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Construction contracts require meticulous planning and negotiation. Each party has a goal to get the job done, but what this looks like and what it will take to get there may look different to each party.

In negotiating a contract on your next Florida construction site, there are certain details that are often overlooked and taken for granted. Every detail of a contract matters, otherwise you end up in mediation to deal with disputes that arise later. Read on for a few key elements of a construction contract that you should never overlook.

How disputes will be handled

Contract disputes happen. We know because we handle them on a regular basis. So, how do you want those disputes to be handled?

Both sides should be aware of the proper channels to handle a dispute. A failure to address this in your contract means you will be forced to be reactive instead of proactive.

There could be ways to ensure the work continues while disputes are handled by project management. Forced arbitration is a popular option, though this may need to come with concessions depending on which side prefers to go that route. Keeping your project out of the courts could benefit both sides and prevent long and damaging delays.

Specific project schedules

Any contract can indicate when a project will start and when it should be completed, but it’s important to take the time to nail down projected dates for stages in the construction process. This is especially important for larger construction projects that may take months or even years to complete.

Draw requests are often based on these dates, and if you over or under-estimate the timing of each stage of a project then you can end up in dispute. Work diligently and honestly to determine realistic target dates.

Force majeure provisions

Schedules can only go as far as nature allows. Even the most fastidious project managers will fall off track if an act of god disrupts the work. This has become especially relevant in the wake of the COVID-19 pandemic.

Natural events like hurricanes, other weather events, and viral diseases put the health and safety of workers at risk. You can’t force workers to move forward in unsafe conditions, but you also have deadlines to hit. A force majeure provision is a sensible middle ground that allows workers to stay safe and prevents liability when unforeseen, uncontrollable events delay the project.

Keep your attorney closeConstruction contracts will benefit from the meticulous attention of a construction law attorney. At Florida Construction Law Group, we have the experience and expertise to help you navigate the contract negotiation, renegotiation, litigation, and mediation process. Get our team involved early and we will work with you every step of the way.

The health and long-term viability of almost any business is heavily connected to its insurance policies. Because there are so many types of businesses in the U.S., the types of insurance policies that exist to protect businesses are also numerous. It can therefore be confusing to know which policies your business needs. 

Construction companies and contractors have unique liabilities that require a thoughtful and detailed insurance coverage strategy. The specific policies your construction business needs can vary depending on the scope of each project and the characteristics of each project owner, but it can be wise to purchase the following:

1. Professional liability insurance.

Just about any business that employs licensed professionals—such as a physician’s practice, law firm, or accounting firm—carries this type of insurance that is sometimes referred to as errors and omissions insurance. As that name suggests, this insurance policy can step in when contractors commit errors that cause financial loss to clients. It often covers breach of contract, missed project deadlines, and services that were promised but not provided.

2. Workers’ compensation.

Some companies are not required to carry workers’ compensation for employees if the company employs a small number of workers (the exact amount varies by state). The elevated risk of injury on a construction site, however, means general contractors are hardly ever exempt. In Florida, contractors with one or more employees are required to carry this policy, which covers medical costs and partial lost wages when a worker is injured on the job. 

3. Subcontractor default insurance.

In lieu of surety bonds, which are usually required for public construction projects, larger general contractors may instead purchase a subcontractor default insurance policy. This policy will pay the contractor after three things happen: a subcontractor defaults on its duties, the contractor selects a replacement subcontractor, and a deductible is paid by the contractor. The deductibles are often large, but the terms may be more convenient to contractors than those of many surety bonds. 

4. Inland marine insurance. 

This policy has nothing to do with water-related projects. It does cover movable property, equipment, and materials that may “float” or be transported between job sites. Generally, inland marine insurance covers equipment and materials that are in transit to or from a job site. This policy can fill in the gaps for property insurance, which covers many fixtures of a permanent physical location.

5. General liability insurance. 

This policy is used by most construction contractors. General liability insurance usually covers losses in several different areas, including injuries incurred by non-employees on the project site, property damage to a client’s property, and even advertising injury. It can also cover legal fees that may associated with such incidents.

A construction contractor that has adequate insurance policies should be able to feel secure in the event of a covered loss. After paying your premiums on time and notifying your insurance provider of an incident, you have nothing to worry about, right? Unfortunately, the answer is not always clear. 

An experienced construction attorney can fight for the outcome you and your business deserve in the midst of any disputes. Our firm would be happy to discuss your situation and advise you on sensible steps moving forward in a wide range of legal areas. Call us at (305) 227-4030 for a consultation.

Construction projects shape our communities. The homes we live in, the businesses we buy from, the places our children learn and play, and more. This, of course, makes avoiding mistakes imperative to ensure the protection of our communities and the people living in them.

Mistakes are a reality in any line of work. They are going to happen, and we must recognize that in order to mitigate the risks that come with those mistakes.

Construction defects can put construction workers and the individuals who eventually occupy a building at serious risk – both physically and financially. Exploring the common types of defects that pop up in construction allows us to be keenly aware of and prevent them.

Design Defects

The most obvious and common defect comes before any equipment or supplies are ever ordered. Architects and engineers must work together to ensure the vision they have for a project can actually be reproduced in reality.

These are trained professionals, often with decades of experience. Understanding the functionality of a design can prevent major design defects. Common design defects include:

• Lack of structural integrity
• Mechanical and electric issues
• Lack of heat and moisture control

Material Defects

Once a design is complete, the construction team will work to order the necessary materials to complete the job. This presents another opportunity for defects to become present on a construction job.

