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18Sep 2021

The bid process for Florida agencies is much more rigid than the process used for private projects. And, for good reason–taxpayers have the general expectation that their tax dollars will be used as efficiently as possible. The Florida statutes lay out the procedures by which construction or renovation work on public buildings or land should be solicited. The law outlines three methods for gathering bids in the state: invitation to bid, request for proposals, and invitation to negotiate. 

Each method is most applicable in certain circumstances. However, any bid solicitation must: 

  • Be made available to vendors at the same time; 
  • Include the date and time to receive bids, proposals, or replies; 
  • List the date of the “public opening”; 
  • Include applicable terms and conditions of the procurement; and
  • Lay out criteria for determining “acceptability and relative merit” of a bid, proposal, or reply. 

Invitation to Bid (ITB)

A few Florida agencies have the capacity and capability to provide a precise scope of work for interested contractors. Because the agency can work out specifications for this type of bid solicitation, the prices of bids are the dominant factor. In an ITB arrangement, the “lowest responsive bid” will win out. Bidders must include estimated yearly costs for performing under the contract. 

Request for Proposals (RFPs)

If the state agency cannot specifically define the scope of work, it usually sends out an RFP. The RFP is appropriate when the agency can specifically define the “purposes and uses” for the work and identify “necessary deliverables.” Just like ITB proposals, RFPs are available to “responsive” vendors. Because price is not the determinative factor in RFPs, bidders must be informed of other criteria which will be important in determining the successful bidder. Broadly speaking, an RFP will be awarded to a responsive vendor whose proposal is “most advantageous to the state.” 

Invitation to Negotiate (ITN)

Of the three bid solicitations covered in this blog, the ITN option is the most open-ended. Simply put, an ITN is used when an agency determines that negotiations with one or more contractors is most likely to deliver the “best value” for the state. The ITN describes the agency’s overarching goals or desired solution for a problem. Still, an ITN must set forth certain criteria by which the contractors’ replies may be judged. 

Conclusion
The procedure for awarding bids for public construction projects is heavily guided by the Florida statutes. Generally, though, public entities seek efficient use of tax money by responsive, and responsible, contractors. Still, construction firms deserve a fair bidding process. If you’ve encountered problems with a recent bid or want legal assistance to position your firm for success, contact Florida Construction Law Group today. We pledge to work toward efficient legal solutions for you and your team.

26Aug 2021

In Parts 1 and 2 of this series, we looked at instances where Florida prime contractors may become liable for the actions of subcontractors. Generally, prime contractors in Florida are NOT liable for the results of actions undertaken by subcontractors. However, there are a few notable exceptions. 

Sometimes, a general contractor enters into an agreement with a property owner or manager that contains a non-delegable duty. This means that, even though the prime contractor hired a subcontractor to do a certain job or perform a certain aspect of the prime contractor’s job, the subcontractor is not liable for personal injuries caused by the work. 

Who Pulled the Permit?

The legal concept attached to a permit-based non-delegable duty is simple: if a prime contractor pulls the permit for a construction or renovation project, the prime contractor may assume liability for some parts of a subcontractor’s work. Florida case law, however, makes it clear that vicarious liability based on the entity that pulled the permit can only be decided after a fact-intensive investigation.

In Florida, a “qualifying agent” is an entity with the legal obligation to “supervise, direct, manage, and control” the work performed under a construction project’s permit. Florida law generally requires construction contractors to employ at least one (DBPR-licensed) qualifying agent. Work performed by subcontractors, with the knowledge of the prime contractor that hired the subcontractor, may expose the prime contractor to liability. That liability may be mitigated, however, if the subcontractor performed work outside the scope of the permit.

What Does the Contract State?

In some cases, determining whether or not the prime contractor is vicariously liable for the acts of a subcontractor goes to the text of the contract between the project owner and the prime contractor. More specifically, express terms included in the contract may create a contractual obligation for the prime contractor if the prime contractor specifically agreed to perform a task. 

For example, the contract between the owner and prime contractor may create a non-delegable duty for the prime contractor to protect the public from various safety hazards. Even though the prime contractor may have hired a subcontractor, the hazards mentioned in the original contract must still be prevented by the prime contractor. 

