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Does architectural plan ownership really matter?

April 23, 2004

NJPA Real Estate Journal

Construction project documents can be voluminous, difficult to understand and time consuming to negotiate. As a result, some points may be glossed over or missed. The ownership of the plans is one of the issues that is sometimes neglected in architectural agreements.

The owner hires an architect to design the building, or a design-build firm to develop and execute the building, but who ultimately has the legal rights to the plans? This can be a particularly important issue, not only to owners, but to other parties in the construction process as well.

The architect or design-builder may want to own the plans and have the owner buy the rights to use the plans for a single specific purpose. The owner wants to obtain the ownership rights to the plans because, in most instances, the owner is paying for a unique structure and does not want to see the design replicated elsewhere. Negotiation of these issues can be touchy, as the architect may not appreciate the owner's desire to preserve as unique the important design elements of the building. Also, the design-build firm or architect may want to retain the rights to use specific design elements in other properties and may want to restrict the owner from duplicating the design.

Aside from esthetic issues, the owner may need to use the plans for subsequent renovation or expansion work in connection with the particular facility or a similar facility. Owning the plans allows the owner to pick another design firm without being concerned about violating the original architect's intellectual property rights. However, the architect will correctly want to be indemnified from injury that results from changes to the plans which are made by others, whether for a new structure or for alterations to the original one.

The ownership of the plans can have significant impact on the ability to complete a troubled project. If the contractor does not finish the job (perhaps it has become bankrupt or there has been a dispute between the parties), the owner who does not own the plans may not have sufficient rights to use the plans for completion of the project. In the design-build scenario, the project designer and builder are a single source, which may magnify the problem of plan ownership in the event of a project party failure. In the case of a contractor failure, a surety firm may step in, and the owner must be able to give the surety the right to use the plans to complete the job.

If the owner has a falling out with the architect, the failure to establish the owner's rights to the plans during the contract negotiation process can create delays for the contractor or the contractor's surety, and ultimately, delays and potential cost overruns for the owner.

Jeffrey M. Gussoff is a member of the West Orange, NJ-based firm of Wolff & Samson PC. Gussoff, whose practice consists of a broad spectrum of real estate matters, can be reached via e-mail at jgussoff@wolffsamson.com.