CONSTRUCTION SERVICES AGREEMENT

(Maryland – Private Project)

[// GUIDANCE: This template is drafted for use on private construction projects located in Maryland. It has been structured to (i) comply with Maryland mechanics’ lien notice requirements, (ii) respect current state‐law limits on retainage, and (iii) contemplate Maryland’s payment-bond framework where a bond is required. Practitioners should confirm project-specific statutory thresholds and update bracketed placeholders before circulation.]

TABLE OF CONTENTS

1. Document Header
2. Definitions
3. Operative Provisions
   3.1 Scope of Work
   3.2 Contract Price & Payment Terms
   3.3 Schedule; Substantial & Final Completion
   3.4 Changes in the Work
   3.5 Conditions Precedent / Subsequent
4. Representations & Warranties
5. Covenants & Restrictions
6. Default & Remedies
7. Risk Allocation
8. Dispute Resolution
9. General Provisions
10. Execution Block

1. DOCUMENT HEADER

CONSTRUCTION SERVICES AGREEMENT (this “Agreement”) is made and entered into as of [EFFECTIVE DATE] (the “Effective Date”) by and between:

(a) [OWNER LEGAL NAME], a [STATE] [TYPE OF ENTITY] with principal offices at [ADDRESS] (“Owner”)

and

(b) [CONTRACTOR LEGAL NAME], a [STATE] [TYPE OF ENTITY] holding Maryland Contractor License No. [LICENSE #] with principal offices at [ADDRESS] (“Contractor”).

Owner and Contractor are sometimes referred to individually as a “Party” and collectively as the “Parties.”

Recitals

A. Owner desires to engage Contractor to furnish all labor, materials, equipment, and services necessary to construct the Project (as defined below) on the real property located at [PROJECT ADDRESS] in the State of Maryland.
B. Contractor represents that it is duly licensed, experienced, and qualified to perform the Work (as defined below) in accordance with all applicable laws, regulations, and industry standards.
C. For good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows.

2. DEFINITIONS

For purposes of this Agreement, the following capitalized terms shall have the meanings set forth below; terms defined in the body of the Agreement shall have the same meaning throughout.

“Actual Cost” – Contractor’s verifiable cost of performing the Work, including labor, materials, equipment, and approved Subcontractor charges, exclusive of overhead and profit.

“Change Order” – A written, fully executed amendment modifying the Contract Price, the Contract Time, or the Scope of Work.

“Contract Documents” – (i) this Agreement, (ii) the Drawings and Specifications dated [DATE] prepared by [ARCHITECT/ENGINEER], (iii) any Addenda issued prior to execution, (iv) all approved Change Orders, and (v) the Project Schedule.

“Contract Price” – The lump-sum amount of $[AMOUNT] (subject to adjustments via Change Orders) payable to Contractor for full performance of the Work.

“Contract Time” – The period commencing on the Notice to Proceed and expiring upon Final Completion, inclusive of interim milestones and any permitted extensions.

“Force Majeure Event” – An event beyond the reasonable control of the affected Party, including acts of God, governmental orders, pandemics, labor disputes (excluding those of the affected Party’s employees or Subcontractors), and material shortages not attributable to the affected Party.

“Lien Law” – The Maryland mechanics’ lien statutes in effect on the Effective Date, together with any regulations promulgated thereunder.

“Notice of Intent to Lien” – The statutory notice that certain Subcontractors and Suppliers must serve upon Owner (and, if applicable, Contractor) as a condition precedent to asserting a mechanics’ lien under Maryland law.

“Project” – The construction of [SHORT DESCRIPTION OF PROJECT] located at [PROJECT ADDRESS] in accordance with the Contract Documents.

“Project Schedule” – The detailed construction schedule prepared by Contractor and approved by Owner pursuant to Section 3.3.

“Retainage” – The portion of progress payments withheld by Owner pursuant to Section 3.2.4, not to exceed five percent (5%) of any progress payment.

“Subcontractor” – Any person or entity, of any tier, retained by Contractor to supply labor, materials, or services in connection with the Work.

