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20Mar 2019

When entering into a construction contract with a client, there are many different aspects to the contract that you need to be familiar with. For most contracts, once the deal is signed you can expect that as long as you do the work properly, you will be able to complete the job and get paid as agreed unless something unusual happens. If you’re taking on a government contract, however, the “termination of convenience clause” could prevent this from happening.

A termination of convenience clause was originally developed because the courts determined that it was not in the public’s best interest to force a government agency to move forward with a contract that no longer made sense. There are many examples of when this can take place, such as when the government wants to have a facility built for a particular agency, but then that agency is shut down or consolidated. It doesn’t make sense to force the government to spend millions of dollars on a building they will no longer need.

What Happens if a Contract is Terminated?

If the government agency in question invokes the termination of convenience clause, you aren’t going to be completely out of luck. These clauses specify that the contractor is entitled to a negotiated settlement that will allow them to recover any costs and losses that incurred. This means, for example, if you have already made a non-refundable order for supplies, you’ll be compensated for the money spent. Any other reasonable expenses or costs will also be recoverable, so you won’t lose money from entering into this contract.

Termination of Convenience in Private Contracts

While almost all government contracts will include a termination of convenience clause, they aren’t nearly as common with private contracts. The courts tend to be of the opinion that if a private company enters into a contract, they should honor it, and it doesn’t hurt the public interest for this type of company to be compelled to honor their contracts. That being said, if both parties agree to have a termination of convenience clause in the contract, it will be honored. This can be used as a negotiating point by either party to help come to an agreement on the deal.

Get the Right Contract

Whether you are working out a contract with a public or a private entity, it is always important to ensure that the contract is properly written up and enforceable. Contact us to get appropriate representation for negotiating, creating, and reviewing your next contract. We’ll work hard to ensure your interests are protected throughout the entire job.

20Feb 2019

When preparing for a large construction project, you want to make sure that the lien is properly in place. In many situations, the lien is the most effective way to make sure you get paid in full for the work that you perform. Understanding all aspects of the lien, and how it is enforced, is critical for avoiding any problems. One often ignored or misunderstood item is known as “first furnishings.” This is a concept that is used when determining whether a lien is enforceable or not. Learn more about first furnishings in this blog post now:

What is First Furnishings?

First furnishings is important when determining whether a lien is enforceable in certain situations. Specifically, a lienor must serve their Notice to Owner at some point prior to 45 days after the first work is done, or the first delivery of materials at the property has arrived. The point where the material arrives, or the work begins, is known as first furnishings. The courts in Florida have been known to be quite strict on this requirement. If you don’t file that Notice to Owner within that 45-day window, it will be far more difficult to maintain the lien rights.

What Counts as First Furnishings?

In general, first furnishings is said to be when work begins or when materials arrive, as mentioned above. The fact is, however, that the courts can define this in very strict ways. For example, there have been cases where the courts ruled that the first furnishings timeline started when the first component of a crane arrived at the site, even though the crane wasn’t assembled or able to actually do any work for some time. With this in mind, it is absolutely essential to get that Notice to Owner served as quickly as possible so you don’t risk going over the 45-day limitation.

Who Needs to File the Notice to Owner?

This applies primarily to lienors who don’t have direct contact with the owner, such as sub-contractors, suppliers, and others. The primary contractor in a job, who works directly with the owner, typically won’t need to serve a Notice to Owner, so the first furnishings rule won’t really apply.

Never Assume a Thing

Florida’s construction industry has been booming for several years now, which has resulted in a lot of legal cases being filed. The courts aren’t going to want to spend a lot of time on each case if it can be avoided, which is why you need to make sure everything is in proper order so they can rule in your favor right away. Having an experienced construction attorney at your side will help ensure your Notice to Owner is created correctly, served, and done within the 45-day window. Contact us to go over your situation and see how we can help.

20Jan 2019

Using subcontractors is an important way to ensure all the work on a construction job is completed, and completed properly. When hiring these subcontractors, however, you need to make sure that they are not only qualified to do the job, but also that there won’t be any type of licensing violations that could put your job at risk of lawsuits, insurance problems, and other issues. The following are some of the most common licensing violations that subcontractors in Florida make, and how to avoid them.

Building Code Violations

One common type of violations that subcontractors commit is a failure to do their work up to the relevant building codes. In Florida, each type of building has many set codes in place to ensure the safety of the building and those who use it. If the subcontractors take shortcuts or used inadequate materials to meet the requirements, they can be cited for a violation. This is a very serious violation because depending on where it occurred, it could require major changes to bring the building up to code.

Failure to Obtain Necessary Work Permits

When bringing on a subcontractor to perform specific tasks, they may need to get specific work permits before they begin. While you would have typically gotten the general construction permits, their responsibilities will include getting what is necessary for the exact work they are responsible for. If inspectors find that they are working without first getting these permits, the fines and penalties can be quite significant. While it is the subcontractor’s responsibility to get these permits, you should make sure that they have completed this task before they are allowed to start their work.

