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January 8, 2008Client Alert

New AIA Documents Released

The American Institute of Architects ("AIA") recently published revised versions of some of its key contract documents, many of which had not been revised since 1997. The revised documents include the A201 General Conditions of the Contract for Construction document. The AIA also did away with its prior owner/architect agreements, the B141 and B151, and incorporated key provisions from each into its new 2007 B101 Standard Form of Agreement Between Owner and Architect. This article addresses some of the key 2007 changes to both the A201 general conditions and the B101 owner/architect agreement.

A201 GENERAL CONDITIONS

Although there are a number of revisions throughout the A201, the most notable were in the dispute resolution, insurance, and financial requirements sections of the document.

Dispute Resolution

Under the 1997 A201, disputes arising between the owner and contractor were first referred to the project architect for an initial decision. The 2007 A201 now allows the parties, for a fee, to instead hire a third party initial decisionmaker to attempt to resolve such disputes. If the owner and contractor do not elect to pay the additional fee and hire a third party decisionmaker, the project architect still may serve as the initial decisionmaker.

If the initial decisionmaking process fails, under the 1997 A201, the parties were then required to attempt to mediate the dispute before proceeding to arbitration, which was the default method of binding dispute resolution. Although the parties still are required to submit to mediation before turning to either arbitration or litigation, the 2007 version allows the owner and contractor to select either mandatory arbitration or litigation as the method of binding dispute resolution. If neither option is selected when the contract is drafted, the default method of dispute resolution is now litigation. If the parties select arbitration as the method of dispute resolution, the 2007 A201 permits consolidation of multiple arbitration proceedings and joinder of other interested parties.

Relatedly, the 2007 A201 requires that all claims must be commenced within the applicable state statute of limitations, but also provides that claims may not be commenced more than 10 years after substantial completion.

Insurance

The most significant change to the insurance language of the A201 is that the contractor is now required to name the owner and the architect as additional insureds on contractor’s liability policies. Additionally, the contractor is now required to obtain completed operations coverage, which must also name the owner as an additional insured.

The Project Management Liability Insurance requirement in the 1997 A201 was removed in the 2007 version. According to the AIA, feedback received during the revision process indicated that this requirement was rarely used by owners and contractors.

Financial Requirements

The 2007 A201 places restrictions on a contractor’s right to demand financial information from the owner after the work on the project commences. In the 1997 version, the contractor was permitted at any time during the project to request that the owner provide evidence of sufficient financing for the project. Under the 2007 A201, the contractor still may request such information before the work commences. After the work commences, however, the contractor may only request such information if the owner fails to make payment, if there is a material change in the work or if the contractor identifies, in writing, a reasonable concern regarding the owner’s ability to issue payment.

The 2007 A201 also contains more stringent requirements regarding payment to subcontractors and suppliers. The contractor is now required to issue payment to its subcontractors and suppliers within seven days of receipt of payment from the owner. Similarly, the owner now has the right to demand that the contractor provide the owner with satisfactory evidence that it has paid its subcontractors and suppliers. If the contractor fails to provide such evidence, the owner may contact such subcontractors and suppliers directly and has the ability to issue checks made jointly payable to the contractor and the subcontractors and suppliers.

THE NEW B101 OWNER/ARCHITECT AGREEMENT

The 2007 B101 incorporates language from both the 1997 B141 and the 1997 B151, both of which are now replaced by the B101, with notable revisions to the insurance and intellectual property sections and a new focus on sustainability.

The 2007 B101 now expressly requires that the architect maintain insurance and the parties must now specify the types and limits of such insurance.

The Instruments of Service language from the 1997 B141 and B151 was revised in the new B101 to give the owner greater access to such documents for the owner’s construction, use, maintenance, alteration and addition to the Project, provided that payment has been issued in full from the owner to the architect.

Finally, the 2007 B101 was drafted to encourage sustainable design by requiring that the architect, as part of its basic services, discuss with the owner the feasibility of incorporating sustainable design approaches that are consistent with the owner’s budget and schedule into the project.

While the revisions discussed above are the most notable, there are a number of additional revisions to these and other AIA documents. A party entering into a contract that includes any of the 2007 AIA documents should review the revised documents carefully and, if necessary, consult with legal counsel to ensure that it is familiar with all the revisions and how those revisions impact the project and each party’s responsibilities under the contract.

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