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22Oct 2020

Florida is one of a handful of states that requires a Notice of Commencement to be filed at the start of (almost) every private construction project—specifically, ones that have a value of $2,500 or more. Statistically, this condition adheres to almost every private construction project. The NoC is a relatively simple and straightforward document, but it is no less important for construction owners, prime contractors, and subcontractors.

Who Needs a Copy of the Notice of Commencement?

Before filling out the Notice of Commencement, you need to be aware of where it needs to be filed and posted. You need to file the NoC with your local county clerk; depending on the county you’re working in, you might be able to file the NoC electronically. Before a single shovelful of dirt is moved on your construction or improvement project, you must file the NoC with the appropriate county office and post a copy of it on the actual job site. Generally, all the applicable permits must be pulled before submitting the NoC. 

What Actually Goes in the Notice of Commencement?

The Notice of Commencement is not some comprehensive form that lists every last detail of a project. Instead, Florida law requires NoC’s to include the legal description of the property to be improved, including the street address and tax folio number. Much of the NoC for a particular project contains the names and contact information for the key parties involved in the project: the owner, owner’s designee, prime contractor, surety on the payment bond (if any), and lender for the construction loan (if any). 

You should also include a “general description” of the project, as well as the expiration date. The expiration date of the NoC will be one year from the filing unless it is specifically designated otherwise in the notice. The NoC will be filed by either the project owner or the lender of the construction loan. 

Why is a Notice of Commencement Important?

A Notice of Commencement helps keep track of every party involved in a project, as well as the payments made to each party. The NoC ensures that every payment the owner makes is “proper,” meaning that the owner is generally protected from having to pay twice for the same work. However, simply posting the NoC does not absolve the owner of performing in accordance to the contract. 

Our firm intimately understands the formal construction process for a wide variety of projects. When you retain us, you can be sure that your project will go as smoothly as possible. Call us today at 305-227-4030 to discuss your options with our team.

17Sep 2020

There are numerous ways to structure a construction contract. Depending on the expertise of the project owner, the presence of other parties (such as a third-party project manager), the particular goals of the project owner or developer, and many other factors, one project delivery method might be best suited for your endeavor (relative to other methods). Regardless of which project delivery method you choose, there are some universal obligations assumed by the two main parties in a project: contractor and owner. 

Owner Duties

Again, the level of involvement a particular owner has during the construction process depends on many factors. Generally, though, the project owner is responsible for securing funding for the overall project and disbursing funds to the general contractor (or other party who coordinates the actual construction). The owner is assumed to have either ownership over, or at least the rights to, the land being used in the project. 

Contractually, the project owner has a duty to cooperate with the general contractor during every phase of the process. When dealing with the general contractor, the owner has a duty not to interfere with the construction process and allow the parties involved in the construction to operate freely. Another stipulation, required by law, is that owners should not act to purposefully delay the completion date for any reason. 

Contractor Duties

There are countless ways that a contractor can be involved in the construction project. Usually, a general contractor (also called a prime contractor) is tasked with coordinating on-site personnel and overseeing the actual construction. Another important duty of a general contractor is hiring subcontractors to provide specialized services (like electrical and plumbing). 

Regardless of the provisions of a specific construction contract, the general contractors involved in a project have an obligation to provide services and perform under the contract in a “workmanlike,” or appropriate manner. One other important duty of contractors is to inform the owner of any conflicts between the project specifications and applicable laws. Any obvious defects should also be disclosed to the owner if discovered by the contractor. 

The best way to ensure that all parties are obligated to perform to specific standards is to have a well-structured and thoroughly negotiated contract. While there are some general obligations under common law that each party must adhere to (essentially that everyone must act in good faith), there can be a surprising amount of leeway during projects that can have devastating results for either party. 

Florida Construction Law Group is singularly focused on providing representation to parties in a construction project; we can help resolve disputes in an efficient manner and prevent costly disputes at the outset of a project. Sound like what you need? Give us a call today at 305-227-4030.

25Aug 2020

It is the rare construction project that actually gets completed on time, with the original, agreed-upon price point. With this knowledge, most project owners, developers, managers, general contractors, and subcontractors are used to adapting to slight changes in timeline and expectations throughout a project. Sometimes, though, a misstep during a construction project is so egregious that one party moves to terminate the construct for cause. This blog will provide a general overview of this situation. 

What is the “Cause” in “For Cause”?

Generally, there are only two ways that a construction contract can be terminated: for cause or for convenience. For convenience means, essentially, that either side can terminate their obligations in the project for almost any reason. To terminate a contract for cause means that one or more parties has breached one or more terms of the contract. Examples of this include:

  • Not supplying enough laborers to complete the project on the agreed-upon timeline
  • Repeatedly not meeting deadlines for key benchmarks of the project
  • Using materials and supplies that do not live up to the agreed-upon quality
  • Not following applicable laws and ordinances
  • Failure to pay contractors, suppliers, or subcontractors on time

As we briefly mentioned above, minor hiccups and inconsequential matters do not typically give rise to a termination for cause. Even one “major” failure to perform by either party may not result in a termination for cause; usually, repeated violations are what result in termination. 

