Mediation and the Critical Path to Settling Construction Disputes

It is every homeowner’s nightmare. You save for months or even years for that long awaited home renovation project. You meticulously calculate your budget down to the penny, ensuring that you saved just enough for that granite countertop or travertine tile. You read reviews of different contractors online, and think you found the perfect one. Work begins, and all seems to be moving along smoothly. Not long after construction begins, however, a dispute arises between you and the contractor. Before you know it, the contractor refuses to finish the work, the subcontractors are threatening to place liens on your property, and you have now been contacted by an attorney representing the contractor.

The same can be true from a contractor’s perspective. You have a wonderful client who is excited that you are building their dream home, or making renovations for that perfect kitchen. Everything is going smoothly until a subcontractor disputes an amount you paid to it for work or materials furnished to the project. Suddenly, the subcontractor has filed a lien and the homeowners are threatening litigation against you because of it.

Whether you are a homeowner, a contractor, or a subcontractor, there are a multitude of potential legal issues that can arise out of a construction dispute. Resorting to litigation is costly, and a homeowner may end up spending more money on pursuing or defending a claim than the construction project is worth. Mediation is an opportunity to allow the parties to sit down and come up with creative solutions to their dispute before the costs of litigation rise and each side becomes entrenched in their viewpoint.

A lot of construction disputes arise due to a lack of communication and misunderstanding between the Parties, due to contractors and homeowners having very different perspectives when it comes to a project. While most contractors view a project from a business oriented, logistical and task oriented perspective, homeowners often have a more emotional, passionate, and responsive perspective, given that the project is their home. These differing viewpoints are often the catalyst to a construction dispute.

Mediation for construction disputes has become more and more common. In fact, many contract forms now require mediation before moving on to more formal dispute resolution processes such as litigation or arbitration.

There are many factors that will determine whether mediation in a construction case will be successful. The complexity of the construction issues, the amount of damages, the motivation of the parties, strength of legal arguments, the logistics of the mediation session, and human factors all play a role in whether a mediation has a chance to be successful.

Having a mediator who understands the construction industry and practices construction law is one very important factor in determining whether a mediation is successful. A mediator with such experience can bridge the communication and knowledge gap that often separates a homeowner and a contractor. Bridging that gap allows for the lines of communication to be re-opened, and gives the Parties a chance to creatively solve their disputes before litigation continues.

If you have any questions regarding mediation, or wish to speak to an experienced mediator about a construction dispute, I encourage you to contact our office for an initial consultation.

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