Engineering and Construction Contracts: What a Board Is Actually Signing

Jason Hamilton Mikes, JD, MBA
Founder & Managing Shareholder

• Published September 25, 2026
• Reviewed by Jason Hamilton Mikes, JD, MBA, September 26, 2026
• Florida Statutes as of July 1, 2026
• Applies to: Condominiums · HOAs · Cooperatives

Roof replacement, concrete restoration, balcony repairs, seawall work, repiping, painting and post-storm reconstruction all run on the same two documents: an agreement with a design professional and an agreement with a contractor. Boards focus on the price in each and skim the rest. The clauses that decide what happens when a project goes sideways are the ones nobody read, and by then most of the work is paid for.

Two contracts, two different animals

The first contract is with a licensed engineer or architect, and the association is buying professional judgment: a condition assessment, a repair specification, a bid package, and usually oversight while the work is performed. The second is with a contractor, and the association is buying a physical result for a price.

Those are different obligations. A contractor promises a result. A design professional promises reasonable care measured against what a similarly situated professional would have done, and is not a guarantor of the outcome. Boards that expect the engineer to warrant the repair, or the contractor to exercise judgment about a design, are disappointed in both directions.

The bidding statutes treat them differently as well. In all three chapters, architect and engineering services are excepted from the bidding requirement. Construction work is not, and above the threshold it must be bid.

The exception is permission, not advice. A board free to hire an engineer without bidding should still interview several and compare scopes rather than fees. For the condominium-specific mechanics of bidding, licensure and liens, our guide to contracting for condominium work goes deeper than this page does.

The engineer's scope, and what is not in it

Design professional agreements describe basic services in a paragraph, then exclude a great deal in a list most boards skim. Read the exclusions first. The usual extras are destructive or exploratory testing, hidden condition investigation, permit expediting, as-built documentation, material testing, and redesign forced by conditions found after demolition.

Then fix the deliverables by name and by phase:

• A written condition assessment stating the methodology, including how much was examined and how much extrapolated.
• A repair specification detailed enough that three contractors bidding it are bidding the same work, with unit prices for quantities unknown until demolition.
• A bid package, bidder list, pre-bid walkthrough and written bid tabulation with the engineer's analysis of the differences.
• Construction administration, defined by number of site visits, what is inspected and what is reported.
• Close-out documents: punch list, as-builts, warranties, manufacturer registrations and a final report.

Ask one question rarely asked at the interview. How many site visits are included, and what happens when the project runs long? A contract priced on 12 visits for a nine-month project becomes an hourly engagement in month ten, and the association learns this on an invoice rather than in the contract.

Where the project arises from a milestone inspection or a structural integrity reserve study, keep the phases separate. The inspection report, the repair design and the construction administration are three engagements, and one bundled fee makes it hard to change professionals later.

Standard of care and the limitation-of-liability clause

Every design professional agreement contains a standard of care clause, usually that services will be performed consistent with the skill and care ordinarily provided by professionals practicing in the same or similar locality under similar circumstances. That is the correct standard, and a board should not try to raise it to a warranty: professional liability policies generally do not cover a contractual warranty, and a promise the insurer will not cover is one the association cannot collect on.

The clause to negotiate is the next one. Design professional forms commonly cap total liability at the amount of the fee for all claims arising out of the engagement. On a $90,000 design fee attached to a $4 million restoration, that means a design error costing the association a million dollars in rework is worth $90,000.

There are several ways to move it. Tie the cap to the professional liability limits the engineer must carry rather than to the fee. Remove it for gross negligence and willful misconduct. Ask for a separate, higher cap for construction administration errors. And confirm the policy is in force and will be maintained for a stated number of years after completion.

One Florida statute sits behind this. Section 558.0035 shields an individual employee or agent of a design professional from personal liability for negligence where the contract is with the business entity, the individual is not named as a party, the contract carries a prominent statement in uppercase type at least five point sizes larger than the surrounding text saying so, the entity maintains the professional liability insurance the contract requires, and the damages are solely economic. That oversized paragraph in an engineering agreement is usually this statement. It shifts the claim to the firm rather than eliminating it, which is another reason to care about the firm's insurance.

Construction administration is a separate service, and it is the one boards cut

When a board looks for savings, construction administration is the line that gets cut, because it appears to be a fee for watching. It is the association's only independent check on whether the work matches the specification, and it is what makes the payment application process meaningful.

It should include certifying payment applications, reviewing submittals and shop drawings, answering requests for information, evaluating change order pricing, observing the work at a stated frequency, preparing the punch list, and confirming substantial and final completion.

The distinction between observation and inspection matters. A professional visiting periodically observes progress and quality; the contractor remains responsible for means, methods and the work itself. Continuous inspection is a different and costlier service. Decide which one the association is buying, and do not assume periodic observation catches everything. Our guide to overseeing a major project covers the board's own role alongside it.

The form matters: standard forms against the contractor's own

Construction contracts come in three flavors. The American Institute of Architects documents and the ConsensusDocs set are industry standard forms with decades of interpretation behind them. The third is the contractor's own short agreement, or its proposal with terms on the back.

A standard form is the better starting point because it has all of the parts: schedule, delay, payment, changes, differing site conditions, insurance, indemnity, suspension, termination, warranty and dispute resolution. A board reviewing it edits terms rather than discovering half the subjects are missing. Where general conditions are incorporated, attach them.

Where the contractor insists on its own form, the review gets longer, not shorter. Look for what the form does not say: no completion date, no consequence for delay, no retainage, no warranty period, no lien releases tied to payment, no differing-conditions clause, and payment owed on a calendar rather than on progress.

