifications
Update (December 2025) New developments have occurred regarding USDOT’s Interim Final Rule. On December 2, the Pennsylvania Unified Certification Program (PA UCP) issued notice to DBE firms advising that recertification submissions are required under the new USDOT Interim Final Rule. To be considered for recertification, firms must submit updated Personal Net Worth statements, 2024 tax information, and a Personal Narrative demonstrating individualized social and economic disadvantage. All required materials must be submitted by February 5. Firms that do not timely submit complete documentation risk decertification. In 1983, Congress enacted the U.S. Department of Transportation (USDOT) Disadvantaged Business Enterprise (DBE) Program to ensure equitable access to federal contracts involving highway, transit and aviation projects for small businesses owned and operated by socially and economically disadvantaged individuals, including women and members of specific racial and ethnic minority groups. Last month, USDOT issued an Interim Final Rule (IFR) on October 3, 2025 that fundamentally changes how firms qualify as DBE and Airport Concession Disadvantaged Business Enterprises (ACDBE). The rule, which came into effect on the date of its publication, eliminates race- and sex-based presumptions of disadvantage — requiring every applicant and currently certified firms to prove social and economic disadvantage on an individual basis. These changes affect all firms certified or seeking certification under the DBE and ACDBE programs, including thousands of women- and minority-owned small businesses that have historically relied on the presumption of disadvantage. Why the Rule Was Issued The IFR, effective October 3, 2025, follows a series of court rulings and executive orders directing agencies to remove race- and sex-based classifications from federally funded programs. In Mid-America Milling Co. v. U.S. Department of Transportation, the U.S. District Court for the Eastern District of Kentucky held that USDOT’s use of such presumptions likely violate the equal-protection component of the Fifth Amendment. USDOT and the Department of Justice agreed with the court’s conclusion and determined that the DBE and ACDBE programs must now operate in a race- and sex-neutral manner to be consistent with constitutional requirements. Key Changes Under the Interim Final Rule The IFR amends 49 CFR Parts 24 and 26 to remove race- and sex-based presumptions from the definitions of “socially and economically disadvantaged individual.” Instead, each owner applying for or maintaining a firm’s DBE or ACDBE certification must now: Demonstrate disadvantage on a case-by-case, individual basis — based on personal experiences and circumstances within American society, without regard to race or sex Submit a personal narrative establishing disadvantage by a preponderance of the evidence — describing specific experiences of economic hardship, systemic barriers, or denied opportunities in education, employment, or business Explain the resulting economic harm, including type and magnitude — illustrating disadvantage relative to similarly situated, non-disadvantaged persons Attach a personal net worth statement—and any other relevant financial information Immediate Program Wide Impacts USDOT has estimated that roughly 41,000 firms nationwide will need to be reviewed, and each state must assess and revise its DBE goal methodology for approval. Many state DOTs have already paused goal setting and tracking while UCPs develop a process for reevaluation. Until each UCP completes its reevaluation process, recipients of federal transportation funding may not set DBE contract goals, and participation by existing DBEs cannot be counted toward overall goals. Following the reevaluation of all DBEs in the state, recipients must assess, update, and obtain approval of their DBE goal methodology. Importantly, contracts that have already been awarded are not impacted, and the DBE goals stated within those contracts remain applicable. Additionally, the termination provisions outlined in 49 CFR § 26.53 continue to apply, prohibiting contractors from terminating a DBE firm without good cause. However, all contracts that have not yet been awarded must be amended to zero out the DBE goal. Why This Matters The DBE and ACDBE programs have long been essential to ensuring fair access to public transportation project contracts. But the shift from group-based presumptions to individualized proof introduces significant uncertainty and administrative burden for small businesses. Firms that do not respond promptly, or that submit insufficient documentation, risk losing certification and access to set-aside opportunities until they can requalify under the new standards. What DBE and ACDBE Businesses Should Know While the rule applies to all DBE and ACDBE firms, female- and minority-owned businesses will feel the most immediate impact. Under prior regulations, women and certain minorities were presumed to be socially and economically disadvantaged. That presumption no longer exists. As such, to maintain certification, owners must now prepare a detailed personal narrative and financial disclosure demonstrating disadvantages based on lived experience not related to race or gender. For many owners, this will mean documenting: Specific professional or economic barriers encountered Instances of unequal access to capital or contracting opportunities Measurable economic impact of barrier encountered Mid-Atlantic State Responses The IFR requires that each state’s UCP to reevaluate all certified firms “as quickly as practicable.” All DBE firms must complete the reevaluation process in the jurisdiction of their original certification (i.e. the firm’s home state). Below is a brief update from key Mid-Atlantic states. Delaware DelDOT has provided notice stating that all currently certified DBE firms have lost their certification and must undergo reevaluation to remain in the program. In its communication, DelDOT clarified that the IFR does not affect existing contracts, and agencies are not required to recompete or reopen current awards. Maryland With over 10,000 certified firms — nearly 25% of the national total — MDOT, serving as the state’s UCP, has expressed its desire to move swiftly in recertifying and reassessing its DBE program. In fact, MDOT has already initiated the process of securing expedited procurement to hire external reviewers to support the reevaluation process. New Jersey The state’s UCP has issued a notice outlining requirements and prohibitions under the IFR; however, no specific deadlines or guidance regarding the reevaluation process is provided. Moreover, all interstate firms will be delisted from the NJUCP directory and must complete the reevaluation process in the jurisdiction of the firm’s original certification. New York While there is no conspicuous notice of the IFR on the state’s UCP websites, MTA — one of New York’s Certifying Partners — has revised the DBE Participation Provisions within its General Provisions for Design-Build Contracts. These revisions indicate that firms will be recertified through an application process, followed by a reassessment and resetting of the overall DBE goal. Only after this process will the need for new contract-specific goals be determined. Pennsylvania A notice has been sent to DBE firms regarding the IFR requirements; however, no deadlines have been provided for the reevaluation process. The Pennsylvania UCP has also announced that it is not currently accepting any new applications. Southeastern State Responses Georgia The Georgia UCP (GUCP) has issued a notice to DBE firms regarding the IFR’s requirement to demonstrate individual social and economic disadvantage. In its communication, GUCP stated that it is seeking further clarification and will continue to update DBE firms regarding certification status and recertification procedures once additional guidance is received. North Carolina The state’s UCP has acknowledged the IFR through formal notice but has not provided further communication regarding its specific requirements or prohibitions. No deadlines or guidance related to the reevaluation process have been issued at this time. South Carolina SCDOT has announced that all currently certified DBE firms have temporarily lost their certification and must undergo reevaluation to remain in the program, noting that the previous decertification procedures found in 49 C.F.R. § 26.87 do not apply. SCDOT also indicated that it is working expeditiously to complete the reevaluation process and will issue further guidance, including the required documentation, to DBE program participants. How DBE and ACDBE Businesses Can Prepare Affected businesses should begin preparing now to ensure they remain eligible and avoid decertification during the reevaluation process: Collection Documentation – Gather records reflecting challenges obtaining financing, discrimination in lending or contracting, or other business obstacles. Draft a Comprehensive Personal Narrative – Explain, in detail, how personal and economic barriers have impacted business growth. Review Financial Information – Confirm your Personal Net Worth statement is current and accurate. Consult Counsel – Experienced legal counsel can help interpret new requirements, structure the narrative, and ensure compliance with 49 CFR § 26.67 and related provisions. How DBE and ACDBE Businesses Can Be Proactive While the IFR impacts federally funded projects, small and minority business certifications remain active and relevant for state-funded projects. Unlike DBE certification, which is governed by federal regulations, small and minority business certifications are administered under state specific guidelines. Firms undergoing DBE reevaluation may already hold certification as a small or minority business within their certifying state. For instance, Maryland’s UCP evaluates all DBE applicants during the certification process to determine their eligibility for the small business program. Generally, a firm will qualify as a small business if it does not exceed the established size and revenue thresholds. In addition, some states are transitioning their DBE firms to the Small Business Administration’s 8(a) program which certifies socially and economically disadvantaged small business owners seeking to expand in the federal marketplace. Certification under the 8(a) program allows firms to compete for sole-source and competitive set-aside contracts. The program authorizes up to $7 million for acquisitions assigned NAICS codes and $4.5 million for all other acquisitions. Similar to the DBE program, to be eligible for the 8(a) program 51% of the firm’s ownership interest and control of the firm must be in a socially and economically disadvantaged individual whose personal net worth is no more than $850,000. As the landscape continues to shift, DBE and ACDBE firms are encouraged to review their certifications and evaluate alternative certification programs that offer greater stability and alignment with their long-term business goals.