Ordering the correct materials will prevent issues, but this is a unique challenge. Having a vision for a construction project is one thing, but turning that vision into reality with physical materials requires careful attention to detail. Common material defects include:

• Damaged or broken materials implemented into a project
• Mismatching materials
• Poor waterproofing
• Cutting corners with too little or too much material
• Using inferior products to cut costs

Construction Defects

Each of the above defects is an example of a construction defect, but the actual construction of a project can lead to some of the most common defects. Proper workmanship will be an integral element of any project.

Experienced teams and workers understand the importance of every element of the job. Working with a team you know and trust can help avoid these issues. Common construction defects include:

• Opting for inexperienced contractors who aren’t ready for the job
• Failure to properly seal windows and doors
• Shoddy roofing
• Shoddy drywall
• Working too fast to catch mistakes

At Florida Construction Law Group, we have been on both sides of a construction defect. We understand the challenges workers face in shaping our communities, and we understand the devastating impacts a defect can have. Whether you are the victim of a construction defect or need to defend yourself against claims you were responsible for a defect, contact our team today.

As we have previously discussed on the blog, disputes in a construction project can derail the entire project and put multiple parties at risk of losing out on serious cash flow. Common or minor disputes can quickly grow and halt work.

There are numerous ways to solve a construction dispute, including arbitration which we covered in January. Mediation is another great alternative that allows you to bring in a third party to help you navigate these issues and get impartial suggestions on what to do next. At Florida Construction Law Group, we can work as a mediator and believe this is a great tool to continue the work being done and paid for.

Mediators Are Independent Third Parties

Like arbitrators, mediators provide an independent review of the situation. You will get in a room with the other party and the mediator to discuss what the issue is, what the possible causes are, and what solutions have been considered.

Some people believe that because one party reached out to the mediator themselves that the mediator will side with them. We can assure you that this is not the case. There are numerous laws that prevent mediators from choosing sides and being partial.

You will receive honest and considerate advice to address your Florida construction law dispute.

You Hold the Power

Unlike arbitration, mediation is not legally binding. The decisions and insights provided by a mediator are merely suggestions for how the two parties can and should proceed. However, if one or both parties disagree with the suggestions of the mediator then the parties can look for alternatives to resolve their disputes.

Mediation is generally a preferred method early on in a dispute as opposed to arbitration which should often be a last resort if the parties wish to proceed but cannot agree on how that will look.

Cheaper and Quicker Alternative to Other Solutions

You could go all the way through the courts to litigate these issues or even go through arbitration, but both of these processes are time-consuming and expensive. As you know, time is money in the construction business. The longer these issues drag out the longer the construction project is delayed and at risk.Our team wants to be a part of your solution and allow you to continue improving Florida’s communities through hard work and dedication. If you are having trouble resolving a construction dispute and need to bring in a mediator, make our team your first choice. You can contact us online or call us at (305) 227-4030.

Entering into business with a construction contractor is often much more complicated than what many people presume. Besides disagreements between project owners and contractors over the quality of work performed, most other conflicts between these two parties come down to money. A relatively new type of financing for some home improvements, PACE, is causing some headaches for homeowners in Florida.

What is PACE Financing?

PACE (Property Assessed Clean Energy) financing is a unique financing structure that allows homeowners and other property owners to pay for renovations as an extra line item on their property taxes. This financing is technically not a loan; the capital needed for each PACE project is paid upfront to the contractor, arranged for by organizations like Ygrene.

Ygrene enlists the help of contractors to sell projects paid for through PACE financing. A common type of home improvement project that uses PACE financing is solar panel installation. Salespeople inform homeowners of the benefits of PACE financing, including the ability to transfer the debt to buyers if they sell the property, delay payment for up to 12 months (or whenever the next set of property taxes is due), and save money through lower energy bills.

Plenty of homeowners have realized great benefits through PACE financing. Conversely, though, many feel they have been duped by Ygrene. 

The primary complaint is that consumers were not informed that receiving a project through PACE financing means a first-priority lien will be placed on their home until the project has been fully paid off. In other words, homeowners may experience foreclosure if they fall behind on their bills that coincide with property taxes. What’s more is that homeowners are forced to pay their PACE financing obligations in the event of a forced sale; that money cannot even go toward the property’s mortgage.

If a sale is not forced through foreclosure, homeowners might not ever be able to sell their property. Many mortgage lenders will not lend to buyers who wish to purchase a property with a first-priority PACE lien. Complicating matters is the fact that contractors are often awarded finder’s fees for selling PACE projects, presenting a potential conflict of interest.

Understand Your Contractor’s Terms

The most important tool for homeowners and consumers before beginning a home improvement project is information. It is important to understand exactly how you will be billed, the interest rate, and any liens that will be placed on the property. Solar panels are attractive to homeowners and entrepreneurs due to decreased energy costs, but the PACE financing often attached to such projects can be troublesome.

In the event of a dispute with your contractor, your greatest tool as a homeowner is an experienced Florida construction attorney. The earlier you consult a trusted firm like Florida Construction Law Group, the better your chances of outright prevailing in your case. In any situation, our team will work tirelessly to resolve your dispute as efficiently as you’d like. Call us at (305) 227-4030 to discuss your legal needs today.

Contract disputes are often best resolved through alternative dispute resolution (ADR) methods, and construction disputes are no exception. The two most common ADR methods are mediation and arbitration, the latter of which is often considered to be the happy medium between informal mediation and often-costly litigation.

Greater Control of Intermediary

Arbitration shares features of mediation and litigation. Arbitration is similar to mediation because the two disputing parties have some control over who eventually occupies the position of arbitrator. Sometimes, a panel of arbitrators will function as the intermediary in an arbitration.

