The "Do-Over"

Remember that kid you played with growing up who refused to call it quits, who always wanted a do-over when things didn’t go his way? Well, he grew up and he works for a bank now - and he wants to re-write your design agreement. 

Now that construction has picked up, I see more and more of the “Architect’s Consent and Agreements” when owners re-finance their projects – usually when the architect is in the middle of or close to the end of design. The architect is told that he/she just needs to go along because the loan can't happen without the architect's consent – “c’mon, you don’t want to stand in the way of funding the project, do you?”

At first glance, it seems harmless enough. A further read reveals the dreaded “Do-Over:” the bank wants the architect to certify and warrant work it didn’t do, allows the bank to use your work without you if the owner defaults and, wait for it, makes you give up your lien rights (and you can’t look to the bank for payment if your client defaults). Not so great.

What can you do? First, read the Consent and understand it before you do anything. Second, if your original contract prevented an “assignment” without your permission, then you can stand on your original contract. For example:

“The parties acknowledge, understand and agree that the Architect’s services are personal in nature and for the sole benefit of the Owner; therefore, this agreement and the obligations of the parties are not assignable.”

If your original contract was silent on assignments, however, you might be stuck working for the bank in the event of default (contracts in Texas are freely assignable unless agreed otherwise). Even so, however, you can still require the bank to agree to the original terms of your contract, so stick to your guns in negotiation and resist giving in to the “Do-Over.”