Termination For Cause Provision

Many construction contracts (those that were well-drafted and well-negotiated, anyway) will have particular circumstances that allow a termination for cause. Before pursuing with this type of contract termination, determine whether or not your current dispute fits into this mold. Sometimes, more than one cause may be applicable in your given situation. Also worth looking for in a contract is whether or not a notice must be sent before terminating for cause. 

What is a Termination For Cause is Initiated, But Not Applicable?

Terminating a contract for cause should only be done when you are absolutely sure that you have that right. The other party could be entitled to lost profits and other damages if the termination for cause is found to be inappropriate. Other times, a termination for cause may be converted to a termination for convenience. 

Conclusion

The general consensus among construction professionals is that termination of a contract should be the last resort if a dispute arises. If you feel that no other choice is viable, though, you need to get with a knowledgeable construction attorney to affirm your right to terminate your contractual obligations. Florida Construction Law Group has extensive experience helping clients with these types of issues; give us a call today at 305-227-4030 to discuss your options.

28Jul 2020

Even when every safety regulation is followed, construction projects always carry a significant amount of inherent risk to laborers who make the structure happen. For this reason, workers’ compensation policies are a must-have for any company involved in the construction industry. One issue that comes up with workers’ comp claims stemming from an accident on a construction site is subrogation and whether or not contractors and subcontractors waive the right of their insurers to subrogate against third parties. This blog will take a look at what this actually means, as well as benefits of having this provision in your next construction contract. 

What is Subrogation?

When an insurance company subrogates, that means it is attempting to receive compensation from a third party that caused a covered loss for one of its policyholders. Essentially, insurance companies are able to stand as a proxy for the injured party and attempt to get a payout from the other side. 

Why are Waivers of Subrogation Important in Construction Contracts?

It is common knowledge that there is always a risk for workers on construction projects. From time-to-time, injuries will happen; when they do, parties involved in the project want to avoid fights between insurance companies that can complicate matters and sour the project’s mood. There are ways for insurance companies to still subrogate in certain circumstances, but a waiver of subrogation can go a long way toward mitigating complications. 

Generally, there are two different types of subrogation waivers. One type is a blanket waiver of subrogation, which means an insurance company is not allowed to pursue compensation from other providers involved in a specific project. Or, a waiver of subrogation can apply only to particular insurance providers that have a greater possibility of becoming involved in a claim. 

Example of Subrogation (and Waiver)

Consider a project in which parties are constructing a new condominium development. During construction, an employee of the subcontractor responsible for roofing doesn’t secure his materials and it falls from a great height, seriously injuring an employee of the general contractor. Without a waiver of subrogation provision, the insurance company for the general contractor might choose to go after the subcontractor’s insurance company. However, the waiver prevents either side from going after the other. 

Conclusion

The waiver of subrogation clause is just one of many that make up a successful construction contract. Florida Construction Law Group would be happy to look over your contracts and, if necessary, negotiate a fairer deal for you and your team. Give us a call today at 305-227-4030 to see how we can help.

16Jun 2020

When beginning a construction project, there are several approaches to drafting and agreeing on contracts that will give structure to the overall undertaking. A unique, specialized contract is sometimes necessary for larger projects with a significant number of involved parties. In other situations, it sometimes makes sense to use standardized contracts that come from an established organization like the American Institute of Architects (AIA). While there might be some pitfalls from using templates, there are a few advantages to using AIA contracts. 

1. Terms used in AIA documents are written plainly and easy to understand. AIA contracts, by nature, are written using everyday language. There might be some jargon and industry-specific terms included in the standardized contract, but the language overall is written without legalese. 

2. These documents can be altered and tailored to fit your needs and goals. Any AIA contracts you use will have blank spaces where you fill in the names of the parties involved, contract price, and other project-specific details. What AIA contracts usually do is provide a comprehensive framework for the rights, responsibilities, and obligations of everyone involved in a construction project. You are welcome to make minor changes or modifications to the contract itself, but too many needed changes could signal that you need to make your own contracts from scratch. 

3. AIA Documents are holistic. Contract templates written by the AIA take into account feedback from owners, developers, contractors, subcontractors, architects, engineers, designers, construction attorneys, and other parties. Generally, no one party will be unfairly represented in AIA contracts. 

4. Standardized documents have case law behind them. You can be sure that any AIA contract or document is in accordance with the latest updates on construction law. Additionally, there is plenty of precedent for how AIA contracts (and the provisions within those contracts) have been interpreted by the courts over the years. Therefore, the way certain legal disputes over an AIA document will be resolved can be fairly predictable. Having this established legal framework and case law can also help disputes be settled efficiently. 

5. Using AIA documents can help initial contract negotiations go by more quickly. When you are contracting with other seasoned construction firms and parties, there’s a good chance they will have already used contracts produced by the AIA before. Having an understanding of each party’s general obligations from the start can expedite the overall construction project. 

Conclusion

Whether you use a standardized construction contract (like one form the AIA) or draft one yourself, you need to have a knowledgeable and experienced attorney look at your contract to make sure your interests are protected. Reach out to the Florida Construction Law Group to see how we can provide value to your next construction project.

