Construction Law Insider
Construction contract strategies for Owners and Developers.
Department Of Buildings Guidance Regarding Stop Work Orders
Last week, in the interest of transparency, the New York City Department of Buildings issued updated guidance detailing those violations that will result in partial or full stop work orders. That document is available here.
The broad authority of the Department of Buildings to issue stop work orders is set forth in Section 28-207.2 of the New York City Administrative Code, which provides, “Whenever the commissioner finds that any building work is being executed in violation of the provisions of this code, the 1968 building code, the zoning resolution or of any laws or rules enforced by the department, or in a dangerous or unsafe manner, the commissioner or his or her authorized representative may issue a stop work order.”
As the saying goes, time is money, and that is certainly true with respect to construction. The issuance of a stop work order that delays a construction project could be devastating for a developer. By way of example, any such delay could extend the interest on the developer’s construction loan or result in canceled sales of residential units if the project is not delivered as promised.
The foregoing helps to illustrate why it is imperative that parties to a construction contract retain knowledgeable counsel when negotiating and drafting such agreements.
For example, the Department of Buildings’ guidance provides that expired insurance will result in the issuance of a full stop work order. Therefore, a well-drafted construction contract should not only specify the insurance that the contractor is required to maintain, it must also provide that (i) the contractor will provide proof of the requisite insurance to the developer before commencement of the work; (ii) the policies shall contain a provision that coverage will not be canceled or non-renewed until at least thirty (30) days’ prior written notice has been provided to the developer (or ten (10) days in the case of nonpayment of premium); (iii) the contractor shall also provide the developer with a copy of such notice within one (1) business day of the receipt thereof; (iv) the contractor shall promptly cause the policy or policies to be reinstated or a like-kind policy or policies to be issued by an acceptable insurance company; and (v) the developer may purchase the requisite insurance and charge the cost thereof to the contractor should the contractor fail to do so as required.
As set forth above, a developer should always engage in best practices in an effort to avoid a stop work order. We remain available to assist our clients in furtherance of such efforts and also remain available to assist our clients in endeavoring to have any stop work orders lifted.
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10.21.2022 | PRACTICE AREAS: Construction & Design Law