“Substantial Completion” – The stage when the Work (or a designated portion thereof) is sufficiently complete so that Owner can occupy or use the Project for its intended purpose, subject only to punch-list items that do not materially impair such use.

“Supplier” – A person or entity providing only materials, equipment, or supplies to the Project.

“Work” – All obligations, services, and deliverables to be performed or furnished by Contractor under the Contract Documents, including all labor, materials, equipment, and supervision necessary for the proper execution and completion of the Project.

3. OPERATIVE PROVISIONS

3.1 Scope of Work

3.1.1 Contractor shall diligently perform the Work in strict accordance with the Contract Documents and all applicable laws, codes, and regulations.
3.1.2 Contractor shall provide competent, suitably qualified personnel; shall maintain effective safety programs; and shall be solely responsible for the means, methods, techniques, sequences, and procedures of construction.

3.2 Contract Price & Payment Terms

3.2.1 Owner shall pay Contractor the Contract Price for satisfactory completion of the Work, subject to additions and deductions as provided herein.
3.2.2 Progress Payments. Contractor shall submit itemized Applications for Payment on a schedule approved by Owner. Each application shall be supported by (i) a duly executed partial lien waiver from Contractor and all lower-tier participants, and (ii) such other documentation as Owner may reasonably require.
3.2.3 Lien Notice Compliance. Contractor shall ensure that all Subcontractors or Suppliers required under Maryland Lien Law to serve a Notice of Intent to Lien do so within the statutory period. Contractor shall incorporate equivalent notice requirements into every Subcontract and supply Owner with copies of such notices on request.
3.2.4 Retainage. Owner may withhold Retainage of up to five percent (5%) from each progress payment. Upon Substantial Completion, Retainage shall be reduced to two-and-one-half percent (2.5%) of the then-earned amounts; the balance of Retainage shall be released at Final Completion, conditioned upon receipt of (i) final lien waivers, (ii) certificates of compliance, and (iii) as-built documents.
3.2.5 Final Payment shall be due thirty (30) days after (i) Final Completion and (ii) Contractor’s delivery of an unconditional final lien waiver, affidavit of release of liens, and any manufacturer warranties as required by the Contract Documents.

[// GUIDANCE: Maryland law presently limits retainage on most private construction contracts valued at ≥ $100,000 to 5%. Practitioners should confirm applicability and adjust Section 3.2.4 accordingly.]

3.3 Schedule; Substantial & Final Completion

3.3.1 Contractor shall prepare and submit a critical-path Project Schedule within ten (10) days after the Effective Date.
3.3.2 Time is of the essence. Contractor shall achieve Substantial Completion on or before [SUBSTANTIAL COMPLETION DATE] and Final Completion no later than [FINAL COMPLETION DATE], subject to approved extensions for excusable delay.
3.3.3 Liquidated Damages (Optional). If Contractor fails to achieve Substantial Completion by the above date, Contractor shall pay Owner liquidated damages of $[AMOUNT] per day, representing a reasonable estimate of Owner’s damages, not a penalty.

3.4 Changes in the Work

No change, addition, or deletion shall be effective without a written Change Order executed by both Parties. Pending resolution of any disputed Change Order, Contractor shall proceed with the Work as directed in writing by Owner.

3.5 Conditions Precedent / Subsequent

3.5.1 Payment Bond. If the Contract Price equals or exceeds $[THRESHOLD], Contractor shall, within ten (10) days after execution, furnish a payment bond in the amount of the Contract Price, issued by a surety licensed in Maryland and otherwise acceptable to Owner.
3.5.2 Insurance. Contractor shall maintain, at its sole expense, insurance coverage at not less than the following limits:
(a) Commercial General Liability – $[LIMIT] per occurrence / $[LIMIT] aggregate
(b) Automobile Liability – $[LIMIT] combined single limit
(c) Workers’ Compensation – statutory limits; Employer’s Liability – $[LIMIT]
(d) Builders’ Risk (special form, completed value).

Owner shall be named as an additional insured on policies (a) and (d).

