Travis & DeBlase PLLC | April 2026 | Construction & Trades
Construction disputes are among the most expensive and disruptive problems a contractor or project owner can face. When they arise, work slows down or stops entirely, costs escalate, and relationships between project participants deteriorate. In New York’s high-stakes construction market—where even routine projects involve significant capital and compressed timelines—a dispute that could have been avoided with better planning or clearer contract language can cost a company hundreds of thousands of dollars.
This article examines five of the most common causes of construction disputes in New York and offers practical guidance on how to reduce the risk of each.
1. Payment Disputes
Payment problems are the single most frequent cause of construction litigation in New York. They take many forms: an owner withholds payment from a general contractor, a GC delays paying its subcontractors, a subcontractor is asked to perform extra work without a confirmed change order, or retainage is held beyond the contractually agreed period. Regardless of the specifics, the result is the same—the party that performed the work is left carrying the financial burden of someone else’s project.
New York’s Lien Law provides a powerful remedy for unpaid contractors and subcontractors through the mechanic’s lien, which creates a security interest in the improved property. But lien rights have strict deadlines. A subcontractor on a private project must file a mechanic’s lien within eight months of the last date it performed work, and a general contractor has the same eight-month window. On public projects, lien rights do not apply; instead, contractors must file a claim against the payment bond.
Prevention starts with clear payment terms in the contract: specific invoicing procedures, defined payment periods (New York’s Prompt Payment Act imposes deadlines on certain projects), and agreed-upon retainage percentages and release conditions. Contractors should also document every payment application meticulously and follow up immediately when a payment is late. The longer a payment dispute festers, the harder it is to resolve.
2. Scope of Work Disputes and Change Orders
Disagreements about what the contract requires are the second most common source of construction disputes. A project owner may believe that certain work is included in the base contract price, while the contractor contends it falls outside the agreed scope and constitutes extra work requiring a change order. These disagreements are particularly common on projects where the design documents were incomplete or ambiguous when the contract was signed.
The legal framework for resolving scope disputes depends heavily on the contract language. Most standard construction contracts (AIA, ConsensusDocs) include a defined process for change orders, requiring written approval before extra work begins. But in practice, work often starts before a change order is executed—sometimes because the project schedule does not allow for delay, sometimes because the parties assume they will work it out later. When they do not, litigation follows.
The most effective way to prevent scope disputes is to invest in thorough design documents before the project begins and to include a clear, unambiguous scope of work in the contract. When changes arise during construction—as they inevitably do—the parties should follow the contractual change order process without exception, documenting the additional work, the agreed price, and the schedule impact in writing before the work is performed.
3. Defective Work and Warranty Claims
Defective construction work—whether it involves structural deficiencies, water infiltration, improper materials, or code violations—is a perennial source of disputes between owners, general contractors, and subcontractors. In New York, the statute of limitations for a breach of contract claim arising from defective construction work is six years from the date of substantial completion. For negligence claims, the limitation period is three years.
Warranty provisions in construction contracts vary significantly. Some contracts include express warranties that the work will conform to the plans and specifications and will be free from defects for a stated period (typically one year from substantial completion). Others are silent on warranties, leaving the parties to rely on implied warranties under New York law. The distinction matters because express warranty claims are governed by the contract’s terms, while implied warranty claims may provide broader or narrower protections depending on the circumstances.
Preventing defective work disputes starts with quality control during construction—regular inspections, adherence to specifications, and prompt correction of identified deficiencies before they become entrenched. When defects are discovered after completion, the owner should document them thoroughly (photographs, expert assessments) and provide written notice to the contractor, giving the contractor an opportunity to cure before escalating to litigation.
4. Delay Claims
Construction delays are expensive. An owner loses revenue from a building that cannot open on time. A contractor incurs extended general conditions—site supervision, equipment rental, insurance—for every week the project runs beyond the original schedule. Subcontractors get pushed out of sequence, disrupting their work on other projects. When a project runs significantly behind schedule, the question of who caused the delay and who bears the cost inevitably becomes a dispute.
New York courts recognize several categories of delay. An excusable delay is one caused by factors outside the contractor’s control, such as unusually severe weather or unforeseen site conditions. A compensable delay is one caused by the owner or its agents—design changes, failure to provide access, or interference with the contractor’s work. A concurrent delay occurs when both the owner and the contractor contribute to the same period of delay. The legal consequences differ for each category, and the burden of proof falls on the party claiming the delay.
Liquidated damages clauses are common in New York construction contracts, setting a predetermined daily rate that the contractor must pay for each day of delay beyond the contractual completion date. These clauses are enforceable in New York so long as the stipulated amount is a reasonable estimate of the anticipated harm and actual damages would be difficult to calculate. Contractors should review liquidated damages provisions carefully before signing and negotiate caps or exclusions where possible.
The single best protection against delay claims is a detailed, regularly updated project schedule maintained by the contractor and shared with all project participants. When a delay occurs, the schedule serves as contemporaneous evidence of the cause and impact. Without it, delay claims devolve into competing narratives with no reliable factual baseline.
5. Insurance and Indemnification Disputes
Construction contracts in New York almost universally include indemnification provisions requiring one party to hold harmless and indemnify another against claims arising from the indemnitor’s work. These provisions are heavily regulated in New York. General Obligations Law Section 5-322.1 voids any clause in a construction contract that purports to indemnify a party against liability caused by its own negligence. Despite this statutory limitation, disputes over the scope and enforceability of indemnification clauses are common, particularly in multi-party projects where fault is shared.
Insurance coverage disputes add another layer of complexity. Construction projects typically require multiple overlapping policies—commercial general liability, workers’ compensation, umbrella or excess coverage, and sometimes owner-controlled or contractor-controlled insurance programs. When an accident occurs or a claim is made, the question of which policy responds, whether the claimant qualifies as an additional insured, and whether a policy exclusion applies can become a dispute in its own right.
New York’s Labor Law adds further exposure. Sections 200, 240, and 241 impose liability on property owners and general contractors for injuries to construction workers, often regardless of fault. Section 240, known as the Scaffold Law, imposes absolute liability on owners and general contractors for gravity-related injuries—falls from heights, falling objects—and does not allow a comparative negligence defense. This strict liability regime makes insurance and indemnification planning especially critical on New York projects.
The best way to minimize insurance and indemnification disputes is to review these provisions with counsel before the contract is signed, ensure that all required insurance is in place and properly endorsed, and verify additional insured status for all parties that require it. After an incident, prompt notice to all potentially applicable insurers is essential to preserve coverage rights.
Taking Disputes Seriously From the Start
Construction disputes rarely appear out of nowhere. They develop over weeks or months from unresolved issues that the parties hoped would work themselves out. By the time a formal claim is made or a lien is filed, the positions have hardened and the costs have grown. The most effective risk management strategy is to address problems early, document everything, and seek legal advice before a disagreement becomes a lawsuit.
Schedule a Consultation
If you have questions about a construction dispute or need legal representation in a pending matter, the attorneys at Travis & DeBlase PLLC can help. We represent contractors, subcontractors, owners, and developers in construction litigation throughout New York.
Call us at (212) 248-2120 or email info@travisdeblase.com
Visit travisdeblase.com to learn more about our construction litigation practice.
Travis & DeBlase PLLC
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