Abandoning the Work

If a subcontractor abandons a project, or even if they never start the work, it can result in serious licensing violations. The abandonment of a project by one subcontractor can put the whole job at risk. Most permits and other authorizations from state or local agencies are time-sensitive, which is one of the reasons having a subcontractor abandon (or even just delay) the job is such an important issue that needs to be avoided.

Unqualified or Unlicensed Subcontractor

You need to make sure the subcontractors that are hired on are properly qualified and licensed to do the specific work they are going to perform. If they are not, you are not only putting the project in danger, but you can also be fined or penalized for having work done without the necessary licenses. Don’t take the word of the subcontractor that they have (or will get) the necessary qualifications or licenses. Demand proof and verify that your project is being done by people experienced in this area.

If you are facing a dispute with subcontractors over any of the above mentioned issues, contact FCLG to schedule a consultation to put us to work for you today.

20Dec 2018

When working as a general contractor, it is quite common that you will have to bring in subcontractors to complete certain tasks. On most jobs, the subcontractors will complete the work you need to be done without any trouble and the entire project can be completed successfully. When there are disputes, however, they can become quite costly and even put the entire job at risk. This is why it is so important to take steps to avoid any type of dispute before it occurs. Read on to learn about five practical things you can do to avoid subcontractor conflicts.

Ensure All Contracts are Clear

All relationships between your business and a subcontractor should be governed by a contract. Whenever starting or expanding any relationship with a subcontractor, you need to make sure that the contract you are using is clear and accurate. It should cover all aspects of what is expected of each party and include any additional information that is necessary for completing the job. You can even include instructions for how to resolve conflict and much more.

Identify Steps for Changes

When first starting a job with a subcontractor, the work that needs to be done should be clearly identified in the subcontractor agreement. As the job progresses, however, it is likely that some of the responsibilities will have to be changed or amended. Identifying how this is to be done and what requirements each party will have is important for avoiding conflict.

Keep Lines of Communication Open

Open communication is essential for avoiding conflict. This starts by making sure your subcontractors are able to get in touch with you when they have questions. Additionally, when an issue escalates, make sure you are working to discuss the situation honestly and not just trying to win an argument. When all parties involved are speaking clearly and without strong emotions, it is much more likely that a reasonable solution can be reached. When necessary, bring in an objective third party to help facilitate any discussions.

Prepare for Disagreements

In the event that there is a disagreement, make sure you have outlined how it should be resolved in your contract. This can include details such as what mediator should be used, where lawsuits need to be filed, and more. By outlining these options before there is any conflict, it will be easier to resolve should a disagreement arise.

Review All Contracts with an Attorney

Before you sign any type of contract, make sure you have it reviewed by an experienced construction attorney. We will be able to spot any weaknesses in the contract and determine if it is a good option for you. Contact us to speak with an attorney and have your contracts written up or reviewed right away.

20Nov 2018

Construction companies live and die based on their contracts. These contracts are most often between the construction firm and the client, but they also exist with contractors, suppliers, and other entities as well. All contracts must be written in a way that is easy to understand and are legally enforceable in the state of Florida. To help ensure your contracts will provide you with the legal protection you need, make sure you understand the following tips.

Use Clear Language

Legal contracts aren’t well-known for using common language that everyone will understand. While some “legalese” is sometimes necessary, the bulk of a construction contract should be written in a clear, easy to understand way. This will help avoid confusion from either party, which could be grounds for contesting it in court.

Quality of the Work & Materials

In the construction industry, perhaps more than any other industry, there is a huge range of quality for just about everything. You can’t have a construction contract that states that you will install kitchen countertops as part of the contract because that is far too vague. You must identify the exact quality of the work and material that will be used. There is a huge difference between basic entry level countertops and granite, so never leave these things unclear in your contracts.

How Conflicts Will be Solved

There are times when it is impossible to avoid miscommunications or misunderstandings. These types of issues can lead to serious conflicts, which all too often end up in court. If, however, you include specific conflict remediation steps in your contract, most legal problems can be avoided. For example, if you add in a clause that says all conflicts must go through third-party mediation before legal action can be taken, it will give you a chance to clear things up and get back to work.

Process for Modifications

For major construction jobs, it is quite common that changes and modifications will need to be made. The company hiring the contractors may change their mind on some aspect of the job, or the contractor may find that certain supplies aren’t available. Adding the process by which these modifications can be made (and details on how any prices will be adjusted) can help avoid serious conflicts as the job progresses.

Work with an Experienced Construction Law Firm

Working with a law firm that has extensive experience in the construction industry can help you to ensure your contract is strong and effective. Our team has been helping construction businesses throughout Florida for years, and we are ready to work with you too. Contact FCLG to schedule a consultation and get us started drafting up your construction contract right away.