Two clauses deserve attention in any form. The dispute resolution clause decides whether the association ends up in arbitration in another county under industry rules, which is a choice rather than a default. And a consequential damages waiver gives up categories of loss that matter to an association, such as relocating residents or lost rental income during a delay.

Payment applications, certification and retainage

Payment should follow progress, and progress should be verified by someone who does not work for the contractor. The mechanism is a schedule of values agreed before work starts, against which the contractor submits a monthly application showing percentage complete by line. The design professional reviews it, adjusts it and certifies the amount payable. The association pays the certified amount, not the requested amount.

Watch for front-loading. A schedule of values assigning a large share of the price to mobilization, supervision, general conditions and material deliveries gives the contractor its profit early and leaves the association exposed if work stops. Approve the schedule of values before the first application, and require stored materials to be on site, insured and documented before they are paid for.

Retainage is what the association still holds at the end of the job, and on private work the number is whatever the contract says. Florida caps retainage at 5 percent on public entity construction contracts under § 255.078, but that section does not reach an association's private contract. Ten percent through substantial completion, reduced to 5 percent afterward, is a common private structure. Do not release all retainage at substantial completion, because the punch list is the only thing it is holding.

Lien releases and the risk of paying twice

Chapter 713, the Construction Lien Law, is why a board can pay a contractor in full and still face a lien from a subcontractor or supplier who was never paid. The protection is procedural and within the board's control.

Record a notice of commencement before work begins. Section 713.13(1)(a) requires the owner or its authorized agent to record it before actually commencing to improve the property, identifying the property, the improvement, the owner, the contractor, any surety and any lender. Under § 713.13(6) it is not effectual after one year unless a different period is stated, and payments made after it expires can be treated as improper payments, which is how an owner pays twice.

Then require releases with every payment. The statute supplies the forms: § 713.20(4) is the waiver and release upon progress payment, § 713.20(5) the waiver and release upon final payment. Two rules sit inside the section. Under § 713.20(2) a right to claim a lien may not be waived in advance, and a waiver reaches only the labor, services or materials actually furnished. Under § 713.20(6) a person may not require a lienor to furnish a waiver differing from the statutory forms.

Three habits follow. Log every notice to owner the association receives, because each identifies a party that can lien the property and should be releasing with each payment. Require a contractor's final payment affidavit under § 713.06(3)(d) before the final check. And consider a payment bond under § 713.23 on larger projects, which moves the exposure to a surety.

How liens attach differs by ownership form and is worth a conversation with counsel before the project starts, not after a lien is recorded. The condominium rules are covered in our discussion of running a major repair or restoration project.

Change orders, allowances and what is behind the wall

Every restoration on an older building finds something unexpected, so the question is not whether there will be change orders but how they are priced and who approves them. Settle four things.

1. No work without a written change order, signed before the work proceeds, with a narrow exception for emergencies reported immediately and papered within a stated number of days.
2. Pricing method fixed in advance: unit prices in the bid for unknown quantities, and a stated markup ceiling on cost-plus changes covering overhead and profit for contractor and subcontractor alike.
3. Schedule impact stated in the change order itself, so a series of small changes does not become an open-ended extension argued about at the end.
4. Approval authority: who may approve a change order, up to what amount, and when the full board must vote. Pair the clause with a board resolution so the manager and engineer know the limits.

Allowances need the same discipline. An allowance is a placeholder, not a price, and the contract should say how the difference is handled in both directions, including whether an underrun is credited back. Lock unit prices for the project or tie them to a stated adjustment.

Concrete restoration deserves a warning. Spall repair bids are quantity-based, the quantity is a guess until surfaces are sounded, and the final number frequently exceeds the bid. Insist on unit pricing, a measurement protocol with the engineer verifying quantities before repair, and photographs of each location. Then budget for the overrun rather than being surprised by it.

Substantial completion, warranty and the clock

Substantial completion is a defined moment with consequences. Define it as the point at which the work is complete enough for the association to occupy or use it for its intended purpose. It usually starts the warranty period, ends delay damages and triggers the retainage reduction. Get a dated written certificate, and attach the punch list to it.

Distinguish the contractor's workmanship warranty, typically one year, from manufacturer warranties on membranes, coatings and equipment, which run longer and usually require registration, specified installation details and sometimes inspections to stay in force. Require the warranty documents at close-out, confirm registration, and calendar the expiration dates. A board that walks the property at month eleven of a one-year warranty finds what a board that does nothing never finds.

Behind the warranty sits the statutory clock. An action founded on the design, planning or construction of an improvement to real property carries a four-year limitations period, and § 95.11(3)(b) sets a seven-year repose running from the earliest of a temporary certificate of occupancy, a certificate of occupancy, a certificate of completion, or abandonment. A defect found late may fall outside repose, which is why close-out documents and dated photographs matter years later. See our discussion of construction defect claims.

Two final points. Chapter 558 sets up a presuit notice and repair process for construction defect claims, and § 558.005(1) lets the parties agree in writing to opt out of it. Know what you are giving up before accepting an opt-out in a contractor's form. And licensure matters at the end as much as at the start: under § 489.128 the contract is unenforceable in law or in equity by an unlicensed contractor, no lien or bond claim exists in its favor, and status is measured at the effective date, the date the last party signed, or the first date labor, services or materials were provided.

None of this is exotic. It is a checklist applied before signature rather than after a dispute. The construction contract review checklist collects it in one page. The broader set of questions a board should ask before any signature is in our guide to the pre-signature checklist.

Contact Hamilton Mikes

Hamilton Mikes represents condominium, cooperative and homeowners association boards in Southwest Florida on engineering agreements, construction contracts, payment and lien issues, and claims arising from defective work. Call 239-594-7227 or visit our Construction page.