ConclusionIn most cases, Florida courts hold that prime contractors and employers are not vicariously liable for the actions of independent contractors/subcontractors. From the writing of the original contract to the prime contractor’s actions during the contract’s performance, however, there are plenty of opportunities to assume liability on behalf of third parties. That’s why it’s so important to hire a Florida construction attorney who is experienced in litigation and contract drafting. We look forward to speaking with you soon!

01Jul 2021

Part 1 of our series on prime contractors’ liability for the actions of subcontractors published last month. The post covered the “meddlesome employer” doctrine, which makes the prime contractor liable for the subcontractor’s actions if he or she becomes too involved in the subcontractor’s work. The meddlesome employer doctrine is an exception to the rule that prime contractors are not liable for the negligence of subcontractors they hire to complete work. 

There is another notable exception to this rule. This exception, which we cover below, is known as the “inherently dangerous activity” doctrine. 

What is an Inherently Dangerous Activity?

Florida case law has largely shaped the commonly accepted definition of “inherently dangerous activities”. As its name suggests, it is a danger inherent in the work the subcontractor has been hired to perform. An inherently dangerous activity is likely to result in physical injury if proper precautions are not taken. That last part is important for prime contractors to understand—there must have been a lack of reasonable precautions taken against the special danger. 

The prime contractor must have known that the danger posed by the subcontractor’s work was inherent in the job duties and obligations. If all pertinent factors are present, the prime contractor might be liable for physical harm caused by the subcontractor’s actions. 

What are some examples of inherently dangerous activities? A few situations stand out. Operating a crane, clearing debris from land by fire or other destructive methods, and dealing with exceptionally high-voltage wires all generally rise to the level of an inherently dangerous activity. 

Situations that Florida courts have held do not rise to the level of an inherently dangerous activity include a tractor-trailer that is parked on the shoulder of a highway but is slightly over the white line and removing tiles from a roof deck. 

Non-Delegable Duty

An inherently dangerous activity faced by a prime contractor is considered a “non-delegable duty”. A non-delegable duty is an obligation that the prime contractor could never legitimately pass off to a subcontractor in the first place. There are other non-delegable duties which ultimately make a prime contractor liable for some actions of a subcontractor. Next month’s blog, Part 3 of our series on contractors’ liabilities for subcontractors in Florida, will focus on two other non-delegable duties. 

A Construction Firm That Has Your Back

The question of whether or not a prime contractor is liable for bodily injury, property damage, or other results of negligence by a subcontractor is often an incredibly complex matter. Florida Construction Law Group’s focus is on helping construction firms and other parties resolve their legal matters and, if possible, help prevent issues in the first place. Call us at (305) 227-4030 to discuss your needs today.

21Jun 2021

Florida law is usually friendly to general/prime contractors in a situation where a subcontractor has acted improperly during a construction or renovation project. This liability divide can—and should—be clearly delineated in the contract entered into between the contractor, subcontractor, and project owner. As is the case with many things in construction law, though, there are exceptions to the rule. A few conditions can lead to a contractor becoming liable for the acts or omissions of a subcontractor. 

‘Meddlesome Employer’ Exception

Several Florida court cases have resulted in a few exceptions to the rule on a contractor not being liable for the actions of one or more subcontractors. Indian River Foods Inc. v. Braswell (1995) cemented the legal concept of a meddlesome employer.

The effect of this and other rulings mean that general contractors can be held liable for the actions of subcontractors if the general contractor becomes too involved in the subcontractor’s work. In court, it must be shown that the general contractor actually interfered with the way the subcontractor performed the work.

In almost every project, the general contractor will perform a certain level of supervision over other parties working on the project. For instance, the general contractor has general obligations to keep the worksite safe. If the level of supervision becomes too high, though, and the subcontractor commits an act or omission that approaches negligence, the general contractor could ultimately be liable. 

