June 18, 2014

Design Professional’s Certificate for Payment What Does It Mean?


On many construction projects design professionals act as the construction administrator. This may include certifying the contractor's application for payment by the owner. This certification may significantly expand liability for the design professional. What, if anything, is the design professional certifying, and how does that affect the owner, contractor, and design professional?

Courts have said the design professional's certification is a representation to the owner that the work has been performed according to the plans and specifications; the work has progressed to the point asserted by the contractor; and the contractor is entitled to a progress payment. The design professional's responsibility is also governed by the parties' contract. So, what happens when the design professional knows work is not in accordance with the plans and specifications or has not progressed to the point indicated by the contractor?

Generally, if a design professional has knowledge that the contractor has performed non-conforming work and the design professional signs the certification for payment of that work anyway, the design professional will be jointly responsible with the contractor for the cost of repairs. The key issue here is what constitutes "knowledge." Most design professional contracts do not require the design professional to make exhaustive on-site inspections. So, unless the design professional has specific knowledge of defective work, the contractor will be responsible. Frequently construction contracts call for a "construction inspection" or "construction observation." These are both terms of art, and define the level of knowledge chargeable to the design professional.

When work has not fully progressed, the issue is again whether the design professional has actual knowledge. If a payment is authorized when it is obvious that work has not progressed to the point asserted by the contractor, the design professional may be responsible for the amount of over payment to the contractor.

Design professionals should be aware that they might be liable if they know of non-conforming or under-performed work. Contractors should be aware that a certification does not insulate the contractor from responsibility for defective or incomplete work. Finally, owners should realize that although the design professional is representing completeness and correctness, payment certification is defined and may be limited by the contract. The owner may not be able to look to the design professional to pay for non-conforming or incomplete work unless it can prove the design professional had actual knowledge of incomplete or defective construction and certified payment in the face of that knowledge.

For more information on this topic, please contact marketing@jordanramis.com or call (888) 598-7070.


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