November 10, 2025
Construction
Pennsylvania Supreme Court Decision Supports Legislative Finality Created by Statute of Repose
In a welcome development for Pennsylvania’s construction industry, the Pennsylvania Supreme Court’s recent decision in Gidor v. Mangus reinforces the integrity of legislatively adopted Statutes of Repose. On October 23, 2025, the Supreme Court held that Section 7512 of the Pennsylvania Home Inspection Law constitutes a one-year statute of repose — eliminating the right to bring a lawsuit against a home inspector. The decision signals continued judicial support for the legislative adoption and intent behind statutes of repose. This decision arrives at a critical point, as two high-profile cases involving the Construction Statute of Repose — Aloia v. Diament and Clearfield County v. Transystems — are pending before the Pennsylvania Supreme Court. Each case threatens to erode the protections afforded by the 12-year Construction Statute of Repose, 42 Pa. C.S. §5536. In Aloia, plaintiffs argue that alleged violations of the building code toll the statute of repose. While the County in the Clearfield County appeal asserts that the ancient doctrine of nullum tempus exempts public entities from the Construction Statute of Repose. The Gidor court’s affirmation of the 1-year Statute of Repose is particularly relevant to the construction industry because the court’s decision heavily relies on its prior decisions interpreting the Construction Statute of Repose. The court emphasized that, because the statutory clock starts at a definite event independent of injury or discovery and is not subject to equitable tolling, the statute extinguishes any claim. Critically, the repose period upheld in Gidor was just one year from the date a home inspection report was delivered. The court’s reasoning underscores the judiciary’s willingness to enforce clearly defined legislative statutory repose periods. Moreover, the court’s acceptance and approval of a one-year statute of repose in Gidor lends judicial credibility to legislative efforts such as Senate Bill 399, which seeks to shorten the Construction Statute of Repose period to six years. By reaffirming the distinction between statutes of limitation and repose, Gidor strengthens the argument advanced in amicus briefs filed by Offit Kurman on behalf of leading A/E/C associations: the repose period must remain a firm and predictable legislative boundary eliminating all claims. If the Supreme Court follows its reasoning in Gidor, we anticipate that the Court will preserve the 12-year Construction Statute of Repose’s essential function of providing finality, reducing indefinite liability, and protecting the architects, engineers, and contractors from stale claims. Law Clerk Robyn St. Hilaire provided valuable insight and contributed to this article.
November 5, 2025
Construction
Pennsylvania’s Construction Statute of Repose Under Attack
For more than 40 years, Pennsylvania’s Construction Statute of Repose (SOR) has given contractors, engineers, and architects the assurance that liability for completed projects eventually comes to an end. That is because, after 12 years from substantial completion, all claims are barred, no matter when the alleged defect is discovered. That certainty, however, is under direct attack in Pennsylvania. Currently, two cases are pending before the Pennsylvania Supreme Court seeking to expand liability in ways that undermine the statute’s purpose and create indefinite exposure for architects, engineers, and construction contractors. In our role as A/E/C industry advocates, Offit Kurman was engaged by leading construction industry associations to file friends of the court briefs (amicus briefs) in both appeals to Pennsylvania’s highest court. Offit Kurman Advocates for AEC Groups in Key PA Construction Case Nine AEC Professional Associations Advocate in Pennsylvania Supreme Court Case What is the Construction Statute of Repose? A statute of repose, by definition, sets a definitive event for the statutory period to begin and then provides for an expiration period that is not tolled. The statute of repose differs fundamentally from a statute of limitations because repose can operate to bar a lawsuit before a cause of action accrues. By contrast, a statute of limitations runs from the time of injury or reasonable discovery of harm. For more than 40 years, the Pennsylvania Construction Statute of Repose has created a hard cutoff point for lawsuits brought against architects, engineers, and contractors who furnish design, planning, and construction services for any improvement to real property. Generally, this requires any such suit to be brought within 12 years of substantial completion. Once the repose period expires, all claims are barred, even if the defect was hidden or the injury occurred later. There are various policy considerations for the adoption of a construction statute of repose. First, unlike most products and services, architectural, engineering, and construction services that improve real property are intended to long outlive the owner. Because the intent is for buildings and infrastructure projects to have long life spans, which include renovation and rehabilitation, state legislatures have typically limited the time period during which construction professionals can be held liable for alleged design and construction defects. The reality is that there is a practical balance: involving years elapsing, records being lost, memories fading, and the individuals who were involved on the projects being unavailable, as a result of retirement or death, that makes defending against stale claims exceptionally difficult. By creating a clear endpoint, construction statutes of response protect the A/E/C industry while also ensuring predictable costs for owners and the public. State legislatures within 48 of the United States have adopted a construction statute of repose. Pennsylvania’s 12-year statute of repose ranks as one of the two longest statutes of repose in the country. Aloia v. Diament – The Meaning of “Lawfully Performing” The first challenge seeks to nullify the construction statute of repose arguing that the statutory provision which states that a person “lawfully performing” means that if a plaintiff alleges any violation of a regulation or building code the statutory period does not start to run. In Aloia v. Diament, a homeowner argues that because the construction of the home’s exterior envelope allegedly violated building codes, the contractor was not “lawfully performing” the construction work. On that basis, the plaintiffs contend the 12-year repose period never began to run, leaving the claims alive decades later. Offit Kurman’s amicus brief, filed on behalf of leading national and state design professional associations, including the American Institute of Architects and American Council of Engineering Companies, makes clear that plaintiffs’ argument completely erases Pennsylvania’s construction statute of repose by not paying attention to the plain and unambiguous text and purpose. Nearly every design and construction defect claim involves alleged code and regulatory violations; if “lawfully performing” meant “perfect,” the repose period would never commence to run. Instead, “lawfully performing or furnishing” design or construction services clearly means authorized, meaning that the design professional or contractor was licensed or otherwise permitted to perform the work. This interpretation aligns with Black’s Law Dictionary (“authorized or sanctioned by law”) and with the legislative purpose of the statute of repose. In other words, “lawfully performing” modifies the qualifications of the architect or engineer, not whether every detail of the design complies with every regulatory or code provision. Clearfield County v. Transystems – Public Projects and Nullum Tempus The second case on appeal to the Pennsylvania Supreme Court arises from renovations to the Clearfield County Jail. The original construction of the Clearfield County Jail was substantially completed in 1981. In 2021, more than 40 years after its substantial completion, the county alleged design and construction defects in the original design and construction seeking to avoid the construction statute of repose by invoking nullum tempus occurrit regi—the ancient common law doctrine that “time does not run against the king.” The county argues that nullum tempus exempts it from the 12-year bar. Offit Kurman was asked by nine design professional and construction associations, including ACEC-PA and all