Parties will often choose an arbitrator or arbitration panel from the American Arbitration Association (AAA), which prescribes unique procedures for construction disputes that are better suited for the industry. Accordingly, arbitration offers parties an opportunity to select an arbitrator who is actually knowledgeable about their specific industries. In litigation, you risk being assigned a judge who is not familiar with the construction industry, its common types of disputes, or best practices.

Customizable Discovery and Preliminary Procedures

In contrast to the relatively rigid procedures in civil court, parties in arbitration may choose to forego certain customs in favor of an expedited timeline and lower costs. For instance, upon the approval of both parties, an arbitration might disallow live witness statements in front of the arbitrator and instead rely on document exchanges. Or, you might want to keep as many formalities as possible so your arbitration process more closely resembles litigation. The money at stake in your dispute will likely play a large part in these decisions.

The Hearing

Both parties will go before the arbitrator or arbitration panel and present their side. Again, the extent to which each party will be able to question the other side and present certain types of evidence might be limited by a prior agreement. The hearing date will be agreed upon by both parties, another advantage over litigation.

One often-misunderstood part of arbitration? The decision reached by the arbitrator or arbitration panel is legally binding and generally not eligible for appeal except in special circumstances. This can save time and money by preventing appeals, which are typically available in litigation. Another feature of arbitration is that the process remains private. Litigation is usually a matter of public record.

Look Over Your Contract

Mandatory arbitration clauses are increasingly used in construction contracts. Many parties who end up in a dispute are surprised to learn they are required to resolve things in arbitration. Arbitration is not always better than litigation, especially when an especially large sum of money is at stake.Whether your construction dispute is to be resolved via litigation or arbitration, an experienced Florida construction attorney is critical. Our team has deep experience representing clients in a wide variety of construction and real estate matters. We would be more than happy to evaluate your situation and work with you to put your legal issues behind you.

“Blood, sweat, and tears” is a generic phrase, but it’s exactly what contractors genuinely put into Florida construction projects. Construction workers are some of the hardest-working people among us, and they deserve to be paid for their work. Unfortunately, sometimes their paychecks come up short or wires get crossed which can result in a lien on the property being worked on.

A construction lien is a tool to protect the pay of those working on the project. We previously talked about how these work and briefly touched on the release of lien process, but we want to dive deeper into how you can get these liens released to cut any of the strings attached to a project or property.

Rights to Lien Cannot Be Waived

First and foremost, you won’t be able to go into a job without lien rights remaining intact. Florida law prevents construction workers from waiving these rights in order to protect them from unfair labor practices or negotiations. Florida law specifically states “a right to claim a lien may not be waived in advance. A lien right may be waived only to the extent of labor, services, or materials furnished. Any waiver of a right to claim a lien that is made in advance is unenforceable.”

If you are a construction worker and are being asked to waive this right or feel like an unwillingness to do so has cost you a contract, you should work with an attorney to recoup what you lost in the process.

Filing a Release of Lien

The official process of removing a lien will be through filing a release of lien. This is a common practice that will be used to confirm the circumstances that led to the lien either never happened, were misleading, or have been remedied and are no longer present.

In remedying the lien, there are two options: releasing the lien after a “progress payment” or after the unpaid amount has been paid in full. The statute linked above provides a specific form that can be used for these waivers:

WAIVER AND RELEASE OF LIEN

UPON PROGRESS PAYMENT

The undersigned lienor, in consideration of the sum of $ , hereby waives and releases its lien and right to claim a lien for labor, services, or materials furnished through   (insert date)   to   (insert the name of your customer)   on the job of   (insert the name of the owner)   to the following property:

  (description of property)  

This waiver and release does not cover any retention or labor, services, or materials furnished after the date specified.

DATED on  ,   (year).       (Lienor)  

WAIVER AND RELEASE OF LIEN

UPON FINAL PAYMENT

The undersigned lienor, in consideration of the final payment in the amount of $  , hereby waives and releases its lien and right to claim a lien for labor, services, or materials furnished to   (insert the name of your customer)   on the job of   (insert the name of the owner)   to the following described property:

  (description of property)  

DATED on  ,   (year).       (Lienor)  

Proving Timely And Accurate Payment

Of course, there’s a chance the lien wasn’t necessary in the first place. Construction companies should keep accurate and consistent records of all contracts, payment/draw schedules, draw requests, and actual payments. If you’re running a construction job and are able to prove that payments were actually made in a timely manner based on the contract that was signed then you can secure a lien release without requiring the other party to agree.At Florida Construction Law Group, we have worked with both sides of construction liens. We understand the perspective of contractors who haven’t been paid for their hard work, and we also know these can occasionally happen without merit. It’s important to ensure liens are only placed on property when necessary and that they’re remedied properly. Contact our firm if you need help filing or dealing with a construction lien.

General contractors work hard to get the money they’re owed to complete a project in a timely manner. Draw requests play a key role in making sure that is possible, but when a draw request dispute arises it can delay the project, make the project more expensive, lead to loss of labor, and more.

At Florida Construction Law Group, we handle these disputes to make sure contractors have the funds they need at the time they are supposed to get them. We fully understand the risk these disputes create for any project. There are several steps you and your team can take to avoid these disputes.

Set a Clear, Reasonable Schedule

These contracts are set on a schedule that dictates when and how draw requests can be made. However, it’s not as simple as setting dates and times for these payments but about paying out draw requests as the project progresses. Once work is completed and confirmed to be completed then the draw request for the next step of the project can be made and fulfilled.

Understanding this schedule will help you avoid disputes down the line. You need to make sure you understand each part of the schedule negotiation, what work is expected of you and your team, and other details within the documents. Be sure to keep any agreements in a secure and accessible place so you are able to review any details you need down the line.

