Modular Construction’s Big Boom: New Risks Outpacing Standard Contracts in Industrial Projects
March 24, 2026 —
Chad Theriot & Jack Mayo - Construction ExecutiveModular construction is revolutionizing the construction industry, tackling labor shortages, sustainability goals and supply-chain challenges, with the global market for modular and prefabricated construction projected to reach over $200 billion by 2030. While residential builders have embraced modular’s speed and affordability, the greatest risks—and opportunities—are emerging in the industrial sector, where project scale and complexity demand new legal strategies.
In 2023, Chad Theriot explored industrial and infrastructure applications of modular construction, addressing risks like offsite fabrication and integration complexities in his article, “
The Rise of Modular Construction—Impacts for Consideration.” Since that time, modular construction has continued to experience significant advancements and has been increasingly adopted by contractors across a broad spectrum of industrial and commercial projects. As modular construction continues to reshape the industrial landscape, contractors and owners alike must be mindful of the legal implications associated with its use, specifically as it relates to liability and risk allocation, regulatory compliance, quality control and upstream factors such as transportation and intellectual property concerns.
Reprinted courtesy of
Chad Theriot and Jack Mayo, Construction Executive, a publication of Associated Builders and Contractors. All rights reserved.
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Arbitration Provision Must Be Incorporated into a Bond for Surety to Elect Arbitration
March 03, 2026 —
David Adelstein - Florida Construction Legal Updates“Sureties cannot exercise unilateral election rights that are reserved for the principal of the underlying contract.” Anderson Service Corp. v. Old Republic Surety Company, 2026 WL 61436, *2 (Fla. 4th DCA 2026). This was the holding in a recent case dealing with arbitration.
In this case, a subcontractor entered into a contract with a contractor that gave the contractor the right to elect arbitration in Pennsylvania. A dispute arose and the subcontractor recorded a construction lien. The contractor transferred the lien to a lien transfer bond under Florida law. (The contractor was the principal of the lien transfer bond.) The lien transfer bond surety then moved to compel the subcontractor to arbitration based on the underlying subcontract. The trial court agreed to compel arbitration but this was reversed on appeal.
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David Adelstein, Kirwin NorrisMr. Adelstein may be contacted at
dma@kirwinnorris.com
California’s Retention Reform on Private Construction Projects
February 17, 2026 —
Michael McKeeman - The Construction SeytRetention has long been a contentious issue in California construction. Traditionally, owners withheld retention of 10% from each progress payment until completion, arguing it was necessary to ensure performance, quality and timely delivery. Contractors and subcontractors, however, often struggled with cash flow, payroll, and material costs while waiting months—sometimes even years—for withheld retention.
Recognizing the financial challenges contractors and subcontractors face, the California legislature passed Senate Bill 61 (“SB 61”), now codified under California Civil Code Section 8811 and effective January 1, 2026, limiting retention to 5% on private works of improvement, aligning with the public works standard in place since 2012. The law’s intent is clear—ease financial strain on contractors and subcontractors while still providing owners with security (albeit reduced) with respect to project completion.
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Michael McKeeman, SeyfarthMr. McKeeman may be contacted at
Las Vegas Partner Jeffrey Saab and Team Leader D. Ryan Efros Secure a $0.00 Settlement on a Multimillion-Dollar Construction Defect Case!
April 14, 2026 —
Dolores Montoya - Bremer Whyte Brown & O'Meara LLPPartner
Jeffrey Saab and Team Leader
D. Ryan Efros’ client was a construction supervisor on a palatial mansion. The homeowners claimed millions of dollars in damages and asserted the client was a general contractor (GC) and so responsible for the alleged defects. Jeff and Ryan took more than 15 depositions, reinforcing their trial strategy theme: that the client was not a GC, but Plaintiffs were. They secured significant concessions from Plaintiffs, pressed Plaintiffs’ own negligent construction choices, and made the risk of trying the case intolerable. On the eve of trial, Plaintiffs backed down, settling out Jeff and Ryan’s client for $0.00.
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Dolores Montoya, Bremer Whyte Brown & O'Meara LLP
Colorado Supreme Court Reverses Course on Public Project Liens: Key Takeaways From Wadsworth v. Regional Rail Partners
July 27, 2026 —
Amanda E. McKinlay - Snell & WilmerOn April 6, 2026, the Colorado Supreme Court issued a unanimous opinion in Ralph L. Wadsworth Construction Company, LLC v. Regional Rail Partners, 2026 CO 19, reversing the Colorado Court of Appeals and providing much-needed clarity regarding verified statements of claim (VSOCs) under the Colorado Public Works Act, C.R.S. §§ 38-26-101 et seq. The decision resolves two issues that have generated significant concern among construction industry professionals since the Court of Appeals issued its opinion on August 1, 2024.