A few actions on the part of general contractors that do not constitute a meddlesome employer include: 

  • Ordering the subcontractor to stop or resume work
  • Receiving reports on the subcontractor’s progress
  • Inspecting the subcontractor’s work
  • Recommending or suggesting ways for the subcontractor to perform work
  • Prescribing alterations

Similarly, it can be shown that the general contractor did not substantially control the work performed by the subcontractor based on the party that supplied labor, tools, and equipment. A subcontractor that handled those three important components of the job will not typically be able to shift liability onto the general contractor. 

The concept of the “meddlesome employer” often has much more to do with injuries suffered to workers during the project or occupants of a structure due to a construction defect. Again, the contract you sign with a subcontractor should clearly state where your liability ends and where another’s liability begins. Next month, we’ll take a look at another exception to liability immunity for general contractors. 
Florida Construction Law Group provides top-notch legal service for general contractors and other construction professionals during contract negotiations. Our Miami firm also handles a wide variety of litigation matters arising from construction disputes. Call us at (305) 227-4030 today to set up a time to speak. 

21May 2021

Premises liability refers to the obligations of property owners and managers to keep their premises safe for third parties who have either explicit or implied permission to be there. This is an important component of personal injury law in Florida and elsewhere in the country (and world). Broadly speaking, there are three types of people in the world of premises liability: 

  • Invitees
  • Licensees
  • Trespassers

Invitees receive the strongest legal protections from property owners and managers. In other words, it is easier for invitees who are injured on a premises to receive compensation than licensees. Licensees are people who are legally allowed to be on the premises but have not been invited onto the property. Trespassers who are injured while on someone else’s property are almost never awarded compensation from the property owner or manager. There is one notable exception that Florida property owners, managers, AND general contractors need to know. 

What is An Attractive Nuisance? 

An attractive nuisance is something on a property that entices children to trespass on the property. Perhaps the most common example of an attractive nuisance is a swimming pool; every summer, we often hear about unattended toddlers who tragically drown after wandering into pools. There are many other real-life examples of attractive nuisances, including upright ladders, power tools, and other equipment you might find on a construction site. If a particular child is unable to grasp the risks of going onto a construction site and gets injured after engaging with an attractive nuisance, the general contractor or other entity exerting control over the site could be on the hook for damages. 

When is a Contractor Liable for an Attractive Nuisance-Caused Injury?

Generally, five conditions must exist in order to prove that a general contractor should be held liable after a child is injured. 

  • The contractor must have known that a child may trespass on the premises where a dangerous conditions exists; 
  • The contractor knew or should have known that the dangerous condition would post a significant risk to a child; 
  • The injured child did not recognize the danger because of his or her age; 
  • The burden of removing the dangerous condition is slight compared to the child’s risk; and
  • The contractor did not take “reasonable” steps to remove the dangerous condition or otherwise protect the child from the dangerous condition. 

What Should You Do?

A good start at protecting your company from attractive nuisance claims is installing signage around the dangerous conditions that warn trespassers of the inherent risks. If you are at all able to do so, install some type of fencing around conditions that could be designated as attractive nuisances. At the end of each workday, clear out debris and anything else you can. Proper communication with your subcontractors and suppliers is also important. 

If you have been sued in relation to an attractive nuisance claim or think you might be, reach out to Florida Construction Law Group today to see how we can help. There are a number of defenses you might be able to raise in court. Regardless, you need to act promptly to put yourself and your construction firm in a good position. Call our team at (305) 227-4030 to set up a time to speak with an attorney.

19Apr 2021

Even the most experienced and knowledgeable prime contractors can put together a structure that contains defects. The causes of these defects often have to do with poor designs and blueprints or inferior materials, but sometimes your clients will allege shoddy workmanship on your part. 

Regardless of the root cause of a construction defect, there are a few structural components often associated with patent or latent defects. 

1. Inadequate window installations. Improper window installations or inferior materials used for sealant are both common causes of serious structural defects. One of the most prominent concerns here is the potential for moisture to get into the house and compromise the integrity of the building. Poorly installed windows can also cause unwanted air filtration, which affects the energy efficiency of the structure. 

2. Inferior weatherproofing assemblies. Builders must pay close attention when installing exterior weatherization components. This is especially crucial for single-family homes. Any compromises in weatherization protection can decrease the energy efficiency and air quality in homes. 