The “reasonable” portion of this is also imperative. Both sides should go into the project with realistic expectations about what the work is, what it will take to get it done, and when it should be done. Everybody wants quick work but what everybody needs is quality work. You shouldn’t be forced into a contract that expects you to complete the work too quickly or that separates the funds out to a point where you won’t be able to purchase the necessary equipment, tools, and supplies for that portion of the project.

Keep All Receipts

Record-keeping on any project is a must. You can’t expect to be paid for your work or settle disputes down the line if you don’t have evidence of what’s being done. If you have an invoice for any previous draw request as well as any receipts for work done then the draw request process should move quickly.

Any contract will clearly state that proof of completion will be necessary to execute a draw request. The more organized and thorough your records are the quicker draw requests can be completed.

Document and Explain Changes

Any experienced contractor knows construction projects generally face a few changes. These changes are nearly inevitable but they’re also understandable. However, changes could derail the draw schedule you’ve already agreed to which is why documentation of these changes is necessary.

You and your team will need to showcase the reasoning for a change which could be related to weather, supplies, funding, ownership, or another unforeseen circumstance. When this happens, you will file a change order that explains the reason for the changes, what the changes are, and what additional costs may be associated with the change.If you’ve taken these steps then your project and draw schedule should be able to move forward without any disruptions. However, even the most thorough project can end up with disputes for various reasons. Contact the team at Florida Construction Law Group if you’re dealing with a draw request dispute that is disrupting your ability to do your job.

We all need to work to make a living. In some professions, taking on every job that comes your way may be the best avenue to financial security for the whole family.

Some construction companies may take this approach, but there comes a time when a project and your company aren’t a match. There’s nothing wrong with saying no – and we want to explore some things you should look out for before signing any contracts.

The project doesn’t fit your portfolio

Have you grown a successful construction company with a ton of big projects in your portfolio? If so, it might not make sense for you to take on small home-improvement projects or the like. You may not want to tie up resources in smaller projects in case a large project comes along that you want to put your name on. It’s also logical that you may be too expensive for someone looking for small projects.

The same is true for the opposite – if you’re a small construction company just getting off the ground it might be sensible to avoid biting off more than you can chew. You have the experience and knowledge to get the job done, but you might not have the staff, materials, or finances to compete with bigger companies at this point. There’s nothing wrong with this. Those bigger companies started off in the same place you did.

Too good to be true

We all want that one big project that puts us on the map. It can be tempting to take the big, shiny project that hits our desk right away – but tread carefully.

Some projects genuinely are too good to be true. A quick and easy project promising big money? A massive project hoping to hire a small or new construction company? These can be signs there’s something missing behind the scenes. It’s important to thoroughly vet each project to make sure you’re not being put in a position to fail before you even start.

Your team is stretched thin

Burnout is a major problem in many industries, but the physical toll construction projects take on workers can be detrimental. If you’ve been constantly shifting from project to project recently it may be sensible to pass on a project or two so your contractors and workers aren’t pushed beyond their limit.

Burnout leads to mistakes. Mistakes in construction can lead to lawsuits, injuries, or worse. Be sure to take the pulse of your team before committing to that next big project when you’ve been booked up recently. Another option is to hire a separate team of contractors who haven’t been as busy lately – even if you’re not as familiar with them.Your experience in construction should tell you when a project isn’t the right fit for you and your team. There are many reasons to consider taking on or turning down a project depending on the circumstances at that time. If you’ve recently signed a contract but realized it’s not going to work out or need help negotiating a legal and feasible construction contract, contact Florida Construction Law Group today.

Construction projects require significant attention to detail to ensure quality control across the board. There are many layers to a construction project, so it’s important to be sure every member of your team is in sync with the details and expectations of the job.

If a homeowner feels a job wasn’t done up to standard and files a claim over defects such as roofing issues, improper materials, or, even worse, a personal injury, then your reputation can immediately go out the window. Florida construction contractors, sub-contractors, material men, and workers bring important experience to every project and one mistake shouldn’t upend a career of good work. Still, that’s the reality of the business at times, so it’s imperative that the whole construction team put time and effort into avoiding defects.

1. Document and review all contract details

The contract process should lay out the expectations of the job. This is an opportunity for the construction workers and property owners to put forth any specifications for the job at hand. This can include expectations of the materials used, present problems that need to be remedied, and other necessary details.

You and your team should be aware of every relevant detail in the contract. Some contracts may seem standard and every contract will include some standard language, but a thorough review may find that the contract requires specific products or materials. Any unusual request in a contract should be acknowledged and adhered to in order to avoid issues down the road.

All efforts to follow through with contract details should be documented, and any reason contract details cannot be honored should be taken up with the property owner prior to any final decisions being made. Even if a contract detail is unreasonable or unviable in your project, you are still legally bound to it until the other party agrees to alter the contract.

2. Don’t be afraid to start over

Nobody on a construction site should be cutting corners. It can be tempting to get the job done early to satisfy the customer or to let a small error go by covering it up. Unfortunately, the costs of a defect being caught later in the process are exponentially greater than just scrapping the part of the project where the error is and starting it again.

The risks to your finances and reputation are too significant to try and get away with cutting corners. Even if the property owner isn’t knowledgeable about construction and the project at hand, it seems every defect eventually comes to light. Take the time to get it right at every step.

3. Constantly review the project

Once the work starts there’s this itch to keep going and get the job done. That’s because construction workers are some of the hardest workers in America. They’re literally building our country.

With that said, sometimes it’s good to slow things down and review all recent work on the project. This can be done by one manager or a quality control team established at the beginning of the project (the more eyes on a project the better). This could be something members of the quality control team do at the beginning and/or end of every day or it can be done as a phase of the project is completed.