4. REPRESENTATIONS & WARRANTIES

4.1 Mutual Reps. Each Party represents that it has full power and authority to enter into and perform this Agreement.

4.2 Contractor Reps. Contractor additionally represents and warrants that:
(a) it is properly licensed and in good standing in all jurisdictions where the Work is to be performed;
(b) it and its Subcontractors possess the requisite skill, expertise, personnel, and equipment to perform the Work in a timely and workmanlike manner;
(c) all materials furnished shall be new and of good quality unless otherwise specified;
(d) the Work will be free from defects in workmanship and materials for a period of one (1) year from Final Completion or for such longer period as may be prescribed by the Contract Documents or manufacturer warranties;
(e) it shall comply with all applicable federal, state, and local laws, including without limitation safety, environmental, wage, and lien laws.

4.3 Survival. The warranties in this Article IV shall survive Final Payment and completion of the Work.

5. COVENANTS & RESTRICTIONS

5.1 Permits & Approvals. Contractor shall obtain and pay for all permits, inspections, and fees required for the lawful performance of the Work.

5.2 Compliance With Laws. Contractor covenants to comply with all laws, ordinances, rules, regulations, and orders of any public authority bearing on the performance of the Work.

5.3 Safety. Contractor shall be solely responsible for initiating, maintaining, and supervising all safety precautions and programs in connection with the Work.

5.4 Records & Audit Rights. Contractor shall keep detailed and accurate books and records relating to the Work for a period of not less than three (3) years after Final Completion and shall make such records available for Owner’s review upon reasonable notice.

5.5 Notice of Claims. Contractor shall provide Owner with written notice of any claim, dispute, or potential lien within five (5) days after Contractor first becomes aware of the event giving rise thereto, but in no event later than any statutory deadline.

6. DEFAULT & REMEDIES

6.1 Contractor Default. The following constitute events of default by Contractor:
(a) failure to prosecute the Work diligently or to maintain adequate progress;
(b) failure to supply sufficient skilled workers or proper materials;
(c) failure to pay Subcontractors or Suppliers when due, absent a good-faith dispute;
(d) violation of any material covenant, representation, or warranty; or
(e) insolvency, bankruptcy, or assignment for the benefit of creditors.

6.2 Owner Remedies. Upon the occurrence of a Contractor default, Owner may, after three (3) days’ written notice and an additional seven (7) day cure period (if curable):
(a) suspend all or any portion of the Work;
(b) supplement Contractor’s forces and back-charge Contractor for associated costs;
(c) withhold any payments otherwise due;
(d) terminate this Agreement for cause and finish the Work by whatever reasonable means Owner deems expedient; and/or
(e) pursue any other remedies available at law or in equity, including recovery of actual damages and attorney fees.

6.3 Owner Default. Contractor may terminate this Agreement if Owner fails to make an undisputed payment due hereunder within twenty-one (21) days after receiving written notice of such failure and an opportunity to cure.

6.4 Termination for Convenience. Owner may, at any time, terminate this Agreement for convenience upon seven (7) days’ prior written notice to Contractor. In such event, Owner shall pay Contractor for (i) Work properly performed to the termination date, (ii) proven costs of materials suitably stored on or off site, and (iii) reasonable demobilization costs, but shall have no liability for anticipated profit on unperformed Work.

7. RISK ALLOCATION

7.1 Indemnification

To the fullest extent permitted by law, Contractor shall indemnify, defend, and hold harmless Owner, its lenders, consultants, and agents from and against any and all claims, damages, losses, and expenses (including reasonable attorney fees) arising out of or resulting from the performance of the Work, provided that any such claim, damage, loss, or expense is caused in whole or in part by a negligent act or omission of Contractor, its Subcontractors, Suppliers, or anyone directly or indirectly employed by any of them, regardless of whether such claim is caused in part by a party indemnified hereunder.

[// GUIDANCE: Maryland law generally enforces broad form indemnity where the indemnitor’s negligence is at least a partial cause of the loss. Revise if project involves public owners or design professional indemnities.]

7.2 Limitation of Liability

Except for (i) obligations to indemnify under Section 7.1, (ii) breaches of confidentiality, (iii) willful misconduct or gross negligence, and (iv) obligations to maintain insurance, Contractor’s aggregate liability to Owner under this Agreement shall not exceed the Contract Price.