20Oct 2018

When working in the construction industry, disputes with clients are almost inevitable. While most jobs will go smoothly, it is important to know what to do when you run into a conflict that simply can’t be resolved through normal communication. In most cases, the two options will be to either go through an arbitration process to come to an agreement, or file a lawsuit and let the courts decide. While there are certainly situations where a lawsuit is the best move, most of the time arbitration will actually be the better choice. Here are some of the biggest benefits of arbitrating a dispute in the construction industry.

It’s Much Faster

The court system in Florida is often backlogged with cases that they need to hear, which can result in a significant delay in getting to your case. Additionally, the courts tend to allow both parties significant amounts of time to really expound on their position. With arbitration, the arbitrator will help guide the process with a focus on coming to a conclusion that all parties are happy with. This typically takes a lot less time than going through the courts.

It’s Much More Affordable

Going to court is an expensive process. You will need to retain your attorneys for a much longer period of time compared to arbitration, which means higher fees. Additionally, there are a variety of court fees and other expenses that will all add up quickly. Arbitration is almost always a much more affordable option for both parties.

You Choose the Arbitrator

When a lawsuit is filed, the judge who will hear the case is assigned by the courts without any input from those in the case. This is done to ensure an impartial judge. With arbitration, however, both parties will need to agree on who they go to. This will help ensure the arbitrator hearing your case is knowledgeable in the specific areas where your conflict exists.

You Get a Final Decision

Once the arbitrator has ruled on a case, the decision is final. This will allow everyone involved to go back to their normal work and focus on their respective businesses. While a judge’s ruling tends to stand, it is possible to appeal, so you can’t be certain that the case is really over for quite some time.

The Goal is Mutual Satisfaction

When you file a lawsuit, you really have to fight to have the judge agree with you on every point with the hopes of having everything you want granted by the courts. With arbitration, however, it is more of a negotiation and compromise with the hope that both parties can walk away reasonably happy. This can help maintain a positive relationship between all parties involved.

We Are Here for You

Whether you opt for arbitration, or a lawsuit is the best option in your case, FCLG is here for you. We can represent you in either situation and provide you with a reasonable approach to help you get the outcome you’re looking for. Contact us to discuss your options and get this conflict put behind you.

20Aug 2018

When working on large projects, banks and other financing companies aren’t going to send you the full loan amount up front. Instead, they will provide the funding as it is needed over the course of the project. This reduces the risk for them but can also help to lower the total amount of interest you have to pay. While using this strategy can be a great thing for everyone involved, it also presents a risk of disputes occurring when it is time to get to the next phase of funding. Draw request disputes can wreak havoc on a project and should be avoided if at all possible. The following tips can help reduce the risk of a draw request dispute.

Be Clear with the Draw Schedule

When negotiating a project, and especially the financing of the project, it is important to be very clear with your draw schedule. Simply identifying dates of draw requests is insufficient. Additionally, you need to really think through the entire project so you can predict when additional financing will be needed and how long each step of the project will take. Spending some extra time at this planning stage will go a long way toward reducing the risk of a dispute down the road.

Stay on Schedule

Keeping your work progressing on schedule is one of the most important things you can do to avoid draw request disputes. While some delays are impossible to avoid, it is usually smart to do everything you can to meet the established deadlines in your contract. In many cases, it will even be preferable to pay employees and subcontractors overtime to catch up on work than it would be to fall behind. This is because the costs associated with a draw request dispute can far surpass those of temporarily increased labor expenses.

Clearly Identify Milestone Accomplishments

While draw request schedules will often include timeframes, they will also have specific milestones set as requirements for releasing funds. As you are progressing with the work, make sure you keep these milestones in mind. Providing proof that specific milestones have been reached will eliminate the most common causes for any disputes and help to ensure your financing is provided on the agreed upon schedule.

Keep Open Communication with the Client

For many draw requests, the financing company is going to need approval or confirmation from the client or other contact used to ensure the project is on schedule. Make sure you know who the lender is working with on your loan and stay in regular communication with them so they can more easily approve the draw request. If they need to contact you for any clarification, be available to them and open with any information they require.

Take Action Quickly on Any Disputes

While these tips should help you minimize the risk of draw request disputes, they can’t eliminate them entirely. In the event that you find yourself in a dispute, it is important to take action quickly. The longer the situation lasts, the worse it can become. Talking to a construction law attorney can help you to handle any disputes appropriately and get the results you’re looking for. Contact FCLG to go over your options and get the help you need.

20Jul 2018

The simple answer to this question is no, you can’t file a lien on a public project in Florida. This is because all public property is actually exempt from having liens filed against them. This is because the property is supposed to be “owned” by the Florida government on behalf of all the citizens of the state. It wouldn’t be fair to the citizens if that property were taken because the government agency responsible for it failed to pay their bills.

Of course, it is also unfair if a contractor’s company does work for the state of Florida but never gets paid. This is why most public projects will require that a payment bond be put in place before the project begins. This will serve to ensure the contractor is able to get paid, and the state property is protected. For projects with the state, these bonds are governed primarily by Florida Statutes Section 713.18.