However your team decides to do this, it’s important to be consistent and not be afraid to take a pause to ensure nobody is building on a mistake. Mistakes have a way of compounding on construction projects.

4. Call an attorney

You shouldn’t be subjected to claims against your hard work that are malicious and invalid. Any construction team should have an attorney they know and trust to write and review contracts and to step in when you’re accused of wrongdoing.At Florida Construction Law Group, we represent both construction workers and property owners in defect cases. We understand the law and when a defect is actually present vs. when a claim is misguided. Contact our team if you need help taking care of a claim.

Once you’ve chosen a piece of land for a new construction project or decided to add a new property to an existing plot, it’s time to start preparing the land. Construction is an expensive and time-intensive project, and a little bit of proper preparation ahead of time can save hundreds of thousands of dollars in unnecessary work.

Of course, the best-laid plans can still result in legal issues. If you’re in that situation now, call Florida Construction Law Group at 305-227-4030 to find out how we can help.

Conduct a Survey and Evaluation

First, oversee a thorough survey and evaluation of the land. This gives you an understanding of any issues you may run into based on the environment and layout of the land itself. Identifying potential issues and boundaries can save a lot of time and money down the road.

Have a Thorough Plan and Timeline

By the time you’ve gotten to this stage, you should have a comprehensive plan for the construction project and a timeline that specifies clear milestones. With a completed survey, you can determine what you’ll want to be removed from the land—trees, shrubbery, and so on—and what you’ll want to keep. This step involves a team of designers, architects, and contractors. Each of these groups brings a separate skillset to the table, ensuring that potential concerns or problems aren’t overlooked.

Verify Access to Utilities

An important part of this process is verifying that the building will be able to be connected to water, electric, gas, and sewer service. If you’re building an additional structure on land that has an existing structure, you may assume that the second building will enjoy the same access. This isn’t necessarily the case, and you’ll want to double-check before you start. You may also want to verify that the property will be able to access Internet service.

Clear the Land

Construction companies spend a substantial amount of time getting property ready for building, and a big part of that is debris removal. Rocks, trees, shrubs, dirt, and other unwanted materials must be cleared away before building can begin. Before this happens, check with local waste removal laws to find out how you have to dispose of natural materials. Failing to adhere to local laws could result in hefty fines if you dispose of waste inappropriately or in the wrong area.

Verify Local Laws and HOA Requirements

If the property you’re building on is part of an HOA or any other association that may affect what you can do with your land, have an attorney go through your HOA covenants and restrictions. Many have specific requirements about what you can and cannot build on your land. Whether you’re building on the previously untouched property or adding an accessory structure, make sure you’re actually allowed to do so without getting hit with fines.

Facing Issues With a Contractor or Construction Company? Choose Florida Construction Law Group
You have important goals you want to accomplish with your property. Make sure that legal issues don’t keep you from reaching them. Schedule a consultation with Florida Construction Law Group now by calling us at 305-227-4030 or filling out our online contact form.

Putting together the large puzzle pieces of a construction job takes expertise and experience. When starting a project, there’s a blank slate that needs to be filled with expert vision. Construction workers need to project what materials and tools are needed to complete the job at hand.

So, what happens when the projection is off and materials are leftover at the end? The answer actually depends on a few specific circumstances surrounding the job and the contracts signed. The owner of the property/building being worked on does not automatically assume ownership of the materials nor do the contractors doing the work.

Owner provides materials

This is a rare case, but it’s worth clarifying before we get into more complicated situations. If the owner of a property who hires contractors to work on their property provides all materials, those materials will belong to the owner unless otherwise noted. Contractors are more likely to seek a supplier on their own rather than relying on the party who they are doing the project for.

If any of those materials are leftover and no payment has been made by the contractor(s) to take legal possession of the materials then materials should be left at the project site. In the rare case that owner sells all materials to the contractors then the contractors have the right to take those materials with them for use on future projects.

Fixed-price contracts

When two parties enter into a fixed-price contract, this cost will cover the price for the completed project. This means the materials and tools needed to complete the job must be provided exclusively by the contractors working on the home and will not belong to the owner who hired them.

Fixed-price contracts can be tricky because it requires both parties to be more precise. If an owner pays for a large job and the contractors are able to complete the job in less time with fewer materials than originally thought, the owner will be out the extra money. If the contractors believe the job can be completed with a limited amount of materials but end up needing additional materials to complete the work, they lose out on the extra costs of the materials. This creates a smaller margin for error.

Materials provided but not paid for

Contractors and suppliers are likely to build relationships over the course of work – leading to cases where contractors will order materials without paying upfront. Because contractors will generally order more materials than needed to cover for any mistakes or unexpected changes in the project, excess materials may be uncovered at the end of the job.

When this happens, Florida laws specifically outline the repossession of materials not used. In this case, the party who provided the materials has the right to repossess any unused materials that were never paid for. The repossession of those materials prevents the supplier from placing a lien on any property, tools, or materials in order to secure the unpaid amount.

Leftover materials are negotiable

When a party involved in the project has a direct interest in the leftover materials there’s always room for negotiation. Property owners have an interest in excess materials because there’s a chance that damage and repairs down the line will require them to have matching materials to properly patch any issues. Contractors have an interest in excess materials because they can be used at future job sites.

As they say – there’s always a price. Don’t be afraid to negotiate a fair price on excess materials if you feel they’re needed. There is no legal boundary unless neither negotiating party has a legal claim to the materials at the time of sale.At Florida Construction Law Group, we know the statutes that protect your hard work and the materials you need to complete the job. Contact us and make sure you’re protected from potential liens and other issues that can arise at the end of a job.

