Change Orders in Construction: How to Document and Handle Them Legally

When it comes to construction projects, changes are inevitable. Whether it’s due to unexpected site conditions, client preferences, or evolving designs, adjustments to the original scope of work are almost always necessary. These adjustments, known as change orders, are a routine part of construction. However, without proper documentation and legal handling, change orders can lead to costly disputes and delays.

In this blog post, we’ll break down what change orders are, why they’re essential, how to document them properly, and what steps to take to handle them legally. Whether you’re a contractor, subcontractor, or property owner, understanding this process is key to avoiding potential legal issues.

What Are Change Orders?

A change order is a formal amendment to the original construction contract. It outlines changes to the scope of work, schedule, or costs that were not accounted for in the original agreement. These can include anything from altering materials and specifications to adding new work or even subtracting work initially agreed upon.

For example, if a homeowner decides to upgrade their countertops from laminate to quartz midway through the project, a change order would document the adjustment in materials and the associated increase in cost and time.

Why Are Change Orders Important?

Change orders are critical for maintaining clarity and protecting all parties involved in a construction project. Without a written and signed change order, you run the risk of disputes regarding costs, delays, and responsibilities.

Here’s why they matter:

1. Avoid Misunderstandings: Change orders ensure everyone is on the same page about what is being changed, how much it will cost, and how it will impact the schedule.
2. Legal Protection: A properly executed change order can serve as legal proof in case of disputes.
3. Accurate Project Tracking: Change orders keep the project organized by documenting every alteration in the scope of work.
4. Clear Financial Agreements: They prevent financial disagreements by formally recording cost adjustments.

How to Properly Document Change Orders

When it comes to documenting change orders, the more detailed, the better. A well-documented change order should include:

1. Detailed Description of Changes: Clearly outline what is being added, removed, or altered in the original scope of work. Be specific—include dimensions, materials, and any other relevant details.
2. Cost Adjustments: Specify how the changes will affect the project’s total cost. Break down labor, materials, and other expenses to avoid confusion.
3. Impact on Timeline: Note how the changes will affect the project’s schedule. Will the change extend the deadline? If so, by how much?
4. Signatures: Both parties (contractor and client) must sign the change order. This makes the document legally binding.
5. Reference to Original Contract: Include a clear reference to the original contract to tie the change order back to the agreed-upon terms.
6. Date: Always date the change order to establish when the modification was approved.

Steps to Handle Change Orders Legally

Handling change orders isn’t just about creating a document—it’s about ensuring the process is followed correctly to protect all parties involved. Here’s how to handle change orders legally:

1. Follow Contract Terms: Many construction contracts include provisions for change orders, outlining how they should be handled. Always refer to the original contract and follow the agreed-upon process for modifications.

2. Communicate Clearly: Before proceeding with any changes, have an open and transparent conversation with all parties involved. Make sure the client understands the implications of the changes, including costs and delays.

3. Get It in Writing: Verbal agreements can lead to misunderstandings. Always document changes in a written change order and have both parties sign off before starting the work.

4. Don’t Proceed Without Approval: Never begin work on a change order before obtaining written approval. Proceeding without approval can result in unpaid work or disputes later.

5. Maintain Records: Keep thorough records of all communications, documents, and approvals related to the change order. This can be invaluable if a legal dispute arises.

6. Work with an Attorney: If you’re unsure about how to handle change orders or are dealing with a dispute, consult with a construction attorney. We can help ensure your contracts and change orders are legally sound and protect your interests.

Common Pitfalls to Avoid

While handling change orders, it’s important to be aware of common mistakes that can lead to issues down the road:

• Ignoring Small Changes: Even minor changes should be documented to avoid misunderstandings.
• Lack of Detail: Vague descriptions can cause confusion and disputes.
• Verbal Agreements: Always get changes in writing to avoid a “he-said-she-said” situation.
• Failure to Communicate: Keep all parties informed throughout the process.
• Proceeding Without Approval: This can result in unpaid work or breach of contract claims.

How We Can Help

At Ayala Law, we understand the complexities of construction law and the importance of properly handling change orders. Whether you’re a contractor, subcontractor, or property owner, we’re here to guide you through the legal process and protect your rights.

If you’re dealing with a dispute over change orders or need help drafting legally sound contracts, contact one of our experienced construction attorneys at 305-570-2208. You can also email our lead attorney Eduardo directly at eduardo@ayalalawpa.com.  

We at Ayala Law PA are passionate about helping those in legal need, so please don’t hesitate to schedule a case evaluation with us online here. 

[The opinions in this blog are not intended to be legal advice. You should consult with an attorney about the particulars of your case].