18May 2020

Construction projects are often highly technical, and disputes arising from work done on a project can be somewhat difficult for a judge to settle due to their technicality. To alleviate this and other issues regarding construction legal claims, Florida law provides for a pre-suit dispute resolution process in Chapter 558 of the Florida Statutes. It is sometimes referred to as Florida’s Construction Disputes Statute (FCDS), and it generally applies to any commercial or residential construction project in the state.

What is a Chapter 558 Claim?

This tool is used by owners or developers of a construction project to provide notice to a contractor that they found a defect with the construction project. In the context of a Chapter 558 claim, a contractor can mean any prime contractor, subcontractor, supplier, architect, engineer, or other party that has rendered service or provided products during completion of the project. 

A Chapter 558 claim usually gives the defendant of the claim 60 days to respond to the notice, although the timeline can be increased to 120 depending on the size of the structure. The Chapter 558 claim itself must contain “reasonable” details on the defect or defects. 

When Can a Chapter 558 Claim be Initiated?

State law describes the point in which an owner or developer can serve a contract with a Chapter 558 claim as the substantial “completion of a building or improvement.” This usually means that a certificate of occupancy has been issued; if the jurisdiction of your structure does not issue such certificates, then substantial completion is intended to mean when “construction, finishing, and equipping of the building or improvement according to the plans and specifications” has been completed. Additionally, claimants are strongly encouraged to serve a Chapter 558 claim within 15 days of discovering the alleged defect. 

What if a Chapter 558 Claim Is Not Settled?

If the two parties are not able to reach an agreement regarding the Chapter 558 claim, then the claimant can file a lawsuit. However, construction litigation can be costly and take a significant amount of time to work its way through the courts. Chapter 558 claims can be effective at providing both sides a confidential, simplified way of resolving disputes similar to mediation or arbitration. 

Conclusion

Just because Chapter 558 claims do not directly involve civil courts does not mean you should file or respond to one without legal assistance. Not fulfilling your obligations concerning Chapter 558 claims can put you in at a severe disadvantage if you end up in court and drain your resources. Get in touch with the team here at Florida Construction Law Group to ensure any dispute that arises with your construction project is handled efficiently and professionally. Call us today at 305-227-4030.

13May 2020

Written by: Nicole M. Garcia

A construction contract has two key components: the scope of work, and the price. A detailed scope of work is crucial for project costing. It is rare to come across a construction project that is completed exactly as planned and promised in the original contract.  Thus, even the simplest construction project can require scope of work changes to account for unanticipated occurrences. 

A change order is a document used to record an amendment to your original construction contract. Change orders in construction create a record of additional services being provided to the customer, along with costing for those services. A subcontractor that neglects to use change orders may forget to bill additional costs related to the changes requested, or forget to complete the changes altogether. When change orders are done properly, they can serve as a record of the change. Unfortunately, many times subcontractors do not properly execute change orders and thus result in contract disputes between the parties to the contract (i.e. general contractor v. owner or subcontractors v. general contractors, etc.)

Although this is not an all-inclusive list, here are some steps than should be taken when executing a change order: 

  • Give “Notice” to the proper party in order to advise of what is considered a change or is now required to be a change. If you don’t give this notice, you may never be able to collect on it. 
  • Demand a written order to do the change. 
  • Negotiate contract terms for prompt payment for changes. It is now common for clauses to provide that only the disputed portion of a change can be withheld. These types of provisions reduce the risk that the contractor will have to finance the extra work.
  • Negotiate contract terms that allow you to verify that the customer has the money to pay for the change. 
  • Include Time Extensions as a part of the Change Order. This saves the Contractor form possibly being held liable for liquidated damages. 
  • Consult with all subcontractors (i.e., trades) about the impact of the change required or requested. It is important to always keep in mind the impact the change will cause all the trades on the job because the change may affect them or unintentionally cause delay for them as well.
  • Reserve lien rights for unresolved changes. Many lien waivers are drafted to give up lien rights for all work as of a certain date. If work has been done on changes, but not yet paid for, signing such a lien waiver could be giving up rights. Make sure that you tailor the lien waiver form to accurately reflect what should or shouldn’t be covered.
  • Fully document specific costs of the change. The moment work is to start on a change, the contractor should assign a separate number to that work and record all expenses to that number. A lot of money is lost by contractors when they can’t prove the cost of these changes. A job can take months or years depending on its size.
  • Watch out for unauthorized change orders. Make sure the person ordering the change order is authorized to do so under the contract. 

If you are currently facing legal troubles in regards to a change order(s) dispute please contact the Florida Construction Law Group at 305-227-4030 or legal@floridaconstructionlawgroup.com and we will assist you and ensure everything is set up and handled properly throughout the project.

27Apr 2020

Construction projects look radically different than they did even a decade ago, and they will continue to evolve as developers, contractors, designers, and other parties innovate to make projects go more efficiently. One of the recent developments over the past few decades has been the increased amount of collaboration between parties involved in a construction project. Apart from its benefits, this can increase the possibility of a dispute arising during construction. 

When it comes to construction disputes, an ounce of prevention is often worth a pound of cure. To that end, we have come up with three ways you can be proactive and prevent disputes before they occur. 

1. Communication – even over-communication – is key for a successful project. Amid all the moving parts of a construction project, parties can sometimes skip the basics of good business. One of these casualties can be proper and effective communication. There is no good excuse, with all the modern media available to reach people, for poor communication. Keeping an open line between you and the other parties is an effective way to manage expectations and, ultimately, keep everyone on the same page. 