Pennsylvania Chapters of the Associated Builders and Contractors, to prepare an amicus brief in opposition to the county’s position. The amicus brief emphasizes three main points: Statutory Finality – The construction statute of repose eliminates causes of action after 12 years, thereby legislatively abrogating the common law doctrine of nullum tempus. Sovereign Immunity Limits – Nullum tempus is a privilege of the Commonwealth itself, not counties or municipalities. Voluntary Contracting – Even if nullum tempus applied more broadly to a statute of repose, it cannot shield a governmental entity voluntarily entering into design and construction contracts to improve real property. If accepted, Clearfield’s argument would mean every public project remains open to claims indefinitely, driving up insurance premiums, discouraging bidders, and ultimately increasing costs for public improvements for the taxpayers of the Commonwealth. Proposed Legislative Reforms to the Statute of Repose Because of the importance of the statute of repose, Offit Kurman has provided legal advice to associations within the A/E/C industry on legal reforms to bring the 12-year statute of repose in line with statutes adopted by other states, so that Pennsylvania is not at a competitive disadvantage. In addition, the legislative coalition of A/E/C trade associations is seeking to address the potential negative outcome of either of the Supreme Court appeals. Senate Bill 399 is currently referred to the Senate Judiciary Committee and would shorten Pennsylvania’s statute of repose from 12 years to six, bringing it closer to the national norm. Why It Matters If either appeal reverses the findings of the trial courts or if legislative reforms are not adopted, the impact on Pennsylvania’s construction economy will be profound. The potential ramifications include: Indefinite Liability – Design professionals and contractors would face claims long after projects reach substantial completion, even into retirement or estate administration. Insurance Burdens – Design Professionals and contractors would be required to carry liability insurance indefinitely, even when such coverage almost certainly is not available. Increased Costs – Design Professionals and contractors will build risk premiums into proposals and bids for public and private projects, passing costs directly to taxpayers and owners. The construction statute of repose was enacted in 1965 to prevent exactly these outcomes. Offit Kurman’s Construction Practice Group continues to work with A/E/C design and construction to protect the industry. Franklin C. Miller, Jr., Counsel at Offit Kurman, played a key role in supporting Anthony Potter with the preparation of the amicus brief. We also acknowledge the valuable contributions of Law Clerk Robyn St. Hilaire to this article.
September 5, 2025
Construction
How Long Is Too Long? What Statutes of Repose Mean for Your Liability Exposure
How long are you on the hook for defects in a completed construction project? It’s a question that keeps many contractors and design professionals up at night—and for good reason. No project is flawless, and the duration of responsibility for construction or design defects depends on numerous factors, including the contract language, the type of harm or injury that is the subject of concern, and statutes of repose. Typically, construction and design work are performed under written contracts. As an initial starting point, if a design or construction defect arose and was identified during the project itself, most construction contracts have specific clauses that require the claims to be noticed, raised and submitted timely, often within a short time period of days or weeks. Thus, if an issue is discovered during the project itself, the accrual date might be immediately at that time, and, under the contract, prompt notice and submission of the claim are often required. For incidents that occur after the project is completed, the written contract may contain clauses that identify the “accrual” or starting point for claims that occur or are discovered after the project is completed. For example, some versions of AIA contracts identify Substantial Completion as the date when claims “accrue,” meaning that Substantial Completion is the triggering start date for when the clock on a statute of limitations (deadlines) begins to run. B143-2004, Section 3.6.3. Thus, for latent, unknown defects in construction or design, the contract might identify a specific milestone (e.g. Substantial Completion) as the accrual date, with a deadline that runs from there. The contractual clauses identified and discussed so far typically pertain to construction or design defects that are pursued as claims between the parties on the project, who typically have a contract where the cause of action would likely be a breach of contract or perhaps negligent design/construction. Statutes of Repose and Contractual Repose Additionally, if a contract clause does not govern the issue, deadlines for claims are typically found in statutes of limitation and statutes of repose. These are state specific statutes; thus, different states will likely have different rules, deadlines and interpretations. A statute of limitations is a deadline to file claims from the date the claim accrues, typically the date of the injury. Thus, under a statute of limitations, once the injury occurs, a claimant has a specific period of time (going forward) to file the lawsuit. It is a deadline that looks forward from the date of loss. Sometimes, the statute of limitations can be extended if the defect was unknown, or if the injury did not occur until a much later date. Depending on the circumstances, the deadline might be extended further than anticipated if the loss was hidden, concealed, or the injury is delayed. On the other hand, a statute of repose is a backward-looking deadline. Instead of looking from the date of injury, it pegs a milestone date and imposes a hard cutoff looking backwards. Once the repose period expires, no legal action can be brought, regardless of when the defect was discovered or the injury occurred. Statutes of repose create a deadline with an absolute bar on claims brought outside the set time limit. Repose periods vary by jurisdiction, and construction professionals working across state lines must be aware of those differences. Some notable examples in the Mid-Atlantic include: Pennsylvania: 12 years Maryland: 10 years Virginia: 5 years District of Columbia: 10 years Delaware: 6 years Thus, for example, in Virginia, five years after the date of performance of the work, no matter what the circumstances, all claims are barred. To be clear, the statute of limitations might run sooner than five years, depending on the type of claim, but with a statute of repose, there is no availability for an extension if the defect was concealed, latent, or unknown. Thus, it acts as a final cutoff, regardless of when the injury occurred, and regardless of who the claimant is. Understanding these timelines is essential when assessing long-term liability and risk on completed projects—especially during the negotiation and drafting of contract provisions. In some cases, parties may choose to establish a contractual clause of repose that is shorter than the statutory period provided under state law. These contract clauses should be drafted carefully to define clearly: The types of claims covered (e.g., contract, tort, breach of warranty, contribution, etc.) The event that triggers the limitations period (such as substantial completion or final payment) The duration of the contractual repose period (e.g., one year or longer duration). When drafted with precision, time limitation clauses can offer powerful protection by limiting claims to a shorter period. To further reduce exposure, contractors and design professionals should take proactive measures throughout the project, such as detailed recordkeeping to establish the scope of work performed and decisions on the project, along with establishment of the actual dates of substantial and final completion. Understanding statutes of repose and contractual clauses of repose is essential to limiting long-tail liability and thus protecting your business. These strategies won’t just help you sleep better at night—they’ll significantly strengthen your position against claims that arise long after you’ve completed a project. When drafting contract clauses and implementing risk management strategies, consulting with experienced construction lawyers, accountants, and insurance experts is best.