Under C.R.S. § 38-26-107(1), a subcontractor on a public works project may file a VSOC with the contracting public entity for amounts due and unpaid for “…furnished labor, materials, sustenance, or other supplies used or consumed by a contractor or his or her subcontractor in or about the performance of the work contracted to be done or that supplies laborers, rental machinery, tools, or equipment to the extent used in the prosecution of the work….” If a claimant files a VSOC for “an amount greater than the amount due” without a reasonable possibility that the amount is due and with knowledge that the claim is excessive, the claimant “shall forfeit all rights to the amount claimed” and becomes liable for the opposing party’s costs and attorneys’ fees. C.R.S. § 38-26-110.
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Amanda E. McKinlay, Snell & WilmerMs. McKinlay may be contacted at
amckinlay@swlaw.com
Moving in Before Substantial Completion? The Risks of Early Owner Occupancy
March 24, 2026 —
Sydney Koby - ConsensusDocsIntroduction
On many construction projects, particularly large projects facing schedule pressure, owners may begin occupying or using portions of the project before the work reaches substantial completion. This is often due to operational needs, phased turnover, or market demands that drive owners to take possession of all or part of a project while construction activities are ongoing. While early occupancy may seem practical, it can blur the lines of responsibility between owner and contractor and can create significant legal and practical complications.
These disputes are especially common on large, complex projects where punch list work, system commissioning, and closeout activities overlap with owner use. Without clear documentation and carefully drafted contract provisions, early occupancy can undermine an owner’s ability to enforce completion requirements while simultaneously exposing the contractor to claims of delay, inefficiency, or interference.
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Sydney Koby, Jones WalkerMs. Koby may be contacted at
skoby@joneswalker.com
California Enacts Change Order Fair Payment Act
March 24, 2026 —
Michael J. Baker - Snell & WilmerFor private works construction contracts entered on or after January 1, 2026, recent legislation establishes a claims and dispute resolution process for change orders. The law is codified at Civil Code § 8850. A synopsis of the pertinent provisions includes the following:
- Submitting a Claim. Contractors or subcontractors must submit a detailed, documented claim when requesting additional time or payment.
- Owner’s Response Time. The owner must meet and confer within thirty (30) days after receiving the claim. Within ten (10) days of meeting, the owner must provide a written statement identifying which portions of the claim are undisputed and which are disputed. An owner’s failure to respond is treated as disputing the entire claim.
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Michael J. Baker, Snell & WilmerMr. Baker may be contacted at
mjbaker@swlaw.com
A Permitting Base Checklist for Data Centers and Power Plants
June 02, 2026 —
Michael S. McDonough, Stephen J. Humes & Stacey C. Wright - Gravel2Gavel Construction & Real Estate Law BlogThere is a lot of talk these days about “license to operate” for data centers, meaning management of the relationships with stakeholders and broader communities concerning both the benefits and adverse consequences of locating a facility in a particular locale. Here, we are speaking of “license to operate” more literally—namely, the legal and regulatory permitting and approval requirements for a privately owned data center whether by itself or colocated with a power generating plant.
Our Base Checklist includes generally and potentially applicable permitting requirements for development and operation, using California as an example. (Taking legal authority Frank Sinatra out of context, “If you can make it there, you can make it anywhere.”) The actual requirements for a given facility would depend, in part, on local law, including planning and zoning laws and plans, and the environment of the site. Just as examples, additional permitting and mitigation requirements might apply if sensitive receptors are located nearby (e.g., noise mitigation for residential dwellings), if sensitive and protected biological resources (e.g., jurisdictional waters and/or protected species) would be impacted, or if the present or former land uses require additional measures (e.g., hazardous materials remediation, mitigation for conversion of prime farmland, or protection of cultural resources). The scope of permit requirements would ultimately be determined by the applicable regulatory agencies and by the lead and responsible agencies under the applicable state environmental land use regime—in our reference case here, the California Environmental Quality Act (CEQA).
Reprinted courtesy of
Michael S. McDonough, Pillsbury,
Stephen J. Humes, Pillsbury and
Stacey C. Wright, Pillsbury
Mr. McDonough may be contacted at michael.mcdonough@pillsburylaw.com
Mr. Humes may be contacted at stephen.humes@pillsburylaw.com
Ms. Wright may be contacted at stephen.humes@pillsburylaw.com
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