2. Optimize and follow all applicable contracts. Many construction projects live and die by the contracts. Too many parties in a project either neglect to include important provisions, like procedures for settling a dispute, or fail to understand the provisions that already exist in the contract. An effective contract will not heavily favor one party, but will instead ensure a fair and efficient process for everyone involved. To remove any ambiguity, all contracts should be put in writing. 

3. Recognize as many risks as you can ahead of time. Some situations cannot be anticipated, such as a sudden, deep recession. Others, like poor weather conditions or shoddy materials, can be reasonably planned for. Understanding, from the outset, that it is nearly impossible for everything to proceed exactly according to plan is key to avoiding disappointed stakeholders, which can lead to costly disputes. A comprehensive risk management plan is recommended for parties involved in a project to identify sources of potential disputes and, therefore, effect a smooth process. 

Conclusion
Occasionally, construction project disputes are unavoidable. Many disputes, though, can be prevented with proactive measures employed by all involved parties. At any rate, an experienced and efficient construction law attorney can help you reach your goals during a construction project and keep all parties satisfied. Get in touch with Florida Construction Law Group by calling 305-227-4030 or filling out our online contact form.

22Apr 2020

The real estate property market is currently under severe strain currently due to the forced shutdowns of all non-essential business in Florida due to the COVID-19 outbreak. As the crises looms, the Federal Reserve could eventually relax some regulations to allow forbearance on loans. 

Currently, it is up to the lenders, property owners and tenants to work together and find the best outcome for all involved. Many of the obvious steps, such as amendments to leases and loan payment deferments could lead real estate owners to significant personal liability. 

Generally, real estate loan documents limit the borrowers ability to amended leases (only on loans not for primary homes). In Florida for commercial real estate transactions generally, there is a limited guarantee named “bad boy” guarantee which  are limited guaranty documents that have certain triggers that may convert them to unlimited guarantees. Agreements between the owner and tenant completed without the lender’s approval to defer, reduce or waive rent payment is a trigger and the most common since the COVID-19 pandemic began. An agreement as such can make the borrower liable for the entire loan amount. Another pitfall that may cause a trigger is if the borrower admits in writing their inability to make payments when they are due. Unless properly worded, a simple request to your lender for forbearance in payment as a result of the tenants inability to pay rent may result in the borrower under the bad boy guaranty to become liable for 100 percent of the entire loan.  

Borrowers need to take caution and carefully review their loan and guaranty documents prior to discussions with the lender. An experienced real estate attorney is a borrowers best friend during these uncertain times. An attorney will help you ascertain your rights with the lender to avoid any negative triggers. 

If you an questions or concerns regarding your property feel free to contact us at 305-227-4030 or legal@raygarcialaw.com

21Apr 2020

Written by: Nicole M. Garcia, Esq.

Whatever good things we build end up building us“ – Jim Rohn

Currently, we are facing constant rapid changes on a daily basis in our personal and professional lives due to the COVID-19 pandemic. It seems this virus is forcing us to think outside of the box, evaluate and reinvent ourselves and the way we do business. 

Typically, when forming a contract, a specific clause is added as additional protection in the event a party is restricted from performing their part. A “Force Majeure” clause is a provision that excuses a party from not performing its contractual obligations where such performance becomes impossible or impracticable. Typically, performance will become impossible or impracticable due to an event, occurrence, or circumstance that parties could not have anticipated or controlled. It is often viewed as a defense to non-performance. When drafting this clause “force majeure” and an “act of God” are too often confused to mean one and the same. However, they are not!

An “Act of God” is an unpredictable natural event (i.e. a fire, storm, earthquake, flood, tsunami, or other natural events), which prevents or interferes with a parties contract performance. On the other hand “force majeure” is actually an unpredicted human-initiated event (i.e. terrorism, war, epidemics, strikes, or other failures to act upon by government authorities) that could have been predicted or controlled by a party in the contract. These events are non-inclusive are will vary case by case.

However, the language and the express terms of a contract will typically define and provide guidance as to what types of events constitute “force majeure. Such clauses will be subject to traditional principles of contract interpretation. Courts will look to the terms of the contract as the best evidence of the parties’ intent, and the plain meaning of the words used will control. Courts will also consider the contract as a whole, and will generally not consider any one specific provision in isolation. When a contract is unambiguous and clear, courts will interpret the contract in accordance with its plain meaning. However, Courts will find a contract to be ambiguous if it is subject to more than one interpretation. Additionally, if the contract has conflicting provisions, the courts will interpret the contract.

A party relying on a “force majeure” clause to excuse performance bears the burden of proving that the event was beyond its control and without its fault or negligence, even if the event is viewed as extreme and unforeseeable. That party also bears the burden of proving that the failure to perform was caused by the event and that regardless of  their due diligence and good faith, their performance remained impossible or unreasonably expensive. However, economic hardship alone will rarely qualify as a “force majeure”. Events, such as a general economic downturn, inflation, or a drop or increase in commodity prices generally do not qualify as a “force majeure” because they are foreseeable events and thus known risks assumed by the contracting parties. 

