The date of substantial completion is of utmost importance, both to the owner and to the contractor, as the commencement of warranties, the reduction of retainage, the time for final payment and the assessment of liquidated damages all tie back to it. It is therefore in everyone’s best interest to reach a clear understanding as to what substantial completion is and how it is achieved.
Section § 9.8.1 of AIA’s 2017 General Conditions (A201) defines Substantial Completion as:
“the stage in the progress of the Work when the Work or designated portion thereof is sufficiently complete in accordance with the Contract Documents so that the Owner can occupy or utilize the Work for its intended use.”
This definition can present difficulties for both parties. For the Owner, there are situations in which it can “utilize the Work for its intended use” yet it may not, perhaps due to loan or grant requirements, deem the project substantially complete. Often, temporary or final certificates of occupancy are the real determining factor for completeness. In such cases, language such as the following can be added:
"Notwithstanding, and as a condition precedent to Substantial Completion, the Owner must have received all certificates of occupancy, permits, approvals, and licenses from the governmental authority having jurisdiction over the Project as are necessary for the Owner’s beneficial occupancy of the Project."
For Contractors, Section 8.1.3. should be addressed as it sets the date of Substantial Completion. It states:
“The date of Substantial Completion is the date certified by the Architect in accordance with Section 9.8.”
What if substantial completion is met per the definition of 9.8.1, but the Architect has withheld certification for some other reason? You can imagine the conflict that would ensue. However, a simple edit to 8.1.3 can typically prevent this. Remove the phrase “certified by the Architect in accordance with” and replace it with “as established in” or “as set forth in.” Assuming both parties are satisfied with the definition of substantial completion in 9.8.1, tying 8.1.3 directly to it can simplify matters and avoid potential future conflicts.