What is a Payment Bond?
A payment bond is similar to a type of insurance that will pay out when a contractor files a claim (assuming it is a valid claim). If the Florida agency that hired the contractor is unable to pay for some reason, the bond will pay the money. While this isn’t a very common situation to face, it can and does happen at times, which is why contractors should never agree to a project with the state without having one in place.

Federal Government Projects
If the job is on federal land within the state of Florida, the same type of rules and regulations will apply. The Federal Miller Act is the set of laws that will govern a federal project like this, but in basic terms it will require you to have a payment bond in place and that the bond would pay out when a valid claim is filed. These types of laws and regulations can make projects with either state or federal governments more confusing than a standard agreement, which is why it is important to have an attorney working with you every step of the way.

Contact Us Today
Whether you have already started a job, or you are still negotiating with a state or federal agency, it is a good idea to speak with an attorney before moving forward. Contact Florida Construction Law Group to discuss your situation and ensure you will get paid for a job well done.

20Jun 2018

Subcontractors are essential to most large construction jobs, but they can also cause some major problems. To help avoid miscommunications and other issues, it is critical to always use subcontractor agreements that are properly written, and include all important information, and signed by all parties involved. The following are five of the most important things that should be included in every subcontractor agreement.

1.   What Work is Required?

Give a detailed description of what work needs to be done by the subcontractors. This should include information about where the work is needed, what type of materials should be used, the colors (if applicable) of the paint, and much more. The more detail that can be included here, the less likely it is that there will be any type of conflict that needs to be dealt with here. It can be helpful to have all parties involved work together to write up this section of the agreement so you can be confident that all parties are on the same page.

2.   Include Important Dates

Specific dates by which work needs to be completed need to be included in the agreement as well. The dates should be very realistic, and take into consideration different types of problems that may occur while the work is being completed. It can be a good idea to have multiple milestone dates in place to help keep the project moving forward. If there are any penalties for missing deadlines, or rewards for finishing early, those should be listed in this section too.

3.   How to Exit the Agreement

There are times when a subcontractor just won’t be able to complete the work as agreed upon. Having specific instructions on how to cancel the agreement, and what (if any) penalties will they face for backing out. When having this portion written up, make sure to consider the impact to the overall job in determining what will need to be done should the subcontractor agreement have to be canceled.

4.   Insurance Requirements

If you need the subcontractors to hold specific types or amounts of insurance, this should be listed in the agreement as well. It may even be a good idea to add in a section where the insurance policy number, the company through which it was acquired, and any other relevant information so it is all easily accessible and verifiable.

5.   Signatures & Initial Areas

All contracts will have a place for everyone to sign at the bottom, but subcontractor agreement may need some additional signatures and initials. Having a spot for the subcontractors to initial for each section can serve to verify that they have read and understood the information contained within. This can help to further strengthen the agreement should it be challenged.

Get the Help You Need

Don’t try to craft a subcontractors agreement on your own. Instead, work with an experienced construction law attorney to ensure everything is handled properly. Contact FCLG to go over all your options, and get your agreements written properly.

20May 2018

When the owner of a property hires a contractor in Florida, they will typically want to have the contractor secure a performance bond in place prior to starting the project. This bond offers protection to the property owner so they can be confident that the job will be done as agreed. The protections to the project will cover the conditions of the finished product, the costs, and the time period for completion.

What Does the Performance Bond Do?

Performance bonds are a special type of surety bond that exists between the owner of the property, a surety, and the contractor. The contractor is the principal for this type of bond and will be responsible for obtaining the bond. The owner is the obligee, and they will be the ones who are being protected by the bond. The bond is then backed by the surety company, who will be responsible for the total amount of the bond should something go wrong.

Ensuring a Job is Completed

For the owner of the property where work is being done, the biggest reason to have a performance bond is to ensure the work is completed successfully. If the contractor is unable to complete the tasks as required, the bond will pay out to the owner. The owner can then take that money to find a new contractor and have the job completed as needed.

Contractor Investigation

Another advantage of a performance bond is that the surety company that actually issues the bond is going to do their research on the contractor or contractors that are being hired. This is in addition to whatever research the property owner completes. Surety companies typically evaluate the contractor’s financial statements, their credit, any references they have, their resume, and current or past work the contractor is responsible for. For contractors, it is very important to ensure all of these things are going to portray a positive image of them so they won’t have any trouble having performance bonds issued.

Contractors can also benefit greatly from the investigation that is done by the surety bond company. Top contractors can earn a strong reputation, and more easily qualify for the bonds. This will often attract additional customers to their company, which can be very helpful for building a business.

Getting the Help You Need

Whether you are looking to get a new performance bond, or you are having legal issues enforcing one, it is a good idea to work with an experienced Florida construction law attorney. Contact FCLG to discuss your situation and get the help you need today.

20Apr 2018

For most construction companies, it is necessary to have a combination of full-time employees and independent contractors to complete specific jobs. Each of these two types of workers will be able to fulfill different types of roles so that jobs can be completed properly and on time. When using independent contractors and employees, however, it is critical to understand what the differences are from a legal perspective.