3. Poor foundational or footing work. The foundation of any structure—single or multi-family building, high rises, and everything in between—can be a hotbed for latent construction defects. Sometimes, the cause of a foundation failure has nothing to do with the workmanship and materials and everything to do with site preparation. There is always the potential, of course, for transpiration and evaporation to chip away at the integrity of the soil under the foundation. 

4. Roofs with insufficient wind-resistance components. The upward force exerted on roofing systems can cause the edges to rip off the membranes. Florida roofs, in particular, must be prepared for high wind speeds due to the potential for devastating hurricanes. Improper roof flashing can cause water to leak into the ceilings and result in expensive repairs. 

5. Inaccurate readings of blueprints. Depending on the project delivery method used on a particular construction project, the prime contractor might not have sufficient access to the designers and engineers. When each team is on a deadline, opportunities are rife for cutting corners. While we understand that you, as a prime contractor, are focused on responsibly executing your duties for construction of a safe structure, there is always a potential for disconnect with other teams on key project objectives. Having the right tools in place for effective interdepartmental communication is vital for an efficient project. 

Conclusion
Again, even contractors with great reputations are not immune from construction defect claims. Many times, these defects are either frivolous or not directed against the responsible party. Our firm has spent countless hours defending contractors against defect claims. If your livelihood and reputation are at stake, contact Florida Construction Law Group to discuss your options with our legal team.

26Mar 2021

When is a construction project actually “done”? Well, that’s a difficult question to answer. Once the general contractor and subcontractors leave the site, there are still statutes of limitations or statutes of repose that outline the time limits for the project owner to bring a claim. Conversely, there may be a point in which you can consider a project “completed” when the contractor is still performing work on the structure. This has to do with different ways to claim that a project has reached “completion.” We’ll look at one of those ways — “substantial completion” — in this blog. 

Substantial Completion Defined

To paraphrase, the American Institute of Architects describes substantial completion as the stage in which a building or structure can be used for its intended purpose. Contractors and subcontractors could still perform minor or corrective work on a structure after the parties reach substantial completion. Construction contracts typically set the target date for substantial completion. If substantial completion isn’t reached by the target date, the contractor could ultimately be liable for damages. 

When is Substantial Completion Usually Reached?

The optimal target date for substantial completion is unique to each project. Countless factors go into determining this date. Some construction professionals choose to tie in the certificate of occupancy when deciding on the target substantial completion date. Whatever you and the other parties decide, it’s important to be specific in the contract. 

Why is the Substantial Completion Date so Important?

Contractors are usually entitled to receive the remainder of payments when they reach substantial completion. Substantial completion means that the clock begins ticking on bringing claims against the contractor’s work, warranties, or statutes of limitations. Put another way, substantial completion means the parties are working toward final completion. For contractors, this involves knocking out the items on their punch list. 

Final completion involves one last inspection by the design team and engineering firm. If appropriate, the contractor or subcontractors may be requested to make final modifications to the structure. Retainage fees may be collected by contractors after final completion. Insurance obligations might shift to the building owner upon substantial or final completion. These questions should be answered in a thorough, well-negotiated contract. 

A Law Firm for Construction Professionals

While legal matters and disputes that arise with construction projects are heavily affected by the underlying contracts, not every “contract lawyer” is prepared to handle these issues. It’s important to have the help of an experienced and knowledgeable construction attorney to set up your contracts and efficiently settle any disputes that may arise during the course of construction. Please contact Florida Construction Law Group today to see how our team can help you and your team. 

26Feb 2021

Even construction projects with the most thoroughly negotiated contracts can sometimes get bogged down in disputes between two or more parties involved in the project. Disputes are more common among parties who are not seasoned construction professionals; however, it can happen to anyone. If, despite your best efforts, your project has been halted due to a dispute, you should first refer to the contract. You and the other party in conflict might be required to go to mediation or arbitration (two common forms of Alternative Dispute Resolution) before starting litigation. Even if your contract does not require you to first go to ADR, it can be a good idea. 

