January 9, 2015
Does “Substantial Completion” Require Permits?
By John Parnass
In Ingram v. ACIC, Division II recently held that legal permission to use the property (i.e., properly acquired permits) is a condition to “substantial completion” of the work. The Court turned away the contractor’s argument that “substantial completion” focuses only on satisfactory completion of the physical work.
The case is unpublished – and only relates to RCW 18.27.040, which requires an action against a contractor’s registration bond to be filed within two years of “substantial completion” – but the case could have wider implications eventually.
For example, if the Court’s reasoning extends more generally, than a contractor who is required to provide permits (but fails to do so) may never achieve “substantial completion” and thus any warranties that start to run at the time of “substantial completion” may not begin to run.
Presumably, the Substantial Completion definition in the project agreement could be written to exclude (or include) this “legal permission to use” requirement – but that would require the sort of pre-work contract negotiation that did not occur on the project described in this Division II case.