7.3 Insurance; Waiver of Subrogation

Each Party waives all rights against the other for losses covered by property insurance applicable to the Project. Policies shall contain endorsements evidencing such waiver of subrogation.

7.4 Force Majeure

A Party delayed in the performance of any obligation by a Force Majeure Event shall provide written notice within seven (7) days after the start of the event. The Contract Time shall be extended by the period of actual delay, and the Contract Price shall be equitably adjusted only for cost impacts demonstrably beyond Contractor’s control.

8. DISPUTE RESOLUTION

8.1 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Maryland, without regard to conflict-of-laws principles.

8.2 Forum Selection. Subject to Section 8.3, the Parties irrevocably submit to the exclusive jurisdiction of the state courts located in [COUNTY], Maryland.

8.3 Arbitration (Optional). [ARBITRATION: ☑ Included ☐ Omitted]
If the “Included” box is checked, any dispute not resolved via executive negotiation within thirty (30) days shall be submitted to binding arbitration administered by the American Arbitration Association under its Construction Industry Arbitration Rules then in effect. The arbitration shall take place in [CITY, MD] before a single arbitrator with at least ten (10) years’ construction law experience. The arbitrator’s award may be entered in any court of competent jurisdiction and shall be final and non-appealable except as provided under the Federal Arbitration Act.

8.4 Jury Waiver (Optional). [JURY WAIVER: ☑ Included ☐ Omitted]
IF INCLUDED, EACH PARTY KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVES ITS RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING ARISING OUT OF THIS AGREEMENT.

8.5 Injunctive Relief. Notwithstanding any other provision, a Party may seek temporary, preliminary, or permanent injunctive relief in any court of competent jurisdiction to protect its intellectual property rights, confidential information, or lien rights.

9. GENERAL PROVISIONS

9.1 Amendment; Waiver. No amendment or waiver of any provision shall be effective unless in writing and signed by the Parties. A waiver on one occasion shall not constitute a waiver on any subsequent occasion.

9.2 Assignment. Neither Party may assign or delegate its rights or obligations without the prior written consent of the other, except that Owner may assign this Agreement to its lender or any successor in interest without Contractor’s consent.

9.3 Successors & Assigns. This Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors and permitted assigns.

9.4 Severability. If any provision is held unenforceable, the remaining provisions shall remain in full force, and the unenforceable provision shall be reformed to the minimum extent necessary to render it enforceable.

9.5 Integration. This Agreement, together with the other Contract Documents, constitutes the entire agreement between the Parties and supersedes all prior negotiations, understandings, and agreements.

9.6 Counterparts; Electronic Signatures. This Agreement may be executed in multiple counterparts, each of which shall be deemed an original, and all of which together constitute one instrument. Signatures transmitted by electronic means (e.g., DocuSign, PDF) shall be deemed original signatures for all purposes.

9.7 Notices. All notices shall be in writing and deemed given when (i) delivered in person, (ii) sent by nationally recognized overnight courier, or (iii) deposited in the United States mail, postage prepaid, certified or registered, return receipt requested, addressed to the receiving Party at its address set forth above (or such other address as may be designated by notice).

9.8 Confidentiality. Contractor shall keep confidential and shall not disclose to any third party any proprietary or confidential information obtained from Owner in connection with the Project, except as required for performance of the Work or by law.

10. EXECUTION BLOCK

IN WITNESS WHEREOF, the Parties have executed this Construction Services Agreement as of the Effective Date.

OWNER:
[OWNER LEGAL NAME]

By: _____
Name: _____
Title: _____
Date: _______

CONTRACTOR:
[CONTRACTOR LEGAL NAME]

By: _____
Name: _____
Title: _____
Date: _______

[Corporate Seal if applicable]

[// GUIDANCE: If the Project involves a deed of trust or lender financing, add lender consent signatures. Maryland does not generally require notarization for construction contracts, but if the document will be recorded or attached to a lien instrument, notarization is recommended.]

END OF DOCUMENT