Change Order by Text and the Final Payment Holdback
Northwest Builders, a licensed general contractor, signs a $120,000 fixed-price contract with Priya for a 400-square-foot addition to her Portland home. The contract includes the CCB number, a written-change-order clause requiring signed change orders, and a clause allowing 'substitution of equal-quality materials.' During framing, Priya texts the project manager: 'Please add two 2-by-4 skylights in the vaulted ceiling and use the same window brand.' Northwest installs the skylights but uses a different siding brand, saying it is equal quality. Priya never signs a change order. At substantial completion, Priya lists punch items, including a skylight leak, and withholds the $15,000 final payment. Northwest sends a demand letter and threatens to record a construction lien. The skylights cost $6,800. Priya says the text was not a change order and the substitution breached the contract.
1. Is Priya's text an enforceable change order despite the signed-writing clause?
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The text is probably an enforceable change, but not a clean one. The contract requires signed written change orders, and courts generally enforce such clauses, but an owner can waive the clause by directing extra work and accepting the benefit. Priya's text identifies the skylights and the window brand with enough specificity to be a writing; under Oregon's version of the UETA, an electronic record can satisfy writing requirements in many contexts. Northwest should still have issued a written change order with price and schedule. Because it did not, the scope is provable from the text and the work. The $6,800 price is not automatically binding unless it was agreed or is reasonable. Priya is likely obligated to pay the reasonable value of the skylights, but she can dispute the amount and any delay. The siding substitution is different: the clause allows equal-quality substitution, but Northwest bears the burden of proving equality.
2. Can Priya withhold the entire $15,000 final payment for the leak and the siding substitution?
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Priya should not withhold the entire $15,000 if the addition is substantially complete. Oregon law favors payment of undisputed amounts; an owner may withhold enough to correct defective or incomplete work, not a penalty. The skylight leak is a punch item and a possible defect. She can withhold the reasonable cost to repair it and any incomplete items. The siding substitution may justify a credit if the material is inferior, but she needs an objective comparison, not just preference. She should give written notice of the defects, allow a reasonable opportunity to cure, and get an independent estimate. If she withholds the whole final payment, Northwest may file a lien and a CCB complaint, and she may lose leverage. A better course is to pay the undisputed balance, hold a documented repair reserve, and put the dispute in writing.
3. What must Northwest do to preserve lien rights, and what risks does it face?
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To preserve lien rights, Northwest must comply with ORS chapter 87. As the original contractor, it must record a claim of lien within 75 days after it last furnished labor or materials, and it must include the required information and give any required notices. It cannot record a lien for extra work unless the work was authorized and the lien amount is accurate. It must also avoid including improper amounts, because an excessive or fraudulent lien can expose it to damages. The threat of a lien does not resolve the change-order dispute. Northwest should send a final accounting, separate the undisputed final payment from the skylight change, and document the siding substitution. If it sues to foreclose, it must file within the statutory period after recording. Priya should respond in writing and demand a breakdown. Both sides face CCB complaint risk.