If seeking to invoke a “force majeure” clause, a party must be sure to comply with any other contract provision requiring notice or any other applicable condition precedent. Additionally, parties should examine their rights and obligations once the “force majeure” event has ended. Additionally, a party invoking a “force majeure” clause will usually have a duty to undertake reasonable efforts to mitigate the event and its consequences. Usually, neither party to a contract is responsible to the other for damages resulting from a loss occasioned by a “force majeure” event or act of God, unless the risk of such loss is expressly assumed in the language of the contract.

This pandemic now poses the question and leaves us wondering as to whether COVID-19 will be categorized as an “Act of God” or an “unpredicted human initiated event”?

Typically, courts narrowly construe this clause. While this burden will likely not be difficult where the contract lists specific events like viruses, epidemics or pandemics, the analysis may become more complicated when the “force majeure” clause is vague and is categorized by the law to be  “boilerplate” language.

Therefore, as to whether disruption based on a pandemic like COVID-19 can excuse performance will depend on the language of the particular “force majeure” clause within the contract. Courts will need to analyze on a case-by-case basis. Under the law of many states the “force majeure” clause will be triggered only where the clause expressly includes the contingent event. Where a “force majeure” clause explicitly uses terms such as viruses, disease, epidemic, pandemic, quarantine, “act of government” or “state of emergency,” parties may, depending on the circumstances, be able to assert “force majeure” as a defense to non-performance or anticipatory breach in the case of the COVID-19 pandemic.

As a nation we are certainly facing an immense amount of uncertainty. However one thing is for certain, we will witness the evolution of families, daily life, businesses, and the law. If you are being affected by the COVID-19 pandemic and are facing legal troubles please contact the Florida Construction Law Group and we will assist you and ensure everything is set up and handled properly throughout the project.

15Apr 2020

Written by: Nicole M. Garcia, Esq. 

Construction bonds are a type of surety bond (used by investors to fund construction projects) that protect against disruptions or financial loss due to a contractor’s failure to complete a project or failure to meet contract specifications.

There are many different types of bonds required under Florida law for any construction project. Some are: Florida Financial Responsible Bond (a/k/a FRO Bonds), Permit Bonds or Right of Way Bonds, Construction bonds (a/k/a/ Contract bonds), Fidelity bonds, and Contractor license bonds. 

One type of bond necessary in the Construction process in Florida is a Contractor License Bonds. These are surety bonds that are required to be posted in various cities and counties in the State of Florida in order to be licensed within that city or county. It is also a requirement in order for contractor to begin work on a construction project. These bonds are typically code compliance bonds wherein the bond guarantees the Contractor (i.e. the licensee) will abide by the terms of the license and codes prescribed by that city or county. There are over 30 different contractor license bonds required by various municipalities in the State of Florida alone. These surety bonds vary in amounts from as low as $1,000 up to $25,000 or more. The large majority of these cities and counties in Florida require surety bonds in the amount of $5,000.

It is no secret COVID-19 is wreaking havoc on our society and our economy as a whole. It is controlling and has changed the way we know life as it is. Surety bonds are no exemption to its wrath. Surety and bond producers are currently seeking emergency orders to allow Electronic signing and waive notarization. Investors in surety bonds are seeking emergency orders to allow electronic signing of bonds and to waive the pre-requisite of notarization of bonds. They are asking federal, state and local officials to take emergency action to update old surety rules requiring stamped notarizations and ink signatures that the Covid-19 pandemic has made very difficult to complete being that there are measures in place to stop the spread of the pandemic (i.e., social distancing and shelter rules)

It is feared that if is lawmakers don’t take action and implement changes the interruption in the normal issuance of sureties required for most public and private projects, could cause further delays in construction projects and inflict further injury to the economy.

Bonds are an important part of most construction projects. If these bonds aren’t handled properly, however, it can lead to many issues that can be very costly and time consuming. If you are being affected by the COVID-19 pandemic and are facing legal troubles please contact the Florida Construction Law Group at 305-227-4030 or legal@floridaconstructionlawgroup.com and we will assist you and ensure everything is set up and handled properly throughout the project.


14Apr 2020

Pursuant to Emergency Order 7-20, subsection 2. signed by Miami Dade County Mayor Carlos Gimenez on March 19, 2020 any business that is interacting with customers solely through electronic or telephonic means, and delivering products via mailing, shipping, or delivery services may remain open in this restricted manner. These employers may maintain an internet work force that is in place to process electronic or phone orders.

While such a nonessential business must close to all “walk-in” customers, they may remain open to process any orders placed via telephone or online, and may deliver these orders to a customer parked in his/her car outside the business, i.e., curbside delivery, or deliver the order to a customer’s home. Only employees can be in the store. 

If you have any questions concerning your Emergency Order 7-20, please feel free to contact the Law Office of Ray Garcia, P.A., at 305-227-4030 or at legal@raygarcialaw.com

13Apr 2020

The COVID-19 pandemic has brought a great amount of uncertainty as every corner of the country deals with this nearly unprecedented health crisis and social distancing measures. One thing on the mind of tens of millions of Americans is rent or mortgage payments. Others worry about the effects on the housing market as a whole. To try to bring some clarity in these uncertain weeks and months ahead, we have assembled some answers to common questions that intersect with real estate law. 