At Florida Construction Law Group, we understand the importance of construction projects for families, businesses, and communities. These contracts are the backbone of projects that shape the way Florida looks, feels, and welcomes people from outside our great state.

Unfortunately, there are many hands involved in construction contracts that could lead to issues with properly completing the contract. Some of these are unintentional while others are pure negligence that can halt a good project in its tracks.

Failure to properly execute the contract could result in a construction loan foreclosure. Most people think of foreclosures in regard to homes when mortgages aren’t fulfilled, but construction loan foreclosures are quite common in the construction industry. It’s important to know the causes and consequences of any involved parties failing to do their part when a construction loan is present.

Causes of construction loan foreclosures

We previously wrote about certain situations that can result in foreclosure. This is not too dissimilar from a normal property foreclosure in that the foreclosure can result from any failure to fulfill the duties within the contract.

While mortgages have a set payment schedule, construction loans often rely on “draw requests” which means a party in the agreement can request payment once a certain benchmark is completed. In this case, borrowers don’t have access to the full funds upfront but instead get funds as needed throughout the course of the project. These draw requests are the most common cause of foreclosure.

Causes of construction loan foreclosures include:

• Failure by the construction lender to pay a proper draw request after the completion of a benchmark
• Project benchmarks aren’t reached in a timely manner (or at all) as detailed in the terms of the loan
• The borrower fails to secure the funds necessary to pay the loan
• The builder fails to sell or rent the property/project, resulting in an inability to pay off the loan

These and other conditions can result in foreclosure. If you suspect any of these conditions are present or may be possible soon, it’s important to take steps to mitigate the issue and the risk of foreclosure.

Consequences of construction loan foreclosures

A construction loan foreclosure will result in the lender seizing the property and stopping the project in its tracks. This means wherever the project is, the lender can take control and could then decide to sign with a different contractor to finish the project or sell it entirely to wash their hands of the situation (which is the most common result).

In order to do this, the lender has to provide proper notice to contractors under Florida statute 713.3471. This means there should be time and negotiation prior to any final actions that result in foreclosure. The statute exists to protect contractors who are actively and continuously working on a project from having funding pulled out from under them without due notice. When contractors receive this notice, it’s important to secure the project and halt work until the situation is resolved.Florida Construction Law Group has extensive experience in both prosecuting and defending construction loan foreclosures. Whatever side you are on the deal, we can help you sort through it. The best result is to contact us and resolve the dispute before litigation and foreclosure occur.

Every construction project comes with plenty of applications, negotiations, and if we’re being honest, too much paperwork. It can be exhausting going through the motions of every project, but the contracting process is just as important as the work itself. One key step is ensuring the contractors and subcontractors doing work on the project actually have the necessary licenses and registrations to do the work on each project.

Recently, in ABA Interior Inc. v. The Owen Grp. Corp, the courts ruled the failure to do so in Florida renders contractors ineligible to do and be paid for the work. In this case, ABA Interior signed as a subcontractor with the Owen Group to do work on a commercial project. Throughout the course of the work and when the work was completed, Owen Group paid ABA for the work but stopped payments once the company realized ABA had not obtained the proper registrations (specifically a certificate of competency in Palm Beach County). The court also ruled ABA gave up its right to litigation by failing to comply with the subcontract agreement.

This case highlights the major risks of failing to be thorough in your construction contracts. Soon, the process will become simpler when almost all licenses go through the Florida Department of Business & Professional Regulation (DBPR). The change doesn’t take effect until July 1, 2023, though, so it’s imperative that every party involved in the process follows any local ordinances on construction contracts.

Not every county requires you to have the same licenses. In the case highlighted above, ABA failed to receive the proper certificate in Palm Beach County but attempted to subvert this by filing in another county court. The court ruled it’s about where the work takes place, so you should check with your county to make sure you have the proper licenses before committing to or starting any work. If you’re unable or unwilling to meet those requirements, you are allowed to negotiate a contract that skips certain license and registration requirements.At the end of the day, the best way to protect everyone involved is to acquire all proper licenses, whether you’re a general contractor, subcontractor, or any other worker who could potentially get involved in the work on a construction project. The right construction law attorney can protect you and your work. At Florida Construction Law Group, we know Florida law. Contact our offices today and get your work started and protected.

Before we dive into this subject, we want to stress the importance of coming to a mutual agreement whenever you’re doing work or having work done. Define the terms, understand the terms, read the terms, and sign on the dotted line.

With that said, we understand situations arise where two parties negotiate and come to terms, but fail to secure final signatures before work starts and, in some cases, before work is completed. We want you to understand what is likely to happen when this situation arises and what you can do about it.

Communicate immediately

The moment you realize a contract was never signed, it’s important to get all parties involved in the loop and make them aware of the error. Doing so allows everyone to start the process of correcting the error, and it will start the clock on all necessary actions to remedy any issues.

When you contact the other party, the situation may resolve itself quickly by simply resharing the contract, double-checking the details, and signing off on the deal.

Gather all documentation

After everyone is aware of the situation, you should look back at all communications about the agreement and make sure you have everything documented and secure. This becomes increasingly important should the involved parties fail to agree on what the final contract included.

What’s important to understand is that a signature is not required for a contract to be enforceable. Verbal contracts can be legally binding in Florida, but only if an agreement is reached and defined clearly within legal standards. This means if all involved parties received and reviewed the contract but failed to sign it, it’s likely still going to be enforceable.

Documentation will be important because if there are multiple versions of the contract, one or both parties may insist a version that favors them was the final agreement. Document everything and be sure to take note of dates when communication took place and the manner of that communication.

