When a certificate of substantial completion is issued and signed, it marks the point when the building, property, or final product can be used as intended, but minor work still remains. It serves as an official stamp indicating when the project is mostly–or substantially–completed.
What exactly does substantially completed mean? We will answer this question along with when to use a certificate of substantial completion, the essential components contractors must include in their certificates, a free template that contractors can use to certify their hard work, and more in the following article.
What is a certificate of substantial completion for construction?
When a certificate of substantial completion is issued and signed, it marks the point when the project is virtually finished, although finishing touches, such as corrective or warranty work, remain to be completed.
A certificate of substantial completion is not to be confused with a certificate of final completion. A certificate of final completion works much the same way, with one big difference. It signals that a construction project is 100% complete with no additional work required.
What constitutes “substantial” completion?
As soon as the property can be used for its intended purpose, it’s deemed substantially complete. Think of it as the point at which the project is 95% or more complete.
This distinction, however, should not be left up to interpretation. Contractors and project owners must discuss, define, and agree on what precisely substantial completion means for the project. Once all parties agree, this definition should be locked into the contract.
The American Institute of Architects (AIA) defines substantially completed as follows:
“The stage in the progress of the Work where the Work or designated portion is sufficiently complete in accordance with the Contract Documents so that the Owner can occupy or utilize the Work for its intended use.”
Hitting the point when a project is deemed substantially complete is a major milestone for contractors. It indicates that the project is finished and, in many cases, sets off the process for final payment.
This can be a special moment, as it signifies the culmination of all the hard work, early mornings, and late nights the contractor put into a project to see it through to the end. The certificate will officially prove that the contractor has completed the project per the contract and to the satisfaction and requirements of the project owner. Think of it as a legal stamp of approval on a job well done.
Certificates are typically issued by a contractor to the project owner. At this point, the project owner, architect, or engineer will inspect the work and approve the work as satisfactory.
Once approved, a few critical steps are set in motion. For example, a timeline for all remaining work will commence. Additionally, it presents some key dates, such as the final deadline for payments; the contractor’s deadline to file a mechanics lien, and timelines for the warranty period.
When to use a certificate of substantial completion
When only small tasks or corrective work remains, it’s likely that you’ve reached substantial completion. At this point, it is not uncommon for an architect or project owner to issue a certificate of substantial completion to officially wrap up the project and commence final payments.
However, a contractor is well within their rights to issue a certificate of substantial completion if they feel confident that their portion of the work is completed. Either way, if a contractor does decide to issue a certificate of substantial completion, communication is everything. Always keep your general contractor or project owner in the loop and always inform them of your intent to issue the certificate.
Lastly, it’s essential that you understand the importance of a certificate of substantial completion. At the end of the day, it’s your legal proof that you met all contractual obligations and that the project owner approved your work. Because it can protect you in the event of a dispute, it’s vital to keep detailed records and documents to support your claim of substantial completion.
What’s included in a certificate of substantial completion for construction
A certificate of substantial completion will specify:
- Project information
- Project overview
- Location
- Contractor
- Owner
- Total contract amount
- General conditions
- Definition of substantial completion
- Date of substantial completion
- Statement of completion with any additional clauses
- Final construction costs owed and paid to the contractor
Business information
In this section, contractors should list who the certificate concerns—this will likely be the stakeholders listed on the contract. List yourself as the contractor, along with the names of the project owner, project managers, architect, engineer, or design professional. Include all relevant parties. This section should also include a description of the work that has been completed.
Dates
In this section, list the date of substantial completion of the project in addition to the deadline for final payments, mechanics liens, and warranties.
Financial information
Certificates of substantial completion should detail financial information according to the contract. This should include the final cost amount of the project and the total amount paid and still owed to the contractor.
Statement of completion
As a legal document, the certificate should include statements that make clear the purpose of the certificate. For example, it should provide separate statements that detail the following:
- The work has been substantially completed per the contract.
- The contractor has been paid for the work completed.
- The owner has approved the work.
- The contractor is now released from any further obligations of the contract outside of any applicable warranty or corrective work.
Inspection information
This part of the certificate should include the inspector’s name, the date of the final inspection, and a brief statement to support that the inspection will be used to certify that the work was completed per the contract.
Signatures
Finally, the last section will serve to capture signatures amongst all relevant parties.
See how you can store your certificate of substantial completion and other project docs with Knowify
Construction substantial completion certificate example
There is no standardized or universally agreed-upon definition of substantial completion in the construction industry. For this reason, contractors must clearly understand what substantial completion means for this particular project. To facilitate this, owners and contractors should develop a list of milestones that must be met for a project to be substantially completed. With that said, most certificates will resemble the following:
[Example] Certificate of substantial completion
This is to certify that [Contractor], has substantially completed the construction of [Project name] located at [Project address] on [Date].