Do I still have to pay rent on the first of the month?

Specific relief and obligations for renters are generally decided on the state and local levels. Fortunately, more than 30 states have taken action to help renters and mortgage borrowers, but if you haven’t received specific guidance yet, be prepared to pay at least something at the start of each month for now. If you are genuinely worried about your ability to pay rent, which millions are, get in touch with your landlord and see if something can be worked out.

Can I be evicted anytime soon?

Again, this is something that is more applicable to guidance from your particular state, but the federal government has issued a 60-day moratorium on evictions in federal housing and properties that are backed by federal loans. 

As a realtor, what should I handle effects from the pandemic, and what should I expect?

No other profession will be affected quite like real estate brokers and agents in the coming days, weeks, and months. Stay-at-home orders have eliminated home showings in more than half the states, and almost all steps involved in the closing process must be done virtually. You may ask current and prospective clients if they have been exposed to COVID-19 or are currently experiencing related symptoms. However, you should ask all clients the same questions; Asian Americans have increasingly been the target of racist tirades and attacks due to the virus’ Chinese origins, so be sure you are treating everyone equally. 

It is frustrating for those who work in the real estate market to be affected by the current health crisis when the spring selling season was just getting underway. All steps involved in closing on properties that must be done in person will be delayed unless there is some way to complete them virtually. While the average home price will probably see a very modest decrease, the amount of buyers is also poised to dramatically decrease. Doing as much as you can over video and the telephone is crucial to continue to sell listings. If you are able to hold open houses, practice social distancing and triple down on disinfecting every surface that will be or has been touched.

Conclusion

Conditions for renters and the housing market are extremely fluid, and it will be months for everything to start getting back to normal. If you have a specific question about your lease agreement or performing your real estate duties, reach out to our firm so we can help you find a solution.

28Mar 2020

One of the most powerful and effective ways parties may ensure payment on work completed for a construction project is by filing a mechanic’s, or construction, lien on a piece of real property. Contractors and subcontractors are frequent users of this tool, as well as material suppliers, architects, and engineers. We have outlined the general steps you need to take in order to file a valid and effective construction lien below, as well as some extra considerations you need to take into account as you navigate the process. 

Step 1: Provide a Notice to Owner (for certain parties). Depending on your contractual relationship with the project owner, you might be required to serve a Notice to Owner (NTO) before filing an actual lien. Subcontractors and material suppliers commonly fall under this category. Due to the strict statute of limitations for filing this, many subcontractors (and even contractors) provide an NTO the same day work begins. 

Step 2: Ensure you have the right paperwork and are planning to file the lien in the correct jurisdiction within the required time frame. As with the NTO, there is a strict time limit for when construction liens must be filed. In Florida, they must be filed no later than 90 days after the final work has been done on the project. You must also make sure you have standing to file a lien; for example, contractors and subcontractors must be licensed to practice in Florida. If any of these conditions are not met, you will likely not be able to file a valid construction lien. 

Step 3: After you have completed the required paperwork and recorded the needed information, you are ready to file. Florida Statute Section 713 lays out the information that must be recorded on the lien. Once you are sure that it is complete, have the form notarized. You may officially file the lien in person at a county clerk’s office, by mail, or electronically. If you plan to file in person, bring along two copies of the lien. 

Step 4: Serve the property owner with the lien. A rule of thumb is to serve the owner with the construction lien before you record it with the county clerk. If you record it with the clerk first, you have only 15 days to serve it to the owner. As with other aspects of filing a lien, there are certain requirements for the lien to be considered effectively served. 

Conclusion

After you have filed and served the construction lien with all relevant parties, your next actions will determine whether or not you receive payment for services rendered or materials provided. If you are paid, then you are required to release the lien. If not, then you must foreclose on the lien. Both actions must occur within a certain period of time. Florida Construction Law Group would be honored to help you with filing a lien and receiving payment for your hard work. Please get in touch with us today through our website or by calling 305-227-4030.

25Feb 2020

In Part 1 of our series on project bidding, we discussed bidding on public construction projects and some unique aspects of those kinds of projects. Once again, many concepts are pertinent for both types, but there are some key ways that private (non-governmental) construction projects differ from public ones. You will find that in many ways, bidding on private construction projects is less onerous and constricting than it is with its public counterpart. 

Whereas public construction owners (usually the municipal, state, or federal government) usually seek the lowest price from a selection of qualified contractors, private construction owners are under no legal obligation to seek any specific price range from bidders. Government entities are required to solicit bids through local newspapers to further ensure that bids coming through are at the lowest reasonable prices. 

Conversely, private bids are often awarded to contractors who have solid reputations and are therefore unlikely to have to scour publications to find work. As important as it is to network as a contractor no matter the types of projects you are seeking, personal connections to owners and developers will go a long way in winning bids for private projects. If you personally go above and beyond to make sure the work performed is satisfactory, you might get recommended for future projects. 

One advantage of private projects is that you may work on multiple projects at one time (if you have the capacity). Often, contractors who are locked in to a contract with a public entity are legally forbidden from concurrently working on other endeavors. 

Protection for Contractors

A major benefit for prime contractors is that unlike in public construction projects, they are free to claim a mechanic’s lien on a private property. This tool, which is an interest on a piece of property, is filed by contractors as a way to ensure payment. Public projects allow ways for contractors to get payment in the event of an issue, but the process for that is more complex than with a private project. 

