Construction Punch Lists And The Importance Of Substantial Completion

Punch List And Substantial Completion

In the construction industry, a “punch list” is a list of incomplete or incorrect work items. The owner or the architect walks through the entire project near the end of completion and makes note of all items that either need repairs, replacement, or compilation. The general contractor must correct these incorrect work items for final completion of the project before it will be accepted by the owner. The contractor should request a final inspection once it believes all the punch list items are complete.

The architect or owner will inspect the corrected work. If they are satisfied the work is completed properly, a certificate of substantial completion should be issued. This will trigger the owner’s obligation to pay any retainage. The amount of retainage may be adjusted if the owner has to repair or complete any punch list items that the contractor did not remedy.

The extended time to complete punch list items can have significant effects on the timing of post-construction legal tools. For instance, North Dakota courts have held that punch list work could extend the warranty period of the entire project. E.g. Iowa Great Lakes Sanitary District v. Travelers Casualty and Surety Company of America (8th Cir. 2019). Minnesota courts have held that substantial punch list work may extend the deadline within which to file a mechanic’s lien. E.g. Kraus-Anderson Const. Co. v. Superior Vista LLC (Minn. Ct. App. 2010).

Disputes can also arise between the general contractor, architect, and owner as to when the project is substantially completed and retainage is owed. In these instances, the general contractor has a better argument to get paid if it completed the punch list in accordance with generally accepted construction industry standards. If some punch list items or requests are unreasonable, the general contractor will need to demonstrate why.

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