When Contractor Liability Extends to Neighbors

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Anyone who has had to determine a property line in order to get rid of some unruly shrubbery or remove a downtrodden fence knows the strain these often uncomfortable conversations can have on neighborly relations. After all, if you’ve lived in the home for years — or if the previous owners had no issues — and you start rocking the boat, things can get tense. 

Challenging neighborly relations are not limited solely to the property owners, however; contractors can be faced with these same issues on a magnified scale. With many Minnesota subdivisions featuring homes which are very nearly stacked directly on top of each other, there are multiple circumstances where contractor liability can extend to neighbors — and it is crucial for contractors to know how to protect themselves from resulting third-party claims. 

While we can’t help you get along with your own neighbors, the team at MNCLS will use this article to outline some situations where a contractor’s liability may extend to neighbors — as well as some steps contractors can take through the construction process to limit their exposure. 

How a Contractor Becomes Liable

Having spent a significant portion of our careers in the construction industry prior to jumping over to the legal side, MNCLS knows that construction can be a dirty job — with mud, dust, and debris all being commonplace. In the unlikely event that damage is added to this list, it can become the duty of the contractor to rectify the situation. There are ways contractors can protect themselves (which we will discuss below,) but here are some common situations where contractors can become liable. 

Structural Damage Claims

Through damage done to a neighboring property during dewatering, excavation, vibrations, or demolition, contractors may become liable. There have been historic rulings where a contractor is deemed not liable for damage to neighboring structures caused by excavation on their client’s property — most notably McBurney v. Cirillo — though many structural damage claims result in both monetary and reputational damage. 

Nuisance Claims

Nuisance claims are a more common instance where a contractor’s liability can extend to neighboring properties, and refers to dust, debris, and noise — standard byproducts of construction. Though these byproducts are seemingly commonplace, nuisance claims can be just as costly as structural damage claims. In the case of C.C. Carlton Industries v. Blanchard, neighboring homeowners sued a contractor on account of bothersome lights and sound and were awarded over $200,000. 

Protecting Yourself from Third-Party Claims

Now that we have outlined some of the ways in which contractor liability can extend to neighbors, here are some tools designed to protect contractors from third-party claims. 

Pre-construction Assessments

One of the best ways a contractor can limit liability and guard against claims from neighbors is by conducting a thorough pre-construction assessment. This assessment of the area surrounding the construction site will aim to determine the existing state of the neighboring building’s infrastructure, in addition to identifying potentially sensitive structures. In the event that a neighbor attempts to file a structural damage claim, this pre-construction assessment can determine whether the damage is a result of construction or if it is pre-existing — making it a valuable tool in any contractor’s toolbox.  

License Agreements

It is not uncommon for contractors to need temporary access to a neighboring property during the construction process, and a license agreement can outline the authorizations (and limitations) of this access. In order to offer the best-possible protection from third-party claims, license agreements should include: 

  • The duration of the agreement
  • The nature of the work
  • Insurance information for both parties

Proper Insurance 

In Minnesota’s highly-regulated construction industry, contractors are required to adhere to proper standards of licensure — including maintaining general liability and property damage insurance. By keeping up-to-date on both license renewal and insurance coverage, contractors can limit liability for damage to third-party property. 

Limit Your Exposure with MNCLS 

While these may seem like far too many hoops to jump through, know that you aren’t alone — and the team at MNCLS can help you safeguard your business against third-party claims. Before we were lawyers we were construction industry professionals, and we know how important an asset trusted legal advisors can be to a construction business. To protect your business and limit your exposure to liability, call MNCLS at (651) 484-4412 or complete our online contact form and we’ll take things from there.