Similarities to Public Projects

Both types of construction projects will see the dissemination of procurement documents to qualified contractors. Contractors will want to attend a meeting with the project owner or developer and survey the site before submitting a final, sealed bid.

Conclusion

Private construction projects provide for a greater amount of flexibility for all parties. Generally, private projects flow more smoothly for contractors, as there is far less red tape to work around than with public projects. If you are seeking legal clarification for any construction issue, please reach out to Florida Construction Law Group today and we will be happy to speak with you further. 

20Jan 2020

They sometimes go by different names, but draw schedules are the detailed payment plan agreed to by the construction project owner, builder, and contractor. It will specify when specific payment allotments will be paid to the contractor and lay out the requirements for exchanging the scheduled funds. If the owner is being funded by a bank or other lending institution, the draw schedule will be put forth by that financial institution. 

Common Draw Points

No two construction projects are the same, and so goes draw schedules. The size, type of funding entity, location, and desired timetable for completion are all factors to consider when drafting a draw schedule. Common sense would tell you that a draw schedule for a one-story house would be much simpler than a transnational corporation’s new headquarters. 

A typical draw schedule for a custom-built house will usually have 5-7 points of draw throughout construction. The different points could be at benchmarks such as having 20 percent of the project completed, then 40 percent, then 60 percent, and so on. The other common way to distribute points is to place them at intervals that a significant feature is completed, like HVAC installation, water and sewer connections, laying the foundation, etc. 

Who Should Look at a Draw Schedule

The more parties involved in a construction project, the more people you will have negotiating the draw schedule. Except in cases in which a bank wants to propose its own standard draw schedule, the contractor will usually be the first to propose the draw schedule. After that, the relevant parties will negotiate until an agreement has been made. The owner or developer will usually send an independent appraiser to look over the proposal. Unless you have complete faith in the contractor you are working with, a third party should always scrutinize the proposed draw schedule. 

Importance of Draw Schedules

Draw schedules are designed to ease the tension between construction project owners and the contractors doing the actual work. A contractor’s worst nightmare is completing an entire project and then getting stiffed when the invoice is finally sent. On the other hand, owners are wary of shelling out money for work that may turn out to be incorrect or incomplete, or not done at all. 

Draw schedules and other legally binding documents that are considered at the outset of a project can make all the difference between successful construction and a disaster. If you are embarking on a project and want assurance that it is on solid ground, give us a call today at (305) 227-4030.

20Dec 2019

Unique Nature of Public Projects

If you are like most contractors, you likely keep your business’s lights on through a mix of public and private construction projects. While many of the concepts are consistent among the two types, this post will focus on public projects. When you submit a bid for a public project, you will be dealing with a government agency. Part two, coming next month, will cover private contracts. 

When a municipal, county, state, or federal government requires construction or remodel of a structure, the solicitation for bids must appear publicly for a certain amount of time while qualified contractors (or developers) submit bids. In the meantime, of course, you will procure necessary documents from the public entity to assess the project and come up with a price. However, it is possible you will get enough pertinent information from the solicitation alone.

Keep in mind that public construction projects must be a sufficiently competitive process, as officials want to be good stewards of taxpayer money. Tax revenue might be the most obvious source of compensation for you during a public construction project, but the public party might seek to compensate you with publicly issued bonds. Generally, the lowest responsible bid will be awarded the public contract, but don’t place a bid that’s too low and loses you money.

Florida Laws

Section 255.20 of the Florida Statutes provides the legal framework through which public bidding may proceed. The section lays out the maximum prices for which certain public projects may avoid the competitive bidding process. For example, electrical work estimated to cost more than $75,000 must go through the process. With constructing or remodeling a public structure, the estimated price tag of competitively awarded bids starts at $300,000. 

Federal Projects

Construction bids for federal structures must go through the U.S. General Services Administration (GSA). As with other public entities needing construction work on a public building, sealed bids are submitted after a federally mandated amount of time has passed since the solicitation was published. Just as municipalities and counties must competitively award contracts to projects estimated over a certain amount of money, the Miller Act (Title 40 in the United States Code) regulates federal construction projects estimated at $100,000 or more.

Part 1 Conclusion

The added formalities of public construction projects can make for a longer and more complicated process than bidding for private projects. Next month’s blog will explain some notable similarities and differences between public and private bidding processes. If, in the meantime, you need any clarification on a bid or potential bid, give us a call at (305) 223-9811 and we can give you experienced legal counsel on your contracting issue.

11Nov 2019

The last thing you want to deal with after years of waiting for your brick-and-mortar store to finally open is a structural problem. Many problems, legally recognized as construction defects, are obvious, like an improperly installed window (you occasionally feel a draft). These defects are referred to as patent defects and are usually quick, inexpensive fixes. 

However, some defects take time to present themselves, such as leaks that cause internal moisture to build up (that better not be mold you’re smelling!). These insidious defects are classified as latent.

Whether patent or latent, there are three common categories construction defects typically fall into.

1. Workmanship Defects

Defects in this category are the result of shoddy labor during construction. The common phrase, “a poor workman blames his tools,” might come to mind in this situation. As long as the materials used in the building of the structure aren’t flawed and the design plans are determined to be solid, then defects are almost always to be blamed on the construction process. 