Florida has a variety of laws on the books governing how each of these types of workers are to be treated, and how to determine which classification a person should have. Learning about these differences will help ensure you are able to complete jobs successfully and that you don’t run into any legal difficulties. The following are some key differences between these two classifications.

Payment Arrangements

An employee will have a regularly scheduled paycheck. The pay may be based on a set salary, an hourly wage, or some other factors, but it will be distributed in regular intervals. For independent contractors, payments can be made in many ways based on the needs of the job. This can include lump sum payments at the completion of a job, partial payments up front with the remainder upon completion, or any number of other configurations.

Work Schedule

While the specific hours worked by an employee may vary, they will generally be required to work a fairly regular schedule over a long period of time. This period of time is often undefined and set to continue until either the construction company, or the employee, decides to end the relationship. Contractors will typically have shorter term work intervals where they are paid to complete a specific task on a specific project.

Tools & Equipment

When someone is working directly for your company as an employee, your business will typically be responsible for providing the tools, equipment, and other required supplies to complete their job. Independent contractors, on the other hand, will often supply their own. This is especially true of specialized contractors who may need very specific tools to complete their jobs.

Importance of Getting it Right

Owners of construction companies need to make sure they are classifying each employee properly, or they could run into legal issues. If misclassified, the worker could sue for lost salary, benefits, or other perks that they should have been entitled to. Having an attorney review your specific situation, and helping to properly classify everyone who does work at your company, can provide a significant amount of legal protection. Contact FCLG to schedule a consultation and learn what we can do for you.

20Mar 2018

As a construction company or general contractor, virtually all new jobs start out on a positive note for all parties involved. Over the course of the job, however, things can deteriorate and result in some major issues. Even when both parties are attempting to do the right thing, differences of opinion, miscommunication, and other problems can make it very difficult. If you’re not careful, these types of problems can lead to a costly and time-consuming lawsuit. Read through the rest of this blog post to learn some effective ways to minimize the risk of legal action being necessary.

Use Specific Language in All Agreements

Whenever working on a contract or other agreement, make sure you use specific language regarding what will be done and what is expected. Include details such as the colors that will be used, the types of materials, when the work should be completed, and more. The more precise this type of documentation can be, the less likely that there will be any type of conflict that could lead to a lawsuit.

Regular Communication

Once a job starts, make sure you stay in regular contact with the customer to ensure things are progressing properly. Identifying issues as early as possible will help ensure they can be worked out with little cost or inconvenience. In most cases, frequent communication will also build up trust between parties so litigation is less likely.

Negotiate & Mediate Conflict

Even with the best of efforts, there will eventually be some type of conflict between you and a client. When this happens, it can be tempted to dig your heels in and push back when you are right. The reality, however, is that it is almost always best to try to talk through conflict with the goal of finding a solution that everyone can be happy with. Even if you lose a little bit in the negotiations, it will often be far less than the cost (in both time and money) that even winning litigation will cost.

Have an Attorney at Your Side

Whenever performing work for another party, it is important to have access to a good Florida construction law attorney. An attorney can write and review all your contracts to ensure they are properly written and enforceable. In addition, they can help to negotiate compromises and try to resolve conflicts that can keep you out of court. If all else fails, an attorney will be there to represent you in court to protect your interests. Contact FCLG to learn how we can help protect you and your business today.

20Feb 2018

When a home or other building is being built or renovated, there will typically be a loan involved to fund the project. Just like with a traditional mortgage, if the parties involved fail to make their payment as agreed, the property can enter foreclosure. When learning about situations in which a construction loan can be foreclosed, it is important to know what type of loan is involved. For construction projects, there are two main options, which are:

  • Construction to Permanent – A construction-to-permanent loan starts off as a construction loan, but as soon as the project is completed, it transitions into a traditional mortgage loan, with the home being the collateral. This is commonly used by individuals who are having their new home custom built.
  • Construction Only – As the name implies, construction only loans need to be paid back either during the construction process, or shortly after it has been completed. In most cases, this type of loan is used by builders who are building spec homes specifically to sell.

When Can a Construction Loan Be Foreclosed?

Just like a traditional loan, a construction loan can be foreclosed upon at any point when the borrower fails to make their payments according to the contract for a sufficient amount of time. The following are some of the different scenarios when a construction loan will likely enter the foreclosure process:

  • Missed Draw Requests – Most construction loans are funded incrementally as milestones in the project are met. If the milestones can’t be met for some reason, then additional funding will not be provided. This can cause the construction project to come to a halt, and the borrower unable to pay as agreed, which can lead to foreclosure.
  • Conflicts Resulting in Non-Payment – Conflicts between the borrower and the construction company can result in a work stoppage. If a project with a construction loan is not progressing as needed, the lender will begin demanding payments. If the borrower does not have sufficient capital to make payments, the foreclosure process will begin.
  • Non-Payment Due to Being Unable to Sell – After a construction project with a construction only loan is completed, payments (or possibly payment in full) will be needed. If the builder is unable to sell the property, the lender may initiate the foreclosure process.
  • Failure to Pay Traditional Mortgage – If a construction to permanent loan enters the traditional mortgage phase, and the borrower is unable to pay, the mortgage will soon go through foreclosure.

