The construction industry is one of the most regulated and high-risk industries, with legal disputes often arising from contract disagreements, project delays, and safety violations. Whether you’re a contractor, developer, or property owner, understanding the common causes of construction lawsuits and how to help mitigate legal risks is essential for protecting your business and investments.
Common Types of Construction Lawsuits
1. Breach of Contract Disputes
Contracts define project scope, payment terms, and deadlines. When one party fails to meet obligations, disputes arise.
Common Breach of Contract Issues:
- Non-payment for completed work
- Missed project deadlines
- Use of substandard materials or poor workmanship
- Unapproved changes to project scope
2. Construction Defect Claims
Construction defects can result in serious financial losses and legal claims from property owners. These defects fall into four main categories:
- Design Defects – Architectural or engineering flaws that affect structural integrity
- Material Defects – Use of faulty or inadequate building materials
- Workmanship Defects – Poor construction techniques leading to failures
- Subsurface Defects – Soil instability or foundation issues due to poor site preparation
Contractors can face liability even years after a project is completed, making proper documentation and adherence to industry standards essential.
3. Mechanic’s Liens and Payment Disputes
A mechanic’s lien is a legal claim used by contractors, subcontractors, or suppliers who have not been paid for their work.
Key Payment Dispute Triggers:
- Contractors withholding payment from subcontractors
- Owners refusing to pay due to project delays or quality concerns
- Disputes over contract terms regarding payment schedules
4. Project Delays and Schedule Disputes
Delays can cost millions in lost revenue, penalties, and litigation.
Common Causes of Project Delays:
- Unforeseen site conditions
- Supply chain disruptions
- Labor shortages
- Disputes over change orders
Proper scheduling, clear contracts, and documentation of all delays can help avoid costly lawsuits.
5. Workplace Safety Violations & Injury Claims
Construction sites must comply with strict OSHA (Occupational Safety and Health Administration) standards.
Potential Legal Risks:
- Worker injuries from falls, equipment malfunctions, or lack of protective gear
- OSHA fines for failing safety inspections
- Lawsuits from injured employees or third parties
A strong safety program, regular training, and adherence to OSHA standards can help minimize risks.
6. Licensing and Regulatory Compliance Violations
Failing to comply with state licensing laws, building codes, or environmental regulations can lead to fines and lawsuits.
Common Regulatory Issues:
- Operating without a valid contractor’s license
- Violating zoning or permit requirements
- Environmental compliance failures
Regular audits and staying updated on regulatory changes are critical for avoiding legal trouble.
What Construction Business Owners Need to Know About Potential Lawsuits
Property owners, developers, and investors must also be aware of the legal risks that could impact their projects.
1. Lawsuits from Contractors and Subcontractors
Owners can face legal action if:
- They fail to pay contractors per contract terms
- They refuse to approve necessary change orders
- They are accused of wrongful contract termination
2. Tenant and Homeowner Claims
If a project results in structural defects or unsafe conditions, property owners may be sued by tenants, homeowners, or buyers.
Risk Areas:
- Water intrusion and mold issues
- Structural instability
- Code violations
3. Insurance and Liability Disputes
Property owners must ensure they have adequate liability insurance to cover accidents and construction defects. Insurance disputes can arise over:
Common Claims:
- Denied coverage for construction defects
- Disagreements over liability for workplace accidents
- Claims against builders’ warranties
How Contractors and Owners Can Protect Themselves
While lawsuits are sometimes unavoidable, contractors and owners can take proactive steps to minimize legal risks:
- Draft Strong Contracts – Ensure payment terms, deadlines, and dispute resolution clauses are clear.
- Document Everything – Keep records of contracts, emails, invoices, and site progress.
- Follow Safety Regulations – Maintain compliance with OSHA standards to reduce liability.
- Communicate Clearly – Regular updates with project stakeholders can prevent disputes.
- Consult Legal Counsel Early – Address potential legal issues before they escalate into lawsuits.
Stay Ahead of Construction Litigation Risks
Lawsuit Larry is always looking for a new target, and construction projects can be a prime opportunity. Whether you’re a contractor dealing with contract disputes or a property owner facing defect claims, being informed and proactive is key. If you’re facing a construction dispute, don’t wait—contact Trembly Law today to protect your business.