By Kushnick Pallaci PLLC | www.nyconstructionlaw.com
Introduction
If you’re starting a construction project in New York—whether it’s a major commercial build or a residential renovation—you’ll need a solid contract. The big question is: Should you use an AIA contract or a custom agreement?
While AIA (American Institute of Architects) contracts are widely used in the construction industry, they’re not always the best fit for every project. In many cases, a custom construction contract tailored to your specific needs can save you money, protect you from risk, and prevent costly litigation.
At Kushnick Pallaci PLLC, we’ve reviewed, revised, and litigated both AIA and custom construction contracts across New York. Here’s a breakdown of the pros and cons—and how to decide what’s right for your job.
Pros and Cons of AIA Standard Forms
AIA contracts are popular for a reason. They offer a consistent format and cover a wide range of project types. But like any “one-size-fits-all” solution, they come with trade-offs.
✅ Pros
- Widely recognized in the construction and legal industries
- Pre-drafted language reduces drafting time
- Include integrated clauses that align with common industry practices
- Useful when all parties are familiar with AIA workflows (especially in design-bid-build projects)
❌ Cons
- Written from an architect’s perspective, often placing owners or contractors at a disadvantage
- Some clauses are overly broad or vague, especially on delay, indemnity, or payment
- May not reflect New York-specific laws, like trust fund obligations or lien requirements
- Easy to overlook risks when you assume they’re “standard”
Bottom line: AIA forms are a convenient starting point—but they’re not a substitute for thoughtful negotiation or legal protection.
Why Custom Contracts May Be Better for Certain Projects
If your project is complex, high-value, or non-traditional, a custom contract might be the smarter option.
Custom agreements allow you to:
- Define your exact scope of work and performance milestones
- Incorporate New York-specific legal provisions (e.g., Lien Law Article 3-A)
- Allocate risk clearly between parties
- Control how change orders, payment applications, and delays are handled
- Build in specific remedies for breaches or defaults
For example, if you’re a general contractor working on multiple overlapping timelines with subs and suppliers, you may want stronger protection on back charges, indemnification, and liquidated damages than the AIA standard allows.
How AIA Forms Favor Architects or Owners
It’s no secret that the AIA originated as an architect-driven organization—and the contracts reflect that.
AIA forms often:
- Give architects final say on payment and change orders
- Limit the contractor’s ability to dispute design-related issues
- Create gray areas on who bears risk for cost overruns or design errors
- Require contractors to comply with procedures that favor the owner’s interests
We’ve seen situations where GCs agreed to AIA terms without realizing they had almost no leverage in a change order dispute—or that they had unknowingly accepted liquidated damages for delays they didn’t cause.
What to Include in a Custom Agreement That AIA Might Miss
A well-drafted custom agreement should go beyond the basics. Consider including:
- Defined payment triggers (e.g., inspections, lien waivers)
- Clear scope of work with exhibits or drawings
- Detailed change order process, including pricing methods
- Liquidated damages and bonus incentives
- Specific remedies for nonperformance or default
- Language for dispute resolution (litigation vs. arbitration)
- Insurance requirements tailored to the risk profile
- Compliance with NY Lien Law Article 3-A and trust fund obligations
These additions help make expectations clear—and reduce the chance of litigation later.
Case Example: When an Owner-Contractor Dispute Could Have Been Avoided
We recently represented a property owner in Manhattan who hired a GC using an unmodified AIA A101 and A201 contract. The project ran into delays, and the contractor submitted multiple change orders that were rubber-stamped by the architect—without the owner’s approval or full documentation.
When the owner disputed the charges, the contractor walked off the job and filed a mechanics lien.
Unfortunately, the AIA contract gave the architect authority to certify payments, and the lack of a clearly defined change order process left the owner vulnerable. With a custom contract, this dispute could have been prevented with tighter controls, required documentation, and financial caps on change orders.
How Kushnick Pallaci PLLC Drafts Owner-Friendly and Contractor-Safe Agreements
At Kushnick Pallaci PLLC, we work with both contractors and owners across New York to:
- Review and revise AIA contracts
- Draft custom construction agreements from scratch
- Negotiate contract terms during preconstruction
- Help resolve disputes quickly and effectively when things go off-track
We take into account your project’s size, complexity, and risk profile—and we write contracts that reflect the real-world issues you’re likely to face.
We’ve helped protect clients in everything from residential renovations to multimillion-dollar commercial developments—often saving them from litigation by getting the contract right before problems start.
Need help now? Explore our Contract Negotiation Services or learn how we handle Construction Contract Disputes when things break down.
Conclusion
AIA contracts have their place—but they’re not always enough. If you’re signing a construction agreement in New York, don’t assume “standard” means “safe.” Every project deserves a contract that fits its risks, budget, and goals.
At Kushnick Pallaci PLLC, we help you decide whether an AIA or custom contract is right—and then make sure it protects you.
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📍 Visit: www.nyconstructionlaw.com
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