Working with an Attorney

If you are facing foreclosure on a construction loan, it is important to take the appropriate steps to protect your legal and financial interests. Contact FCLG to discuss your situation, and come up with an effective plan of action on how to proceed. We have helped many people in Florida avoid foreclosure, and we would be honored to help you too.

20Dec 2017

For many contractors, remodeling jobs are their “bread and butter.” These jobs can range from redoing a small room to huge renovations and can account for a large percentage of your annual income. While the vast majority of these types of jobs will go off without a hitch, it is important to have a legal contract in place that will protect you should something go wrong. A good remodeling contract doesn’t have to be overly complicated, but it should include all the essential elements.

Essential Parts of a Remodeling Contract

The following are the key elements of a good remodeling contract. While this blog should cover the most common aspects of any job, there may be additional components that should be included (or not included) in your specific case, which is why it is always important to have an experienced construction law attorney write or review a contract before it is signed.

  • Description of the Project – Including a description of the project is critical as it will make sure all parties know exactly what to expect. This description doesn’t have to include every detail of every step, but should include more information than, “remodeling kitchen.”
  • How Changes are Handled – It is almost inevitable that sometime during the project, changes will need to be made. Including a section in the contract that explains how changes will be made will help to avoid misunderstandings or conflict.
  • Project Completion Dates – Identifying the target completion dates in the contract can help to set reasonable expectations. This can include milestones as well, such as setting the date for when the project will start, when the demolition steps will be done, and when the final completion date will be. These dates should be listed as an approximate timeline.
  • Payment Information – Just like the customer is going to want a good timeline on when the job is to be completed, you need to identify when and how payments are expected. This can be payments that are required up front, or at certain milestones, or once the job is complete. Regardless, whatever you agree upon should be identified in the contract.
  • Lien Waivers – Offering lien waivers provides customers with good peace of mind. A lien waiver simply shows that as payments are made, you no longer have the right to file a lien on their property for that amount. As you get paid, you will need to issue a simple waiver along with the receipt.
  • Cancellation Details – In the event that either party needs to cancel the job, instructions for how this is to be done should be included in the contract. This will cover things like cancellation fees, refunds, and valid reason for stopping the job.

We’re Here to Help

Having a good contract in place before starting any remodeling job is absolutely essential. We can write up custom contracts for each job, or provide you with a good contract template that can be used for a variety of different jobs. Contact us to go over your specific needs, and see how we can help protect your business.

20Sep 2017

A surety bond is a common tool used in construction contracts to help protect the interests of construction companies and others involved in the project(s). When a construction company hires a subcontractor to complete a certain task, they may also require a surety bond to be in place. This way, if the subcontractor does not complete their obligations as laid out in the contract, the construction company can file a surety bond claim. If successful in their claim, the construction company can recover the amount of money that was provided on the surety bond.

This will help to protect the company against losses caused by a party that is outside of their scope of control. While most contracts are completed successfully, it is important to understand what a surety bond claim is and how it works.

Making a Claim

If a construction company finds that the principal on the bond has not fulfilled the obligations that are listed in the contract and the bond itself, then it will be necessary to make a claim against the bond. Depending on the details of the bond and what type of work was supposed to be done, it may be necessary to prove to the surety bond company that the obligations were not met. If there is a dispute on this matter, it can be necessary to take the issue to court.

Potential for Partial Payment

When filing a surety bond claim, it is important to be aware that you may not always get full payment for the amount of the bond. If it is determined that 50% of the work was completed successfully, for example, you may receive 50% of the bond payment. The amount that is paid out will be determined by a number of factors in addition to just how much work is done.

Types of Surety Bonds

When hiring a contractor or other party to complete tasks, it is important to be aware of the different types of surety bonds available. The most common options are performance bonds and payment bonds, both of which can apply to a given job. The performance bond is more common for construction companies as it is used to guarantee that work is done, and done properly. A payment bond, on the other hand, is a guarantee that a party will pay for the services once they are completed. In both cases, the purpose of these bonds is to mitigate the risks of common events in construction projects. Our earlier blog explains more about the differences here.

Getting a Custom Surety Bond

A surety bond is a type of contract that will involve your company, the other party, and the surety bond company. While some surety bond companies offer fairly generic contracts for these bonds, it is better and safer to make sure that the contract is customized to your needs. Contact FCLG to have the details of the bond written up by an attorney who is experienced in all areas of construction law.

22Jun 2017

Whenever taking on a large construction project, it will be necessary to negotiate a draw schedule with the lender. A draw schedule takes the full amount of the construction loan and splits it up into multiple payments that are made as work is completed. This helps to limit the risk that the bank takes on, while also ensuring the construction company has the money they need, when it is needed.