Differences Between Mediation and Arbitration

As mediation and arbitration are both forms of ADR (Alternative Dispute Resolution), they can be used as alternatives to traditional litigation. Both mediation and arbitration involve a neutral third party (mediator or arbitrator) who aims to get the disputing parties to come to an agreement. The arbitration process is more formal, though, and ends when the arbitrator issues a decision (which may or may not be legally binding). Although mediation may eliminate the need for litigation, arbitration is more appropriate as a substitute for litigation. 

Benefits of Mediation

Mediation, relative to arbitration (and certainly litigation), gives the disputing parties more control. Instead of building to a decision, the mediator’s aim is to help both sides come to a mutually beneficial agreement when the parties aren’t interested in communicating with each other. This is better for parties who still want to work together. Additionally, mediation is typically kept confidential. 

Benefits of Arbitration

You could think of arbitration as a middle ground between mediation and litigation. Parties involved in arbitration are not involved in litigation but still present evidence to a neutral third party, who eventually reaches a decision. In many ways, arbitration combines beneficial elements of litigation without the massive expenses and long timelines associated with court actions. Some construction contracts stipulate that the arbitrator’s decision is final, while other contracts give parties the option to go to court after going through arbitration. The results of arbitration may also be kept private. 

Litigation is useful for plenty of parties embroiled in construction disputes that cannot be resolved in mediation. However, it is usually best regarded as a last resort. Though judges are experts in law, plenty of them are not well-versed in the nuances of construction-related matters. Plus, once you begin litigation, you get locked into a long discovery process that can push back the end date for your project at least a year. 

Florida Construction Law Group offers construction professionals precise legal counsel for any disputes that arise during a project. Litigation may very well be your best option, but the only way to find out the optimal path forward is to let our experienced legal team review your circumstances. We look forward to serving you soon; get in touch with us through our contact page to set up a consultation. 

20Jan 2021

The vast majority of construction projects — especially for relatively small and simple ones — use one of two project delivery methods: design-build and design-bid-build. Both of these methods have been in existence for more than a century and are widely used by both private and public project owners. We’ll go over some of the major differences between these two project delivery methods in this blog as well as a few notable advantages of each type. 

Design-Build Advantages

The general structure of the design-build project delivery method is this: the project owner or developer contracts with a single entity (design-builder) that is responsible for both the design and construction of the project. Once hired, the design-builder gathers subcontractors, consultants, and perhaps other contractors to execute the project. Especially savvy project owners might choose to form an LLC or other entity to bring a number of firms together for one project. 

Why might project owners choose the design-build project delivery method? There could be several reasons: 

  • Design-build generally allows for a more time-efficient project. 
  • Design-build makes it easier for project owners to develop a budget. 
  • There is better communication between the designers and construction team. 

Design-Bid-Build Advantages

Design-bid-build involves three main entities: the project owner or manager, design team, and prime contractor. The project owner contracts with a designer to create plans and specifications for the project. After the designer has completed that milestone, the project owner then solicits bids from a prime contractor to construct the project based on the designer’s plans. The prime contractor then hires subcontractors and other professionals to complete the project. 

Design-bid-build has its advantages over design-build. Several are: 

  • Design-bid-build may ultimately save the project owner or developer money by encouraging a competitive bidding process by prime contractors. 
  • Design-bid-build has been the accepted method for owners and contractors for decades; as a result, you might have a larger pool of prime contractors to choose from as the project owner. 
  • Design-bid-build generally requires more involvement from project owners, which some prefer. However, owners can always hire a project manager or liaison from which he or she can receive only the most important information and updates from a project. 

Conclusion

Design-build and design-bid-build are two of the most common project delivery methods used by construction professionals around the world. To figure out which one is right for your upcoming project, it is essential to carefully consider what’s most important to you: are you on strict instructions to not go over a certain dollar amount? Or, would you rather have the structure up as soon as humanly possible? Keep in mind that many other project delivery methods exist. 

What do they all have in common? Florida Construction Law Group has represented clients involved in each method at one point or another. Going through a construction dispute or wanting to lower the chances of one in the future? Give us a call at 305-227-4030 to see how we can help.

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.