May 6, 2025
Construction
Future of Pennsylvania’s Construction Statute of Repose Hinges on Pennsylvania Supreme Court Ruling
The Pennsylvania Supreme Court will decide a pivotal case that could significantly impact the construction industry and the application of the state’s construction Statute of Repose. Aloia v. Diamant raises key questions about how the phrase “lawfully performing or furnishing” design or construction services should be interpreted within the statute. The ruling could have far-reaching consequences for architects, engineers, contractors, and property owners, potentially altering the way construction defect claims are litigated in Pennsylvania. In Aloia v. Diamant, the Superior Court of Pennsylvania upheld a trial court’s ruling that applied Pennsylvania’s Twelve-Year Statute of Repose to bar claims related to construction defects and deficiencies. The Pennsylvania Supreme Court has now accepted an appeal from the homeowners, seeking to clarify the statutory interpretation of the phrase “lawfully performing or furnishing” in the context of construction services under the Statute of Repose. Several prior appeals to the Pennsylvania Superior Court have challenged the application of the construction Statute of Repose, particularly in cases where plaintiffs allege that design or construction deficiencies violate the applicable building code. Notable cases include Johnson v. Toll Bros., 302 A.3d 1231 (Pa. Super. 2023), Tibbit v. Eagle Home Inspections, 305 A.3d 156 (Pa. Super. 2023) and Venema v. Moser Builders, 284 A.3d 208 (Pa. Super. 2023). The plaintiffs in Aloia argue that the Statute of Repose should not apply where there are allegations that the design or construction was not “lawfully performed” due to violations of the building code. This argument raises significant concerns for architects, engineers, and contractors, as it could allow plaintiffs to bypass the Statute of Repose merely by alleging a building code violation—potentially nullifying the statute’s protective function. Legislative Response: Senate Bill 336 Recognizing the ongoing disputes over the Statute of Repose, the legislative affairs committee of AIA-Pennsylvania introduced Senate Bill 336 on January 31, 2023. The bill sought to amend Pennsylvania’s construction Statute of Repose by reducing the period from twelve years to six years, bringing Pennsylvania in line with most states and providing a legislative definition for “lawfully.” However, the bill was not enacted, leaving Pennsylvania with one of the longest construction Statutes of Repose. Key Legal Issues in Aloia v. Diamant The plaintiffs contend that the trial and appellate courts erred in dismissing their claims based on the Statute of Repose before trial. The case facts reveal that building permits were issued for the home’s construction, and a certificate of occupancy was granted on March 30, 2006. Additional certificates of occupancy were issued on February 20, 2007, following the completion of an addition and basement improvements. The plaintiffs, who purchased the home in 2016, filed suit on March 5, 2021, alleging latent construction defects. The contractor invoked the twelve-year Statute of Repose as a defense. The Legal Implications of the Pennsylvania Supreme Court’s Decision Pennsylvania’s construction Statute of Repose provides an absolute bar to claims filed more than twelve years after the substantial completion of a construction project. Unlike a Statute of Limitations, which limits the timeframe in which a lawsuit may be filed but allows for exceptions under equitable doctrines (such as the repair doctrine or discovery rule for latent defects), the Statute of Repose is a strict cutoff for liability. The Pennsylvania Supreme Court’s decision in Aloia will have significant implications for the construction industry. If the court adopts the plaintiffs’ interpretation of “lawfully performed,” it could render the Statute of Repose ineffective by allowing plaintiffs to avoid its application through allegations of building code violations. Such a ruling could expose architects, engineers, and contractors to indefinite liability, fundamentally altering the legal landscape of construction defect claims in Pennsylvania. The outcome of Aloia v. Diamant is eagerly anticipated by construction professionals, developers and legal practitioners alike. A ruling in favor of the plaintiffs could reshape Pennsylvania’s construction litigation framework, potentially extending liability well beyond the current twelve-year period. Conversely, a decision upholding the Statute of Repose’s current interpretation would reinforce the finality intended by the statute, providing greater certainty for construction professionals. Until the Supreme Court renders its decision, the industry remains in a state of uncertainty regarding the long-term enforceability of Pennsylvania’s construction Statute of Repose.
March 17, 2025
Construction
An Update on Federal and Pennsylvania Corporate Reporting Requirements
Much confusion has surrounded the Federal Corporate Transparency Act and the new Pennsylvania annual reporting requirement. Many have asked: what is the status (and deadlines) for compliance? Federal Corporate Transparency Act The Federal Corporate Transparency Act (CTA) was enacted in 2021 with the purpose of combatting money laundering, terrorism financing, and other financial crimes. The gist of the CTA is a requirement to submit a Beneficial Ownership Information Report (BOI Report) that identifies the owner(s) of the business. The CTA is administered and enforced by the newly created Financial Crimes Enforcement Network (FinCEN), which is a bureau within the U.S. Department of Treasury. In December 2024 the U.S. District Court for the Eastern District of Texas issued an injunction that paused the CTA. On January 23, 2025, the U.S. Supreme Court removed the pause. There is still ongoing litigation as to the constitutionality of the CTA, however, while that litigation unfolds, the CTA will be enforced, which means that the BOI Reports must now be filed. On February 18, 2025, FinCEN issued a Notice that BOI Reports must be filed by March 21, 2025. For more information on filing BOI Reports, please see the Offit Kurman informational webpage. Pennsylvania Annual Reporting Requirement In Pennsylvania, starting January 1, 2025, an annual report must be filed with the Pennsylvania Department of State for all domestic and foreign filing associations conducting business in Pennsylvania. This requirement replaces the “ten-year filing” with a yearly filing specific to Pennsylvania. Filing of the federal BOI Report under the CTA to meet federal requirements is not sufficient to meet this Pennsylvania Commonwealth requirement. The Annual Report filing fee is $7 (this fee is waived for non-profit organizations). For each calendar year, corporations must file by June 30; LLCs must file by September 30; and LPs, LLPs, business trusts, and professional associations must file by December 31. There are exceptions to this requirement, including fictitious names, general partnerships that are not LLPs, financial institutions, trademarks and insignias. All other entities conducting business in Pennsylvania must submit this annual report. A failure to report will result in dissolution, termination, or cancellation and a loss of the protection of the entity’s name. If a domestic entity, LLP or electing partnership is administratively dissolved, it will have the opportunity to be reinstated by filing an annual report, paying a reinstatement fee and paying any back fees for delinquent annual reports. If a registered foreign association has been terminated for failure to report, it will be required to submit a new Foreign Registration Statement and will receive a new entity number from the Department of State. Additionally, because a failure to report will result in a loss of protection of the entity’s name, an entity that fails to report may have its name appropriated during its delinquency. The annual reports will include general identifying information including the business name, office address, names and titles of principal officers, and the entity number issued by the Department of State. This information will be publicly available on the Department of State’s website. While these reports may be submitted by mail, it is strongly recommended that they be filed through the Pennsylvania Department of State website. First, the online form will populate any details currently on file with the state to avoid mistakes and delays. Second, and most importantly, an Annual Report that has been submitted online will be automatically approved. For further information on the Annual Report requirements, visit the Pennsylvania Department of State website.