2. Material Defects

When the builders are not at fault, you should look to the raw materials that comprise your building. Material defects can be patent, such as flawed roof materials that allow leaks when the first rainstorm comes, or latent, like metal fixtures that prematurely corrode or rust. Builders may unknowingly use defective materials. Sometimes, however, they are aware of faulty materials and will not say anything to cut costs and corners. In this case, you could (and should) pursue a claim against the laborers. 

3. Design Defects

Sometimes, construction defects can be due to flawed blueprints or design plans. Certain regulations and codes often guide the creation of structural designs, so there are certain assurances afforded to owners during the design process. Design flaws due to actual malice on the part of engineers or architects are extremely rare. The error of omission is almost always to blame when it comes to design flaws.

Conclusion

Construction defects lower the value of your structure and, more importantly, pose a physical threat to you and others who use the building. This was a rampant issue with homes built right before the 2008 housing crisis when developers rushed to meet demand from homeowners. Florida was ground zero for the crisis. 

If you think your structure might have a defect that was incurred during the design, construction, or material selection stage of the building process, we are eager to help you find stability in your living situation. Call us at (305) 223-9811 to get the relief you deserve.

20Oct 2019

In a construction contract it is not uncommon for consequential damages (also known as special damages) to be mentioned, or even asked to be waived. Understanding what consequential damages are will help you to determine what action to take in regard to a specific contract. It will also help you to know what legal rights you have in the event that you experience consequential damages or are sued because of them. 

What are Consequential Damages?

Consequential damages are anything that costs money indirectly due to another party failing to meet their obligations on the project in question. In most cases, this would be due to the third party breaching their contract. In order to be considered consequential damages, they must be able to be linked to the action of another party in a reasonable way.

Examples of Consequential Damages

There are many ways that someone can experience consequential damages, and looking at examples can help to better understand what they are. The following are among the most common examples in the construction industry:

  • Loss of Use – If a contractor starts a construction job, but then abandons the project, a property owner may be unable to use the property until a new contractor can be found.
  • Increased Material Costs – When a supplier fails to meet their obligation to deliver necessary supplies to a job site. This may necessitate an immediate purchase of materials locally, which can increase the price significantly.
  • Extended Rental Fees – It is often necessary to rent equipment to complete specific tasks for a job. If a third party doesn’t fulfil their responsibility, it may be necessary to rent the equipment for a longer period of time.

There are, of course, many other situations that can result in consequential damages. Any time that there are damages that are indirectly caused by an action or inaction, there may be a legal case possible.

Waiving Consequential DamagesIn some contracts there will be a section that waives the legal option for lawsuits related to consequential damages. There are situations where this can be a good option, but not always. For example, a contractor who is asked to sign this type of contract should also insist that the waiver is mutual so that they can’t be left on the hook should they become unable to complete a task. Some contracts try to ‘sneak’ this type of waiver in without discussion, which is why it is so important to ensure all contracts are fully read and understood prior to signing. Contact us to get the help you need with creating, reviewing, or agreeing to any type of contract.

30Sep 2019

DBIA contracts are among the most popular types used in construction jobs today. These contracts were developed by the nonprofit organization Design Build Institute of America (DBIA). Both the building owners and the design professionals typically prefer using these types of contracts because they are designed to clearly outline all steps from the preliminary agreement all the way through to the final payment.

As the construction industry began using design-build strategies for their project delivery, a new type of contract was needed to ensure all parties were protected. In 1993 the DBIA was formed to not only provide structure to contracts, but also to promote the value of this type of project delivery.

Benefits of the DBIA Contract

When design-built projects were just getting started, building owners and design professionals would write up their own contracts to manage the deal. In the vast majority of cases, there were disagreements over the details because the contracts weren’t typically balanced. In order to avoid these types of problems, the Design Build Institute of America began producing easy to follow, and properly organized, contracts that could be used.

While the contracts have been updated over the years, they continue to be flexible enough to use on just about any job. They also do a great job of documenting the relationship between the various parties, including the design-builders, architects, and the trade contractors. This all helps to make the legal side of these projects much easier for everyone.

Terms & Conditions of a DBIA Contract

Each contract will have a number of different terms and conditions included based on the details of the project. Almost all examples of a DBIA contract will include the following items:

  • Change Options – The contract will identify how the project owner can make reasonable changes to the project.
  • Discovering Hazards – In the event that unknown, previously existing, hazardous conditions are found at the job site, work must stop and the owner notified. The owner is then responsible for remedying the situation. The contract will also identify what compensation the owner must pay to the design-builder for their down time.
  • Option to Stop Working – These contracts identify situations where the design-builder can stop work and terminate the contract. This will typically include things like when the owner fails to make payments, or provide agreed upon resources.
  • How to Resolve Disputes – No contract can address every situation, so it is important to identify how potential disputes will be resolved. The DBIA contract will include details of the agreed upon dispute resolution process.

There are many other details that can be included in a DBIA contract. Using the standard formatting will help to ensure all critical issues are covered. If you need help having a DBIA contract written up, or you need one reviewed, please contact FCLG to schedule a consultation today.