Stick to the original agreement

This occurred in the case of E-21 Engineering INC v. Steve Stock & Associates. A subcontract was agreed to but never signed, and one of the parties attempted to go back on the deal, noting the lack of a signature. A costly legal battle ensued, ending with the courts determining the contract remained enforceable despite the lack of a signature.

It’s important to define what the original agreement was and stick to your side of the deal. Any attempt to alter details of the agreement may be declined by the courts or could be viewed as an admittance that the entire contract is failable. This could mean your work or money goes to waste as an entirely new agreement would need to be drafted.

Contact your attorney

As with the E-21 case mentioned above, you could find yourself in court defending the agreement. Don’t go into this process without your attorney by your side.

At Florida Construction Law Group, we know Florida law and can defend your rights when these mistakes arise. Contact us right away and let us make this right for you.

Construction jobs, no matter how big or small, can be complicated and require extensive documentation and payment. It’s important for both the property owner and the contractors working on the property to protect themselves in case something goes wrong on either end of the project.

In Florida, a construction lien is a tool to ensure the proper payment for work and materials is done fully and in a timely manner. For contractors, the lien allows them to claim real property or materials until the agreed-to payments are made fully. It’s important to note government property is exempt from construction liens, so if your project relates to government work, you will not be able to use a construction lien to ensure payment.

Claim of Lien

You will need to file a Claim of Lien if you intend to use this tool to secure your project. Your claim must be filed with the clerk’s office within 90 days of the final day work or materials were furnished in the project in question. Once the claim is filed, it will need to be served to the owner within 15 days.

Your claim needs to be thorough and include all documentation of who worked on the project, when and where the work was being done, when payment was due, and how much payment is still owed.

Contest of Lien

Once a claim has been filed, it is valid for one year unless the lienor (the party who claims the lien) files a lawsuit to extend the lien beyond the one-year period. The timeline completely changes, however, if the owner files a Contest of Lien during the initial one-year period. At that time, the lienor has 60 days to formally file a lawsuit to enforce the lien.

An owner can contest a lien if they believe and have proof the lien is unenforceable because proper and timely payments have been made to all contractors as previously agreed to. Owners should always file a Release of Lien (or require the contractors to do so) when a project is complete and payments are completed and documented. A Release of Lien blocks contractors from filing a Contest of Lien once proof of payment is provided. A Release of Lien cannot be filed in advance, because Florida laws prevent contractors from waiving their right to lien property in order to secure payment.

Selling under lien

An active lien on property changes how the sale of the property will work. If you had work done with the intent to sell, you will need to be cognizant of these changes. You CAN sell the property, but the sale will need to stipulate how the lien will be taken care of. Are you using the funds in the sale to pay off the lien? Is the buyer taking responsibility for the lien? Whatever the case, the lien must be satisfied in order for any sale or transfer of the property.

Protect your hard work

Whether you’re a contractor looking to claim a lien or an owner looking to protect your property, Florida Construction Law Group is here to help. This can be an expensive and exhausting process, so you should not take it on yourself. Contact us today to get your case started! Our senior attorney, Ray Garcia, has received the highest rating available from Martindale-Hubbell!

Buying property and deciding to build it from the ground up is a thrilling proposition. It feels like a massive undertaking, but when the final product is ready, you will have something that feels unique to you in a way that only a new construction project can. This is true whether you are building your home, your office, your vacation spot, or even a bridge.

However, it is important to enter into the process with realistic expectations. Construction projects are labors of love, built on the back of teamwork. They require a lot of communication, coordination, and flexibility – despite what you might have heard. Here are 4 myths about construction projects that you should ignore, and the truth behind them:

Everything Will Go According To Plan

Let’s start here. On even the best of construction projects, there were days that didn’t go well, materials that weren’t available, and compromises that had to be made. Think of entering a construction project like charting a course through unknown waters. Things are going to go wrong, and not everything can be prepared for in advance. As long as you have a good team all working together towards a unified goal, you will get there in the end.

They Can Speed Up as Necessary

No, a construction team can not just “work harder” or “speed up” to get something done in less time. Construction is an intricate work that often requires things to be done in a very specific order. The crew will work as quickly as they can, but things take time – sometimes more time than you expect.

The Price Will Never Change

If you have to make concessions or the size of the project expands, the budget required to make it is going to expand too. Your starting price is generally a good estimate, but it does not mean that is all you will have to pay. As the project changes in practicality, the price will as well.

It Should Take the Same Time as Another Project

Spending any amount of time comparing one construction project to another is time wasted. Every construction project is unique, with it’s own team, challenges, and unique location. The same project might get built quicker in the summer than in the winter. Understand that you have your own project, and avoid comparing it to others.

Get the Help You Need

Construction projects are massively rewarding, but they are also a major undertaking. Going into them with an open mind is the best approach. For help dealing with any construction project disputes, contact the Florida Construction Law Group today! Our senior attorney, Ray Garcia, has received the highest rating available from Martindale-Hubbell!

The Florida construction industry is governed by contracts- between project owner and general contractor, general contractor and subcontractor, and between any of these parties and a third-party provider such as a materials supplier. If a breach of contract occurs, two types of damages are generally available if the plaintiff prevails: direct and consequential. This blog outlines the nature of each type, the differences between them, and what you need to know about their potential impact on your company.

Direct Damages

These damages are intended to compensate the plaintiff for losses directly related to the breach. Unpaid invoices, substandard workmanship or materials, and costs associated with completing unfinished work or repairing defective construction are examples of direct damages.

Consequential Damages

Florida’s Uniform Commercial Code defines consequential damages as a foreseeable and direct consequence of the construction contract being breached. Some examples include lost profits, property value reductions, and loss of bonding capacity. Under Florida law, these damages can be recovered unless they are waived in the contract.