In most projects, the draw requests are completed without any significant issues, and the project is able to flow along efficiently. In some cases, however, disputes can occur between the construction company and the bank. These disputes can cause delays and other costly problems, which should be avoided whenever possible. The following tips can help you to avoid draw request disputes and keep your construction project moving forward:

Start with a Realistic Agreement

The best thing you can do to avoid draw request disputes is to start with a realistic agreement. Some construction companies are tempted to just agree to a draw request schedule to get the financing settled, without really taking the time to determine whether it is going to work for their project. This is really setting themselves up for a dispute down the road. Negotiating a good agreement from the beginning may take a little extra time, but it will be well worth it in the end.

Communicate Frequently  

If you think that the draw schedule is not going to work, or you need some type of modification, it is a good idea to begin communicating with the financial institution as soon as possible. Lenders have a vested interest in seeing your projects succeed, so if they are able, they will likely work with you. When you fail to communicate, however, it makes it much more difficult for the lenders to be willing, or able, to make the necessary adjustments.

Look at Compromise Options

In some cases, it may be in your best interest to compromise in certain areas in order to avoid a more serious dispute. If you can adjust your schedule to meet the demands of the lenders, or work with them to find a solution that makes everyone happy, that’s preferable. Each situation is unique, so don’t be afraid to think outside the box when trying to come up with solutions to problems.

Get Legal Help

While it may seem counterproductive, getting an attorney is often one of the best ways to avoid serious conflicts. An attorney can look at a situation dispassionately, and provide advice that is objective based only on the facts. Experienced attorneys also have ideas that you may not have considered, which could resolve the conflict quite amicably. If you’re facing any type of draw request dispute, please call Florida Construction Law Group to get the legal help you need.

20May 2017

A claim of lien is a specific type of legal claim against property to secure a debt. The claim can be for any amount of money, or the specific value of services rendered. In most cases, the claims of lien are handled when the debt is taken out and agreed upon by all parties involved. A common mortgage, for example, has the mortgage lender putting a claim of lien against the property so they can claim it if the borrower fails to make their payments as agreed.

The party that is owed money can place a claim of lien on a property, even if the person owing the money doesn’t approve it. To get a claim of lien applied to a property, the party owed the money will need to work through the courts to get it approved. There are certain requirements that must be met in order to successfully make a claim of lien.

Prove the Debt

The first thing that must be done is you need to have proof that there is a valid debt that needs to be paid. This is easy enough to do as a contractor or construction company as the work agreements, purchased materials, and other expenses should be clearly documented. It is also necessary to show that these debts have not been paid already.

File the Documents

Next, you need to file the correct documents with the courts and county clerk office. This process must be done correctly to avoid delays or potential disputes against the claim of lien. Filing this type of document may require that you present evidence with the court, or even make arguments against the other party. If the debt is undisputed, however, it can be possible to simply file the necessary paperwork along with the proof.

Serve Notification

It is necessary to serve the debtor with proper notification that a claim of lien has been made against their property, what the claim is for, and other details surrounding the situation. When you file the proper documents with the courts, the notifications will typically be sent out as part of this process. You may need to pay to have the debtor served these documents, especially if there will be a court case.

Avoid Potential Problems – We Can Help

The best way to make a claim of lien is to have an experienced attorney help you along the way.  Here at Florida Construction Law Group, we have helped contractors, construction companies, and more prepare and file claim of liens before, during, and after the work is done to help protect their financial interests. Contact us to see whether now is the time for you or your business to seek a claim of lien, and what needs to be done to accomplish that goal.

24Apr 2017

When planning a new construction project, getting the needed financing is one of the most important steps. Most lenders aren’t going to want to simply ‘write a check’ for the full amount of the entire project before it has even begun, however. This is where a document known as a draw schedule comes in.

A draw schedule is an agreed upon schedule of when money will be released to the construction company (or contractor), to complete the work. As the job progresses, the needed finances are provided to keep everything progressing forward. Lenders may have someone inspecting the project along the way as well, to ensure there aren’t any problems. Some things to consider when drafting up a draw schedule with the lender include the following:

Schedule of Values

One key document to use while creating a draw schedule is commonly called the schedule of values. This will list off all the major steps that need to be completed for the project, their approximate cost, and the approximate percent of the total cost of the project that makes up. These items will then typically be combined into ‘groups,’ which will be when each draw is made.

Number of Draws

A draw schedule can have any number of draws that is appropriate for a project, and is agreed upon by the relevant parties. A typical new home construction project, for example, will usually have 5 to 7 draws. Larger projects may have more, and each one will be for a higher dollar amount. When determining the number of draws, it is important to balance the convenience of having the cash that is needed on hand, with the risk being taken on by the lender.

