What Does Substantial Completion Mean?

by | Last updated on January 24, 2024

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Substantial completion means

the project, or a portion of the project, is fit for its intended use

. The owner can then occupy and use the property. The owner must also pay the contractor the last portion of the monies owed for that project or portion of the project.

What does certificate of substantial completion mean?

Substantial completion is a legal term found in construction contracts to define that

stage of a contractor’s work that is sufficiently complete in accordance with the applicable construction agreement

. … It is a critical term in the life of any construction project as any contractor would advise.

What is a letter of substantial completion?

November 24, 2019. “Substantial completion” is

the point in a construction project in which the contemplated premises have been completed to the point where the owner can move in and use the premises for their intended purposes

.

What comes after substantial completion?

After substantial completion,

the owner again becomes responsible for the property

, i.e., security, utilities, etc. A contractor can still breach the contract, but any breach subsequent to substantial completion will only be a minor breach.

Who provides the notice of substantial completion?

When the Contractor believes that it has achieved Substantial Completion, it shall deliver to

the General Contractor

a notice thereof (the “Notice of Substantial Completion”).

Why is substantial completion important?

Typically, achieving Substantial Completion

entitles the contractor to receive full payment for his work

, less amounts the owner can retain to secure outstanding punch list work or to secure repairs for defective work. As a result, a contractor is entitled to payment even though the project is not fully complete.

What is the difference between substantial completion and substantial performance?


Substantial

Completion marks the point in the construction timeline when, according to the Canadian Construction Documents Committee (CCDC) Stipulated Price Contract, “Substantial Performance of the Work shall have been reached when the Work is ready for use or is being used for the purpose intended and is so certified …

What is a final completion certificate?

The final certificate is

certification by the contract administrator that a construction contract has been fully completed

. It is issued at the end of the defects liability period and has the effect of releasing all remaining money due to the contractor, including any remaining retention.

What is a completion certificate?

A completion certificate

confirms that a building has been constructed, demolished or converted in accordance with the relevant building warrant

. It also confirms that the building complies with Building Regulations.

What is a notice of completion?

A Notice of Completion is

a document that establishes the official date that a construction project is considered complete

. … Mechanics liens protect payments to subcontractors or other workers who provide materials or labor on a project.

What is the date of completion?

The date for completion is

the date by which the contractor is expected to complete the works

, which may be earlier or later than the contract completion date.

What is final completion?

As used in project finance, occurs when:

The project has achieved all the technical and performance requirements set out in the construction contract

. All punch list items have been completed (unless the parties otherwise agree).

What is the difference between practical completion and final completion?

Practical completion is the date nominated in the contract for the works to be substantially completed and available for use. This may be subject to change. At the satisfactory completion of any required rectification work, your architect will issue the final certificate.

Who certifies practical completion?


The contract administrator

certifies practical completion when all the works described in the contract have been carried out. Certifying practical completion has the effect of: Releasing half of the retention (an amount retained from payments due to the contractor to ensure they complete the works).

What does substantial completion trigger?

The California Legal Definition of “Substantial Completion”

Occupation or use by the owner after the labor has been completed;

60 days after all labor on the project has ceased

; or. As soon as all work on the project has completely ceased for at least 30 days and a notice of cessation is filed.

What payments are typically linked to substantial completion?

What payments are typically linked to substantial completion? Final completion?

Final periodic payment

is linked to substantial completion. Release of retention is linked to final completion.

Rachel Ostrander
Author
Rachel Ostrander
Rachel is a career coach and HR consultant with over 5 years of experience working with job seekers and employers. She holds a degree in human resources management and has worked with leading companies such as Google and Amazon. Rachel is passionate about helping people find fulfilling careers and providing practical advice for navigating the job market.