A plaintiff can recover consequential damages in two different ways. They are:

• A claim for compensation based on actual and proven damages
• Acting upon a liquidated damages clause in the original contract

What are Liquidated Damages?

It can be difficult to assign a dollar value to actual consequential damages, so construction contracts often include liquidated damages clauses. Using these clauses can save time and money by assigning a specific dollar value to each day that passes between the contract’s substantial completion date and the date the job is actually completed. 

Courts will only enforce liquidation clauses if the anticipated damages are reasonable, so as not to act as a penalty. Overly burdensome estimates are unlikely to be collected. If the breach was caused by the death of the contractor or subcontractor before the work was completed, liquidated damages are not recoverable, though actual consequential damages may be pursued.

Precluding Consequential Damages in a Construction Contract

Many Florida construction contracts are designed to exclude recovery of consequential damages. Other agreements contain clauses stipulating that the only recoverable damages are liquidated ones. 

The contractor should demand a limit on its liability if the project owner does not remove clauses pertaining to actual or liquidated consequential damages. An acceptable cap is a percentage of the contract price or the profit that the contractor is expected to make from the job. Without one, bonding companies may not underwrite a performance or payment bond, as a contractor could tender a proposal valued at (for example) $5 million and end up facing consequential damage claims worth much more.

Understanding Consequential Damages is Critical 

It is crucial that all parties to a construction contract understand the impact of consequential damages clauses. If the financial consequences are not capped, they can cripple or even end an otherwise thriving business. If you have questions or need a contract drafted or reviewed, contact the Florida Construction Law Group at (305) 227-4030.

A construction loan is distinct from a mortgage loan, which is what many homeowners are most familiar with. Once a house has been built and the certificate of occupancy obtained, the homeowners need to secure a mortgage loan (unless they can pay fully in cash). Before that point, future homeowners typically need cash up-front to begin construction. The arrangement between a lender and borrower to exchange money for construction expenses is referred to as a construction loan. 

Two Types of Construction Loans

Most construction loans are classified as either construction-to-permanent or construction-only. Of these, many more construction loans are classified as the former. Construction-to-permanent loans morph from a pure construction loan to a traditional mortgage loan once the structure is completed. 

Construction-only loans generally have higher interest rates than traditional mortgage loans, though the rates somewhat align with prime rates. The main reason for these higher rates? Lack of collateral. A mortgage lender has the actual house or building to seize if the borrower stops making payments. A construction loan doesn’t offer much in the way of collateral, which is why the lender usually makes routine disbursements (draw schedule). However, the borrower pays only interest payments during construction.

Construction Loan Foreclosures

For many reasons, construction loans are more susceptible to foreclosures than traditional mortgage loans. One reason is that more parties are involved. While a mortgage involves the borrower (property owner) and lending institution, construction loans involve lenders, borrowers, contractors, suppliers, and subcontractors. The more parties involved in a monetary transaction, the more likely a conflict or miscommunication will occur. 

Conflicts between parties to a construction loan can either result in or arise from draw schedule disputes. The lender typically disburses a portion of the principal upon achievement of certain milestones, such as appointing a contractor, setting the structure’s foundation, or pouring concrete. Draw conflicts ultimately result in non-payment, which is the singular catalyst for foreclosure.

Fortunately, the terms of a construction loan are generally more flexible than those of a traditional mortgage loan. That often makes it easier to work with other parties outside of the formal process of foreclosure, which is the most expensive option. Sometimes, however, foreclosure is all but inevitable. 

Florida Construction Law Group is well-prepared to defend against or prosecute a foreclosure action. We have years of experience navigating the nuances of construction loans. Whatever the nature of your construction dispute is, we can help you find a resolution. Call our firm today at (305) 227-4030 to discuss your options.

It’s been said that the “best-laid plans of mice and men often go awry.” In other words, even the most meticulously put-together plans sometimes need an audible. Anyone who’s been involved in a construction project before understands exactly how that adage plays out during the process. Sometimes, the most drastic changes lead to what’s called a “change order.” 

A change order is something that owners generally despise and contractors generally favor. Why? Because a change order is a formal amendment to the original construction contract that often adds time—and money—to the project. It occasionally decreases the labor, services, or materials ordered in the original contract, but that is not the norm.

Project owners and developers do not enter into a change order lightly; more often than not, they will try to convince contractors and subcontractors to informally add the changes to the project scope. Other times, owners or developers will try to make the case that the “change” was actually included in the scope of work all along. Contractors, for their part, might argue that they never agreed to a specific price in the original contract. 

Regardless of either side’s argument for or against a change order, these situations often cause such disagreements: 

• Unreliable labor (subcontractors that do not show up as scheduled);
• Specifications in the original contract are inaccurate or incomplete;
• Raw materials were either unavailable or delayed in getting to the site;
• Unrealistic timelines and/or cost; and
• Any unforeseeable hurdles (like consistently bad weather).

Ways to Avoid Needing a Change Order

Many times, the disagreement over whether or not a proposed change actually necessitates a change order is more disruptive than the change order itself. If a change order is clearly necessary, then there is little sense delaying the inevitable. Thus, the more productive activity is not to necessarily avoid a change order, but improve the process for deciding on and implementing a change order.

Some ways to improve the change order process include: 

• Drafting a “change order directive” that comprehensively lays out the process for implementing a change order in your project;
• Defining the scope of work as clearly as possible;
• Including a right-to-audit clause;
• Choosing optimal data management and communication software; and
• Retaining an attorney at every stage of the change order process. 

Yes, that means having an attorney help draft and look over your construction contracts before you sign anything. Change is inevitable, but you can control how you handle it. Contact our firm today for proven construction legal counsel.