March 4, 2025
Construction
How Should Construction Contracts Approach Potential Tariffs?
As an initial primer: tariffs typically work as a tax, charged on goods purchased and imported to the United States from a foreign country. The tariff is charged as a percentage on the price paid for the foreign good. Tariffs are collected at the ports where the goods enter the country. Typically, the tax is paid by the importer directly to the US Customs and Border Protection Service. And, typically, the tax is required to be paid to release the good from the port, although there are some methods to slightly adjust that timing by satisfying certain conditions. A tariff on construction materials would likely result in additional costs for the project. Intuitively, a tax on the imported materials simply causes the goods to cost more. Also, tariffs on imported goods might cause increased demand for specific alternatively sourced materials (whether that be domestic or non-tariffed foreign sources), which then leads to increased costs for those alternative sources. As a general rule of thumb, and reflected in most standard construction contracts, the contractor is responsible for providing the labor and materials for the construction project at the agreed upon contracted price, and the contractor is not entitled to any adjustment to the price on the basis of changes in taxes or laws, unless there is a contract clause specifically affording such relief. For example, the AIA A201-2017 section 3.6 General Conditions provides that the contractor is responsible for all taxes on the work. In most standard contracts, there is no specific clause that affords the contractor relief or adjustments in the event of changes in taxes, laws, or tariffs. Depending on the specific contract, perhaps one could argue that a tariff is an unforeseeable event beyond the control of the contractor; however, most contract clauses would afford limited or no relief, typically an extension of time at best, but not compensation. An example of this difficulty is the force majeure clause that might exist in a contract. Under most contracts, tariffs are not specifically identified in the force majeure clause, and most force majeure clauses provide an extension of time as the remedy and do not afford additional compensation to cover the costs. Some contractors might be tempted to argue that relief should be afforded under the doctrine of commercial impracticability. That too, is a difficult path. Commercial impracticability sometimes affords relief to a contractor when circumstances on a project have changed so drastically that the performance of the contract is commercially impractical. Theoretically, if a tariff increased the costs so astronomically to make the job financially impossible, there could be an argument under the doctrine. But these circumstances are relatively rare, and courts are rather critical of this argument. On public federal projects, an argument could be made that a contractor is entitled to equitable relief and an adjustment to the contract price under FAR 52-229.3, which provides for an equitable adjustment for new taxes that arise during a project. It is unclear, however, whether this argument would succeed, because it is uncertain whether a tariff constitutes a new tax under FAR 52-229.3. There is a dearth of decisional law on this point, and a 2022 Armed Services Board of Contract Appeals decision rejected this argument. Thus, a tariff on construction materials is likely to increase the costs, and there is no obvious straightforward right to relief in most default contracts. A contractor should consider negotiating a specific clause to address the cost item. A list of potential approaches, including specific negotiated clauses, including the following: Price escalator clauses for either tariffs or specified categories of materials; Contingencies or allowances for materials of concern or tariff costs; Greater flexibility for substitutes or alternatives to allow for sourcing of differing materials; Segregated pricing by agreement for time-and-material budgets for carved-out scope packages that might be more volatile; Prompt procurement, buy-out administration, and warehousing of goods in advance to avoid potential volatility on specified goods; Value-engineering during the preconstruction phase to identify different materials; Increased buffers in the contract price to account for the risk of potential tariff impositions. When negotiating and drafting custom contract clauses to address risk on projects, or if litigating claims for equitable adjustments or change orders, best practice is to consult with trusted, experienced counsel that is knowledgeable on the intricacies of construction law. Offit Kurman construction attorneys are available to advise and counsel contractors, owners and developers, construction managers, design-builders, design professionals, subcontractors, and suppliers on construction contracts, risk, and project disputes.
January 14, 2025
Construction
How (and Why) Does a Mechanics’ Lien Cause Pressure to Pay for Work
All contractors and subcontractors have some degree of understanding that if they have not been paid for work performed on a project, they have the right to file a mechanics’ lien against the project. The details of why the lien filing often results in payment, however, are often murky to most contractors and subcontractors. This article clarifies these items. The first thing to understand about a mechanics’ lien is that it acts as a type of lien against the project property. There are numerous types of instruments that can act as liens. Tax liens can be attached to a property. So can monetary judgment liens. A mortgage acts essentially the same as a lien. For all of these instruments, the gist is that a debt is owed—whether that be a loan, delinquent taxes, or payment for work performed—and the debt is collateralized to the property. In other words, if the debt is not paid, the real property will be sold to pay for the debt. Mortgages are the type of instrument that most people have some degree of experience. With a mortgage, there is a loan of money, and if the loan is not paid, then, the mortgage can be foreclosed on to pay the debt. The foreclosure on the mortgage is the execution sale of the real estate to pay the loan debt. The mortgage typically gives priority status so that the loan will be paid from proceeds from the foreclosure sale. Mechanics’ liens function similar to a mortgage. If a laborer or supplier has not been paid for the work furnished to the project, then, the lien secures the unpaid debt to the property. In most jurisdictions, the process for progressing a lien claim to a final judgment and ultimate sale of the real estate is similar to the process for foreclosing on the mortgage and selling the real estate at foreclosure sale. From a big picture point of view, it’s the same idea: an unpaid debt is secured to the property, and the property will be sold to pay for the debt. It is for these reasons that mechanics’ liens tend to receive prompt attention when filed against a project. The mechanics’ lien acts similar to an additional mortgage against the real estate. And, if pursued to its end, the mechanics’ lien can force an execution sale of the property. This, of course, is of significant concern to the property owner and any lenders with mortgages on the property. Similarly, a mechanics’ lien is of concern if the owner intends to refinance or sell the real estate. Typically, any liens or mortgages attached to the property must be addressed or paid if a refinance or sale of the land occurs. As a last and final related point, the state specific statutory laws that govern mechanics’ liens will typically provide a method for a bond to be posted with the court, to act as substitute collateral for the lien claim, and therefore discharging the property from the lien claim. If pursuing a mechanics’ lien claim, or if managing a project that is under threat of lien claims, best practice is to consult with trusted, experienced counsel that is knowledgeable on the intricacies of construction law. Offit Kurman construction attorneys are available to advise and counsel owners, contractors, construction managers, design-builders, design professionals, subcontractors, and developers on construction contracts, risk, and project disputes.