The Project has been completed in accordance with the terms and conditions of the Construction Contract and as directed by [Owner], and the Contractor has performed all required duties as set forth in the Contract.
SUBSTANTIAL COMPLETION DEFINITION
The stage of construction where, in the opinion of OWNER, all items of the Work necessary to enable the asset to be utilized without significant restrictions for the purpose for which the asset was intended. All pay items shall be completely installed and all necessary testing as required by the Laws Regulations and/or Contract Documents shall be completed.
Therefore, this certificate certifies that the Project is complete and all work required by the Construction Contract has been completed except for Punch List items, which shall be completed at a later date.
This Certificate of Substantial Completion is issued in lieu of an Occupation Certificate.
DATE: ___________________________
CONTRACTOR: ___________________
OWNER: _________________________
The above example is very bare bones and should be adapted or expanded upon as needed to ensure all relevant project details and legal requirements are covered.
This may include identification and location of the land or site, information regarding the developer, and specs of the property such as the height of the building, square footage, or other relevant details.
Not necessary for legal reasons, but recommended for professionalism is to customize the certificate to include a logo or other graphics to provide branding and added polish.
Certificate of substantial completion for construction [Free template]
CERTIFICATE OF SUBSTANTIAL COMPLETION
This Certificate of Substantial Completion is made and entered into this ___ day of _________, 20___, between ___________ (“Contractor”) and ___________ (“Owner”).
Whereas, Contractor and Owner have entered into a written contract dated _____________, 20___, for the completion of certain work (“Work”) to be performed by Contractor at _________________ (the “Project”); and
Whereas, the Work has been substantially completed in accordance with the terms of the contract, the plans and specifications, and all applicable laws and regulations;
Now, therefore, Contractor and Owner jointly certify that the Work has been completed in substantial compliance with the contract documents as of the date of this Certificate.
Definition of Substantial Completion
[Description of definition]
The following items remain to be completed:
[List of remaining items]
Contractor has been paid for the work completed to the amount of $_______, and Owner has accepted the Work.
Contractor is hereby released from any further obligations under the contract. The date of substantial completion is ___________, 20___.
The Subcontractor hereby certifies that:
1. The work performed under the Contract has been completed, and the Contractor is in compliance with all applicable laws, regulations, and ordinances for the state of [list state].
2. The materials, supplies, equipment, and services required by the Contract have been provided and are suitable and sufficient for their intended purposes.
3. The Contractor has satisfactorily performed all of its obligations under the Contract and has delivered all of the materials, supplies, equipment, and services required by the Contract.
4. The Contractor has sufficiently given the Owner all notices, documents, and other relevant paperwork as required in the Contract.
5. All necessary permits and inspections required by applicable laws, regulations, and ordinances of the state of [list state] have been obtained, and the work has been approved by the applicable governmental authorities.
6. All the plans and specifications for the work have been performed in accordance with the Contract.
7. The Subcontractor does not have any outstanding liens or claims against the Owner relating to the work that has been completed.
Therefore, the Subcontractor and the Owner hereby certify that the Contract has been substantially completed in accordance with the terms of the Contract and all applicable laws, regulations, and ordinances.
DATED: ____________
SUBCONTRACTOR BY: _________________
NAME: _______________________________
TITLE: _______________________________
OWNER BY: __________________________
NAME: _______________________________
TITLE: _______________________________
You can download the template in Word format here.
Managing documents with Knowify
Certificates of substantial completion are just one of many document types that contractors must juggle on a daily basis. Manually tracking and organizing paperwork just isn’t sustainable anymore. Especially when dealing with clients in today’s fast-paced world.
You can easily create, manage, and store crucial documents such as a certificate of substantial completion in Knowify’s easy-to-use centralized platform; store, track, and organize all documents associated with a project. With Knowify, contractors can easily access important documents related to a project, ensuring they have the information they need on hand when needed. Additionally, Knowify provides automated reminders to contractors when a certificate of completion is due, helping to ensure that all projects are completed on time and with the proper documentation.
Disclaimer
The documents provided in this article serve only as an example template and does not constitute legal advice. The contents of these documents should not be used to create a binding contract, and should be modified to meet the individual needs of the parties. Therefore, Knowify does not take any responsibility for any legal contracts or consequences made using any of the above templates. Parties should consult with their respective legal counsel prior to executing a contract based on this, or any, agreement.
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