What does the term "substantial completion" refer to in construction?

The term "substantial completion" in construction refers to the point at which a construction project is sufficiently complete for occupancy or use, despite minor unfinished tasks that do not substantially affect the intended use of the project. This milestone is significant because it generally triggers several important aspects of a construction project, such as the start of warranty periods, the requirement for final inspections, and the potential for the owner to start using the facility.

In practical terms, substantial completion means that the project has advanced enough that the owner can occupy and utilize the space for its intended purpose, thereby allowing transitions to operational phases. This can also have legal and financial implications, affecting payment schedules and liability for construction defects. By defining completion in this way, it allows for some flexibility in finishing touches while still recognizing the project's readiness for use.

The other options do not accurately capture the legal and practical definition of substantial completion. For example, full completion encompasses finalizing all work on the project, including details that may not need to be complete for occupancy. Similarly, inspections may be required before or after reaching substantial completion, but they are not the defining characteristic of this status. Lastly, while obtaining permits is a necessary step in the construction process, it does not relate to the status of