October 31, 2024
Construction
Some Practical Pointers for Following the Claims Process in Your Contract Documents
When a problem arises on a project, it can cause significant impact to the schedule, costs, design, and sequence of work. The problem might also require significant technical analysis to determine and ascertain the cause and best cure or remediation. It’s therefore no surprise that contractors and subcontractors, in the midst of such situations, sometimes fail to properly focus on the contract process for formally noticing the issue and submitting it as a claim; they are too busy addressing the issue directly. Most contract documents have specific clauses that govern the claims process, and each project might have variations to the process. Regardless, there are certain fundamental steps that tend to be common, and all contractors and subcontractors should consider these steps when evaluating the problem because (a) your contract probably requires it, and (b) these steps tend to facilitate a proper submission, negotiation, and resolution of a claim. Notice the Issue The first step when encountering a problem is typically to issue a written notice of the issue. Most contracts require notice of delays, differing site conditions, change orders, or claims within a specified period of time. It is often confusing to initially determine if the issue is a claim or not because a claim usually indicates a dispute; meanwhile, notice of an issue could be as simple as submitting an RFI. It depends on the circumstances. Nevertheless, the first step is to notify the proper parties of the issue in writing. The contract documents may require that specific issues be noticed as an RFI, change order, or request for adjustment. The contract documents might require that the notice be submitted to the Architect of Record, owner’s representative, or a construction manager. Typically, when initially noticing the issue, the notice will take the form directed by the contract, and it will identify the issue at hand, with any supporting documentation to explain or present the issue. It should also identify whether additional time or costs are likely to result from the issue. Transitioning the Notice of an Issue to a Formal Claim Often, a problem on a project will start with notice of the issue, and it will progress and develop into a claim. For example, a sinkhole on a project will typically result first in an RFI, project meeting minute, or change order proposal that identifies the sinkhole and declares it to be a differing site condition or issue needing the attention of the owner or Architect of Record. Thus, the first discussion of the item is typically a notice, not a formal claim. Typically, in response to the notice of the issue, instruction or direction will be provided by the owner or Architect of Record on the work to be performed. The instruction might be in the form of a change order, change directive, or a response to an RFI. If the directed action is agreeable and provides an acceptable adjustment to the time or price for the work, then the issue is often resolved through this natural course of conduct. But if the parties disagree on the direction, lack of direction, or the proposed compensation or extension of time, then the matter has developed into a claim/dispute. The cautious and prudent contractor recognizes that if it fails to lodge and preserve its disagreement and instead simply signs a change order, it could potentially waive its rights to additional time or compensation, depending on the circumstances. Typically, the contract documents will provide a specific process for progressing the claim, and the first step of the claim process is to submit a written claim within a specified time period. Thus, in the hypothetical example at hand, once the issue has been noticed and developed into a disagreement, that is when the notice of claim should be submitted. I often see contractors that initially notice the issue but then fail to submit a formal claim once the issue has reached an impasse. The submission of the claim might be rather simple, or it might be complex. For example, the AIA A201 requires that claims be submitted to the “Initial Decision Maker,” who is typically the Architect of Record. The Architect of Record then responds to the noticed formal claim, and if the matter is still in dispute, the claim proceeds to either mediation, arbitration, or litigation. Some contracts have very extensive and complicated processes for submitting the claim, which require specific information or supporting documentation. And some contracts have extensive processes where the initial decisions on the claim, either from the owner or Architect of Record, may take several steps with decisions rendered at each step. It is important to properly present the claims to the correct persons, with the correct information, and if the claim is denied to promptly notice the appeal of the decision in conformance with the contract. Proper notice and submission of a claim is important because a failure to do so may result in a waiver of the claim. Thus, it is important to issue both a written formal notice of the issue and an additional notice of claim when the issue has not been resolved to satisfaction. Additionally, a properly developed and presented claim—containing supporting documentation and clear explanation of the issues with legal and expert analysis if necessary—is in a significantly better position for negotiated resolution. The best practice is to consult with trusted, experienced counsel that is knowledgeable on the intricacies of construction law. Offit Kurman construction attorneys are available to advise and counsel contractors, construction managers, design-builders, design professionals, subcontractors, and developers on construction contracts, risk, and project disputes.
September 12, 2024
Construction
Show Me the Money: The Importance of Owner's Proof of Financing
Lack of project financing can be a very unpleasant surprise for a contractor (and all players on the project). In a volatile environment — where project costs are increasing and borrowed money, credit, and leverage are increasingly difficult to obtain — what are some approaches for a contractor to address and reduce these risks upfront or during the project? The best time to address project financing concerns is at the beginning, during preconstruction, and certainly before work has broken ground. Many contractors are hesitant to probe and inquire about project finances. If, however, there is any concern about whether the project will be adequately funded, it is best to ask for the necessary information directly. Representing that it is standard practice and policy may help reduce tension on disclosure of the information. An open and honest discussion on the financing not only ensures that the project does not stall but also is reasonable because a contractor’s role in confirming the project costs, schedule, setting contingencies, experience and reputation, and qualifying the trades is a key component to the owner’s discussions with the bank to obtain financing. It makes sense that if the owner is reliant on the contractor to help obtain the financing, then, likewise, the contractor should have the ability to confirm that the financing is sufficient, too. At the start of the relationship, the contractor can communicate to the owner that it expects to receive satisfactory proof of financing that might include any of the following: Commitment letter from bank/lender or equivalent term sheet or written confirmation from a lending committee at the bank. Oral conversations with the bank/lender to confirm financing. Documentation confirming loan amount, terms for the loan and disbursements, and a commitment to a loan closing date. Documentation of disbursements, such as disbursement agreements or a disbursement summary. If the owner is self-financing the project, it is reasonable to ask that funds be set aside for the project. This could be done with the bank (or a third party) and a statement showing proof of funds. It is also reasonable to ask for financial statements, credit reports, and bank strength ratings, especially if it is self-financed by an unfamiliar owner. Depending on the circumstances, further information might be necessary, including details of the owner’s budget for the project. Such details should be set forth in the owner’s pro forma or related documents. The documents should identify proper contingencies, reserves, and budgets to cover the various issues that can arise with the owner’s land development, design, and construction. Including clauses in the prime contract that address financing issues is also useful. The contract should include a clause that entitles the contractor to request additional proof of funding or even the right to engage in direct discussions with any lender or bank. The clause should also express that the contractor has the right to suspend work in the event of slow payments or indications of problems with the owner’s financing on the project. Contractors should also pay particularly close attention to the ownership entity of the land/project. First, the owner should provide adequate information to confirm the record owner of the real estate. If the owner of the real estate is an unknown company or is a “single shot” LLC used for holding the real estate (often indicated by its name, which uses the property address, such as, for example, 35 Main Street, LLC), then, the contractor should realize that the LLC owner of the property likely has no other assets other than the project property itself. In these “single-shot” scenarios, a mechanics’ lien right is the best approach to lack of payment because it attaches to the property itself, and, other than the property, the LLC may have limited or no other assets. Also, it is best to obtain the information of the LLC owners (members) if possible because the financials of a single-shot LLC are only as strong as the loan and members backing the LLC. If the contracting party is not the record owner, that creates a few additional wrinkles that must be addressed for both proof of financing and also mechanics’ lien rights. A last point for consideration: Sureties often require disclosure of project finances. One tactic is to bond the project with a surety, which has some benefits aside from this discussion, and use the surety as the reason for all the financial questions. This shifts any tension from the contractor to a third-party surety. Handling problems with project financing can be a thorny situation at any point in a project. The best practice is to have sound internal protocols and trusted counsel for troubleshooting. Offit Kurman construction attorneys are available to advise and counsel contractors, construction managers, design-builders, design professionals, subcontractors, and developers on construction contracts, risk, and project disputes.