Inspections

If the lender is going to require inspections of the work that has been completed prior to releasing funds for a draw, that should be agreed upon while making the draw schedule. When working on large construction jobs, unexpected delays can cause serious complications. Being aware of the need for inspections, and knowing who to contact to schedule them, can help ensure progress can continue on schedule.

What to Do with Changes in the Job

Another challenge that should be addressed is what to do should there be significant changes in the cost of a job. For example, if a contractor is hired to build a new home, they will make up all the plans and cost estimates with the owners, and present it to the lender when making the draw schedule. In many cases, the people who are having the home built, may change their minds on certain aspects of the project. If, for example, they decide to move from a traditional bathtub, to a high-end whirlpool style tub, it can add many thousands of dollars on to the project. The added costs either need to be paid for by the people who want the project, the contractors, or the financers. Knowing where the money will come from up front is something that should be settled along with the draw schedule.

Contact Us

If you need assistance negotiating a draw schedule with a lender, or you would like to have a draw schedule written up to present to a lender, please contact Florida Construction Law Group. We can go over your options, and help ensure you have an effective draw schedule that will meet all your needs.

21Feb 2017

Major building projects typically cost millions of dollars to complete and they won’t start making any money until sometime after the construction has been finished. In order to finance these large-scale projects, a funding agreement needs to be in place between the people or company who needs the construction done and the financial institution(s) who will be providing the capital for the project.

These agreements are necessary to get the loan because of the complexity of the work being done and the amount of money involved. A good funding agreement will include many different elements, including the following essential details.

Purpose Clause

The purpose clause will identify what the money is going to be used for. It is not enough to simply say that the financing is to be used for ‘an office building located at X location.’ Instead, financial institutions will need to know how much is used for each major area. Some examples of what can be identified in this clause would include payments for licensing, architect fees, equipment costs, employment costs, and more.

Drawdown Requirements

For many funding agreements, the funds will only be made available as they are needed. Financial institutions may approve a total loan for $100 million, for example, but release it in phases. The drawdown requirements list out these phases and any requirements that need to be met in order to get the funds. A simple example of this is requiring proof that all licensing, inspections, and regulatory approvals must be met before the financiers will release the funds to purchase the supplies needed to begin the actual construction.

Repayment Information

While all loans have detailed instructions on how and when the money must be paid back, large construction loans will often have much more complex repayment details. Since the project won’t generate any revenue until it is completed, there might not be any payments necessary until that point. The agreement may also dramatically reduce the payment amounts up to a certain date, and then have them increase once revenue is being generated.

Events of Default

While most construction projects get completed without issue, there are times when it becomes impossible to continue with the construction. This typically leads to a default on the financing. The funding agreement will lay out how this will be dealt with based on the cause of the default.

Some examples of things that should be covered under this element of the funding agreement would include what happens if the project is not completed on time, if the project sponsors or investors fail to meet their obligations, if government action is taken that disrupts the construction, if there is an employment strike, or if there is a terrorist attack. These are just a few examples, and the specifics in an agreement should be tailored to the risks of a project.

Get Help with Your Funding Agreement

Funding agreements can get very complicated. Making sure they are written up properly so that all the necessary information is in them is very important. Having an attorney available to write up the agreement, or review a proposed agreement, can help avoid issues with the project. Contact Florida Construction Law Group to speak with an attorney with experience in this area.

20Dec 2016

Getting a construction loan can be more complex than most other types of loans, even for construction companies. Financial institutions often require a lot of information and requirements because of the fact that their collateral is often not in existence until after the construction project has been completed (a building, home, ect). One important part of most construction loans are the ancillary agreements, which identify how certain things must be done throughout the course of the construction project. The following are some common examples of ancillary agreements for construction loans.

Construction Loan Agreement

This agreement will go over the main details of the construction loan, including what the loan will be used for, how much it will be for, and other common details. Providing the lender with information about where the construction is taking place, what type of project it is, what its purpose will be, and other relevant information will help them evaluate risk. In addition, it will give them a timeline and other information on how to measure progress on the project, which is important for ensuring repayment.

Funding Agreement

Many construction loans are issued in small amounts as things progress. A loan for $1 million, for example, may be spread out over the course of the project. The first installment of the loan could be received for paying for the initial materials and labor, the second installment for completing the infrastructure of the project, and so on. This type of ancillary agreement helps the lender understand the timeline better, and also reduces further risk.

Construction Supervision Agreement

Many lenders will require that a construction company has a trusted supervisor on site to ensure things are progressing as planned. This supervisor may be an employee of the lender or a trusted third party. The supervision ancillary agreement will identify who will be doing the supervising, what role they will have, and any other relevant details.

Design Certification Agreement

If the full design of the project has not yet been completed, there may be an ancillary agreement related to this important aspect of the project. A loan may be contingent on having the project design approved by an assigned design certifier.

Contact Us

Ancillary agreements are an important, but often complex, part of a construction project. Having an attorney write up or review the agreements can help ensure everything is set up properly before any documents are signed. Contact Florida Construction Law Group to go over your construction loan needs and get everything handled properly.