If you are a property developer or a new construction buyer in Maryland, you may encounter disputes between your general contractor and their subcontractor during the construction process. These disputes can cause delays, cost overruns, defects and other problems that can affect your project and your investment. And, while you may not want to get involved, you may have to, if you want your building completed on time and within budget. But, how can you help resolve these disputes and protect your interests?
Contract review
One of the first steps is to review the contracts between the general contractor, the subcontractor and you. These contracts should specify the scope of work, payment terms, dispute resolution mechanisms and the rights and obligations of each party. You should also check if there are any warranties, guarantees or indemnities that apply to the construction work. If the contracts are clear and enforceable, you may be able to resolve the dispute by communicating with the parties and facilitating a negotiation or mediation.
Contractual issues
If the contracts are unclear, ambiguous or unenforceable, you may have to resort to litigation to resolve the dispute. In Maryland, construction lawsuits can be filed in Maryland District Courts or Maryland Circuit Courts, depending on the amount and nature of the claim. Construction lawsuits can involve various claims, such as breach of contract, breach of warranty, negligence, fraud, lien enforcement or violation of consumer protection laws. Construction lawsuits can be complex and costly, requiring expert witnesses, extensive discovery and lengthy trials.
Maryland Home Improvement Commission
Another option for resolving disputes between a general contractor and a subcontractor in Maryland is to file a claim with the Maryland Home Improvement Commission. The MHIC is a state agency that regulates home improvement contractors and subcontractors in Maryland. The MHIC also administers a Guaranty Fund that compensates homeowners for losses caused by licensed contractors or subcontractors who fail to perform or complete their work properly.
However, filing a claim with the MHIC Guaranty Fund has some limitations. For example, the Fund does not cover commercial properties, unlicensed contractors or subcontractors, salespersons or damages caused by natural disasters or acts of God. The Fund also does not cover attorney fees or punitive damages.