April 16, 2024
Construction
A Primer on Preliminary Notice of Mechanics' Liens
Most contractors, subcontractors, and suppliers know that lien claims have strict deadlines, typically measured from the last date of work. But did you know that some states also require preliminary notice of lien rights upfront, at the first time of furnishing labor or materials? In 2017, Pennsylvania created an online registry known as the Construction Notices Directory that allows owners to register private projects that exceed $1.5 million. If a project is registered, all subcontractors and suppliers must file a Notice of Furnishing within 45 days of first providing labor or materials to the project; otherwise, the lien right will be lost. Recently, more owners have been registering projects. Thus, prompting the questions: Do other states have similar early notice requirements for preserving lien claims? And what steps should be taken in Pennsylvania when dealing with the Directory? Other States' Lien Claim Process and Notice Requirements Pennsylvania’s requirement for a preliminary notice at the start of work (only when a project is registered on the Directory) is atypical in the Mid-Atlantic. Neither Maryland, Delaware, the District of Columbia, nor New Jersey require any similar preliminary notice at the start of work. The only other Mid-Atlantic state with a similar requirement is Virginia, which requires a preliminary notice to be issued within 30 days of commencing work on a one- or two-family residential dwelling if the owner has identified a Mechanics’ Lien Agent in the building permit. Preliminary notices at the commencement of work are more prevalent in other regions of the country; for example, California requires a preliminary notice to be issued within 20 days of first furnishing labor or material to the project. The point is that while preliminary notice requirements are atypical in the Mid-Atlantic, they are required in other parts of the country. It has become more popular for owners to utilize the Pennsylvania Construction Notices Directory. Thus, it is best to stay current on preliminary notice requirements if working in multiple jurisdictions. Practical Tips for Handling Pennsylvania's Construction Notices Directory If a prime contractor works directly with the owner, recognize that it is ultimately the owner’s choice on whether to register the project. If the owner elects to register the project, a Notice of Commencement is filed on the Directory, and that document should become part of the Contract Documents. The best practice is to also identify in the special conditions of the contract the Directory listing. The Notice of Commencement must be posted at the project site. Additionally, statutorily mandated language must be included in all contracts that provide notice that a failure to file a Notice of Furnishing will result in a waiver of the lien claim. The notice of furnishing is only required to be filed by subcontractors and suppliers. For subcontractors, closely review the Contract Documents to identify any indication of the project being registered. It is also recommended to include in internal standard processes that the Directory be searched at the time of signing the subcontract and also at the time of commencing work. The Notice of Furnishing can be filed prior to starting work; thus, there is no need to wait or delay in properly filing the document. Properly noticing mechanics’ lien claims and preserving rights can be a complicated area of construction law. The best practice is to have sound internal protocols and trusted counsel for troubleshooting. Offit Kurman construction attorneys are available to advise and counsel contractors, construction managers, design-builders, design professionals, subcontractors, developers, and design professionals on construction contracts, risk, and project disputes.
March 14, 2024
Construction
Avoiding Preconstruction Pitfalls (from the Contractor's Point of View)
It has become increasingly popular for private commercial construction projects to engage the contractor during preconstruction design early in the project. By doing so, the owner’s team and design professionals are able to work collaboratively and receive valuable feedback on key project details, such as constructability, schedule, early cost estimates, projected budgets, long lead items, and value engineering. This is true for any project delivery system that uses design assistance, delegated design, is a true design-build, is a CM at risk or CM as an advisor, or is a version of an integrated project delivery. But what happens if the owner tries to call an audible at the line of scrimmage and seeks to replace the contractor right before the construction phase begins? And what other pitfalls should a contractor be wary of if involved in preconstruction services? Precon, Not Freecon Some owners ask that preconstruction services be offered for free as a value-added customer service. Each project should be considered on a case-by-case basis. There might be projects and business reasons why that makes sense. Typically, however, it is best to avoid giving “freecon.” The preconstruction work is a valuable service, and there can be risk associated with it. Proper business relations should clearly define the scope, rights, and obligations regarding the preconstruction services and have an associated fee, typically done on an hourly or stipulated sum basis. Land Development, Design Assist, Delegated Design, or Design Build? The role, responsibilities, and scope of preconstruction services should be clearly identified in a contract so that there is no confusion about the exact services and risks being undertaken. Sometimes (but rarely), the contractor will assist the owner with land development, acquisition, usage, and zoning. Usually, however, the contractor is not involved in land development activities but instead will only provide services in relation to the preconstruction itself. If the contractor is only assisting and commenting on the design (design assist), that limited scope should be clearly stated. If any scope is delegated design, where the contractor will be responsible for furnishing the actual sealed/stamped design, or perhaps the contractor is responsible for a performance specification, it should be clearly stated. Furnishing of design should always be done by properly licensed professionals per any statutory laws. Intellectual Property Ownership of the Design One of the best approaches to protect the contractor from unpleasant surprises when furnishing any design is for the contractor to expressly remain the owner of the design intellectual property. If the intellectual property rights to the design will be assigned, it should be later in the project or at the end of the project. This ensures that the owner cannot receive a discounted design, remove the contractor, and then continue with the project, still using the original contractor’s design work. Similarly, whether furnishing the design or merely assisting, termination for convenience and “buyout” clauses help to protect the contractor from being unceremoniously removed from the project. Lastly, if furnishing the design, the final seal/stamp on the design should be the last thing and done very close in time with the submission of the design to the AHJ and the buyout/procurement phase. Unintentionally having a sealed/stamped design floating around without any future involvement in the project tends to lead to issues down the road. Clarifying the Guaranteed Maximum Price If using a GMP, it should be clearly defined in regards to evolving, unfinished design development. Also, it should be clear whether certain work or potential work is included in the GMP. Issues can arise when owners believe that the GMP includes the reasonably inferable, developing design (e.g., incomplete lighting package, which is often developed at the end of design), but the contractor believes that the incomplete design was not included in the GMP. For developing design, any placeholders, assumptions, budgets, qualifications, and exclusions should be clearly noted, and it should be clear how they relate to the GMP. Similarly, if using a GMP, there should always be a contingency. The contingency should be clearly defined both in terms of use and process, so that everyone is in agreement as to the type of work, issues, scope, and snafus that allow for application of the contingency. It is further recommended that the savings on the contingency be split in an agreed upon percentage ratio. By allowing the contractor to participate in the savings, it incentivizes the project to come in on budget and schedule. Assessing the risks and properly contracting for preconstruction services can be a complicated area of construction law. Best practice is to engage trusted counsel, insurance consultants, and other professionals. Offit Kurman construction attorneys are available to advise and counsel contractors, design-builders, CMs, design professionals, developers, and specialty trades on contract matters and project disputes.
