September 11, 2021

PandaTip: This model architects` agreements contains the necessary conditions to protect you as an architect while remaining fair to your client. You describe your role and responsibilities in relation to the client`s project, while outlining what you need from other parties to execute your role in the project. Professional liability and uninsurable risk can increase significantly due to the language in the consent to the assignment. Particular attention should be paid when a lender indicates that consent to the assignment is a condition of the loan. Such a statement may constitute an effort by lenders to establish negative confidence in the statements made in the consent to the assignment, thereby creating lenders` rights against the design expert that would not otherwise exist. One of the best measures to protect against such inappropriate risks is to include a language similar to that used in aia or EJDC documents, for example: if the lender does not negotiate the terms, the engineer must make a business decision regarding the signing of the consent. In practice, if the owner encounters financial difficulties during construction and his loan is not late, the engineer will probably have completed the plans and specifications and received payment. If the engineer performs only limited construction management, there may not be a significant risk of payment. However, unless the agreement compensates the engineer for the use of the plans and specifications by the lender or subsequent buyer, the engineer may still be exposed to claims.▪ When a customer insists on transferring contractual rights to a lender that requires approval and certification of project information, most of the resulting problems are business-related and have little influence on professional liability.

risks. From a professional liability perspective, the concerns raised by an order focus on whether the design professional extends its liability to the lender through its statements and whether the service instruments could be used in an unmanaged situation, thereby increasing the risk of unfounded claims against the design professional. Thus, the owner can assign the agreement to his lender without obtaining the agreement of the A/E, provided that the lender assumes all the obligations of the owner, including the unpaid. If the lender asks the A/E to execute (sign) a consent agreement, paragraph 10.4 of B101 contains the following provision: A design professional cannot have a contractual obligation to accept a contract, provide certification, or provide future services to a lender. Indeed, the professional services contract may contain a provision prohibiting such an assignment, or it may speak to it without talking about this issue, which makes it possible to negotiate acceptable terms of assignment. A design professional`s decision to accept an assignment that depends on a credit default does not mean that a design professional must also extend its risk by providing certification to the assignment holder or by conferring on the lender rights that are not provided for in the contract. . . .

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