Notice to Proceed

 

A Notice to Proceed is a formal notice you give to your general contractor, per the terms of your construction contract, releasing him to proceed with the construction effort.

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Per the various forms of AIA construction contracts, a notice to proceed is the contractual start of a project, and is used to determine the project completion date.  For example, the construction contract may say that the project must reach substantial completion no later than 365 days after notice to proceed.  It is important to formally establish the construction start date so that you can contractually establish the project completion date.

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Contractually establishing the substantial completion date is important not only so you know when your project will complete, but your contract may also have a liquidated damages clause, causing your GC to pay you a daily penalty if he delivers the project late.

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Here is a link to a simple Microsoft Word version of a Notice to Proceed. 

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As a side note, make sure you don't start construction until you close on your bank loan.  If you start on construction before closing on the loan, your general contractor, and any of his subcontractors that have done work on site will be able to place a mechanic's lien on the property that will be in a superior position to your bank's mortgage lien.  This will be problematic for the bank.  They want their mortgage lien to be superior to any other liens. 

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Next Page: GC Pay Applications

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