February 7, 2024
Construction
Protecting Contractors’ Rights Filing and Perfecting Mechanic’s Liens in Virginia
In the complex realm of construction and property development, contractors and suppliers often find themselves grappling with payment disputes. A Mechanic’s lien can provide a powerful tool to secure payment for services rendered or materials supplied. This article briefly introduces the procedures to file and perfect a mechanic’s lien under Virginia law.[1] What is a Mechanic’s Lien? A mechanic’s lien is a legal claim against a property that ensures contractors, subcontractors, and suppliers receive payment for their work or materials. In Virginia, this remedy is governed by Virginia Code § 43-3, et seq. Timely Filing is Paramount: Under Virginia law, it is imperative to file the mechanic’s lien within 90 days from the last day of work. § 43-4. Failure to perfect a Mechanic’s lien by that deadline may result in the loss of lien rights. Prepare the Lien Claim: Crafting and perfecting the Mechanic’s lien requires: Identification of the Parties: Clearly state the names and addresses of the property owner, the claimant (contractor or supplier), and the general contractor. Property Description: Provide an accurate description of the property subject to the lien. This should include the legal description and the street address of the property where the contractor or supplier performed work or provided materials. Detailed Statement of the Debt: Clearly outline the services rendered or materials supplied, along with the corresponding costs. Be specific and transparent in detailing the debt owed. Notarization & Copy Mailed to Property Owner: In Virginia, it is essential to notarize the lien and mail a copy of the lien to the property owner’s last known address. Use the following form to identify and state a Mechanic’s lien: Virginia Mechanic’s Lien form. Filing the Mechanic’s Lien: Once the lien claim is prepared, it must be filed and recorded with the Circuit Court in the county or city where the property is located. Along with the claim, a claimant should expect to pay a filing or recording fee to the circuit court clerk’s office. Enforcing a Mechanic’s Lien: If a contractor or supplier still has not received payment despite filing and perfecting a Mechanic’s lien, a claimant may file a lawsuit to enforce the lien. However, a claimant must file an enforcement action s within 6 months of lien’s filing date (or 60 days if the property owner has recorded a notice of completion). Failure to file a lawsuit to enforce the lien within the above time limits could render the lien unenforceable. Conclusion Navigating the intricacies of mechanic’s liens in Virginia demands precision and adherence to statutory timelines. If you or your organization have an outstanding construction-related claim, consulting with a trusted attorney in your area might prove to be the difference between securing payment or not. While outcomes cannot be guaranteed and past performance cannot assure future success, Offit Kurman litigator Anders Sleight | Offit Kurman is available to evaluate your specific situation. [1] These materials have been prepared for informational purposes only and are not legal advice. Reviewing this post or contacting Offit Kurman in response does not create an attorney-client relationship. Case results depend upon a variety of factors unique to each case, including the specific factual and legal circumstances of each case. This post may constitute ADVERTISING MATERIAL.
December 14, 2023
Construction
Pennsylvania State Design Professional Boards Adopt New Regulations and Rules for Digital Signatures & Seals
On October 20, 2022, The Pennsylvania State Architects Board, The State Registration Board for Professional Engineers, Land Surveyors and Geologists, and The State Board of Landscape Architects adopted new rules and regulations governing signatures and seals. The final form of regulation approved by the Independent Regulatory Review Commission (IRRC) provides new guidelines and requirements applicable to licensed design professionals in Pennsylvania. Generally, state law governs the use and application of a design professional’s seal on work performed by the licensed design professional or under immediate supervision or responsible control. The changes to the regulations are to protect public health, safety, and welfare. The overall intent of the new regulation of Digital Signatures and Seals is to assure the public, including clients and authorities having jurisdiction, that work product (drawings, plans, and specifications) were prepared by or under the personal supervision of the Registered Architect, Professional Engineer, Professional Land Surveyor, or the Registered Landscape Architect. The regulations generally require mechanisms to allow the design professional, client, or code official to detect modifications by requiring standards for electronic authentication. The desire is to decrease the incidence of forged or fraudulent sealed documents by unlicensed design professionals. Because the regulation of licensed design professionals and the use of seals on technical drawings, plans, and specifications is regulated at the State rather than federal level Architects, Engineers, Professional Land Surveyors and Landscape Architects must carefully consult each State design professional Board in order to ensure compliance with the existing licensing laws and regulations. Impact for Architects, Engineers, Land Surveyors and Landscape Architects The new regulations in Pennsylvania generally recognize three separate mechanisms for affixing a signature and seal to final or complete technical drawings, plans, or specifications issued to a client or to a governmental agency for final review. The three methods are as follows: Physical placement of a seal and handwritten signature in permanent ink; Digital placement of a seal and a handwritten signature in permanent ink; and Digital placement of a seal and a digital signature; The second and third categories related to digital sealing with a manual signature and digital sealing with an electronic seal will now require some additional verification and authentication requirements. To this end, if the licensed design professional is affixing a digital seal or digital seal and signature, the electronic document is required to have an electronic authentication process attached to the digital document. Thus, under Pennsylvania law, if any data within the digital technical drawing, plan, or specification, which has a digital signature or seal affixed, the digital signature or seal will be invalidated and voided. The practical implication for licensed design professionals practicing in Pennsylvania is that if an Architect, Engineer, Professional Land Surveyor, or Registered Landscape Architect is affixing a digital signature or seal, they will be required to utilize software that will void or invalidate the signature or seal if an alteration is made to a technical drawing, plan, or specification. I have worked on the digital signature and seal regulations in connection with the various Licensure Boards since the summer of 2013. The regulations will take effect upon publication in the Pennsylvania Bulletin, which is anticipated to occur within the next month. If you have questions regarding the new Digital Signature and Seal regulations, please reach out at 717-980-3140 or apotter@offitkurman.com.
November 2, 2022
Labor and Employment
Delaware's Contractor Registration Act – 19 DEL. C. CHAPTER 36
EFFECTIVE JULY 1, 2021 After a lengthy delay caused by the COVID-19 pandemic, the Delaware Contractor Registry will “go live” on July 1, 2021. Any Contractor who performs construction or maintenance services in Delaware must be registered before performing those services. If the services include work on any public project, the registration must be completed by August 1, 2021. Failure to become registered can result in severe penalties, some of which will effectively put the Contractor out of business. Registration is being handled online through the Delaware One-Stop system (https://onestop.delaware.gov) and is currently in a testing phase with contractor volunteers. Assuming that one has all of the necessary information at their fingertips, the process appears relatively simple and painless. The annual fee is $200 for Contractors performing only private work, $300 for only pubic work, and $500 for those who perform both. A two-year registration discount exists for Contractors who are on the registry for two years with no violations. Most of the information necessary to register is straightforward (FEIN, NAICS Code, contact information, business, and related licenses) if also somewhat intrusive (contact information for all persons with a financial interest in the business). Proof of participation in unemployment and workers’ compensation is required, as well as having an OSHA-compliant safety plan. One item likely to cause confusion and discontent is the disclosure of “labor law violations” during the prior six (6) years. The form asks if the Contractor has received “notifications” from the Department of Labor that it has incurred a violation but fails to distinguish between mere allegations and actual, proven violations. And penalties, of course, there are penalties. They range from being denied registration or having registration revoked (and thereby the ability to work) to being required to post a surety bond to civil penalties ranging from $5,000 to $85,000 (no, that last one is not a typo). One unusual aspect of this statute is that while appeals to the Secretary of Labor are allowed (as with other labor law statutes), there is also a right of appeal from the Secretary’s decision to the Superior Court. Any business that performs construction services or maintenance work must register and do so quickly. For further information, go to the Department of Labor website at CONTRACTOR REGISTRATION ACT - Delaware Department of Labor. This site has FAQs, a copy of the statute, a brochure and checklist of the required information, and links to the Delaware One Stop and the application.
June 3, 2021
