An owner of a construction project may be vicariously liable for another person's acts. Vicarious liability means that the owner is indirectly responsible for the other person's acts. If an owner hires contractors, design professionals, inspectors, or agents for a construction project and the acts of the contractors, the design professionals, the inspectors, or the agents injure another person or damage another person's property, the owner may be liable.

An owner's vicarious liability in a construction project is based on the general principle that an employer has a duty to control his or her employees and that the employer is responsible for injuries or damages that are caused by the employees when they are acting within the scope of their employment.

The extent of an owner's control over persons at a construction site determines the owner's liability for injuries or damages that are caused by the owner's employees. For example, if the owner has the sole right to approve the selection of subcontractors by a contractor, the owner is responsible for the acts of the subcontractors and his or her employees. The test is whether the owner had the sole authority to control the subcontractor and his or her employees and whether the owner could discharge the subcontractor.

An owner may be liable to a contractor for the negligence of the owner's design professionals if the design professionals impede the contractor's completion of a construction project. The contractor may seek damages for the delay and for the acts and omissions on the part of the owner with regard to the design professionals.

Some courts have held that a design professional or an architect is an agent of an owner in a construction project. The owner may therefore be liable for the acts or omissions of the design professional or the architect under the laws regarding principals and agents.

An owner may also be responsible for his or her engineer's failure to conduct an adequate subsurface investigation if the owner had a duty to provide accurate soil conditions and property conditions to his or her bidders under a contract.

If an owner has been held vicariously liable for the acts of his or her contractor, design professional, or agent, and the owner or his or her insurer has paid damages to a third party, the owner or his or her insurer may file a subrogation action against the contractor, the design professional, or the agent to recover the damages that were paid to the third party. A subrogation action seeks to recover damages from the party who was responsible for the damages. The owner and the insurer must prove that they were legally required to pay the damages and that they were not merely paying a debt of the contractor, the design professional, or the agent.

Back to All Publications