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23Mar 2015

It’s often said that with large construction projects, delay-related disputes are inevitable. Situations that are beyond the control of the contractor(s) do arise and cause delays, but the tips below will minimize the risk of a project dragging on past its originally projected completion date.

1. Complete the submittal process on time. Paperwork can and will hold up a project. The submittal process is the stage at which materials are proposed, approved, and ordered. If the entire project team is not behind the process from the beginning, the materials won’t arrive on time and delays will result.
2. Discuss any project changes/additions up front. There are inevitably changes to any construction project. Have a discussion with your contractors to determine how changes or additions will impact the project’s overall timeline and then communicate with your client. This will ensure that a three-month project will not develop into a six-month project.

3. Develop realistic milestones and contingencies: Schedule disputes often arise because of unrealistic milestones. To make them realistic, each one needs to have sufficient contingency in keeping with the degree of uncertainty. This contingency can be established by asking the contractor to provide an early completion schedule or carrying out a comprehensive risk assessment and documenting the findings.

4. Take a collaborative approach to information management.  When all parties involved in a project know what’s going on at each phase, frequent or late changes can be prevented. By establishing a central and collaborative information management system, everyone has access to important documents and correspondence, reducing the likelihood of errors and misunderstandings.

5. Correct and document any logic-based schedule flaws. If you find and correct any schedule flaws, document and explain these changes when you make them. If a dispute makes it into a courtroom, arbitrators and judges will question changes made after construction is complete.

Keeping construction projects on schedule is always a challenge. Delays are expensive financially and in terms of eroded customer trust, so they need to be avoided as much as possible. Although timely performance can be impacted by unpredictable factors such as abnormal weather, other potential issues (poor scheduling, labor or material shortages, and regulatory changes) can be anticipated with proper planning, limiting their ability to take projects off-track.

Questions about construction law? Facing a legal dispute? We can help – give us a call today at (305) 227-4030!

10Mar 2015

Building your dream home on a budget is possible. It takes discipline and a willingness to make the right choices, but in the end you’ll have a house you love and can afford.

This article explores five tips for building your dream home on a budget. They’re simple, don’t call for a lot of sacrifice, and won’t leave you in the red after the project is complete.

Tip No. 1: Think small

We’re always encouraged to think big, but when it comes to building your home, small can actually be better.

It can be difficult to see it this way, given the fact that most new subdivisions contain huge homes that could have been estates in an earlier era. But do you really need all that space? Instead of building a larger home, why not throw out or give away things you no longer need, such as old furniture and books that haven’t been read in years? The majority of American families can do just fine with a 2,300 square foot home, and it’s a lot less expensive to heat and light too.

Tip No. 2: Keep it simple

Look at any of today’s builder houses and you’ll see a lot of unnecessary add-ons, such as an army of gables and a zigzag floor plan with multiple corners. Many stock house designs also have illogical structural organization, and compensate with extra elements to hold it all in place. These added supports don’t come cheap, either.

Stick to box-style designs. They are simple, affordable, and have a clarity in their layouts that makes them easy to build and maintain.

Tip No. 3: Eliminate extra walls

Open floor plans have a lot going for them. The fewer walls there are in a home, the less material is used, which translates into lower build cost. They also make inside spaces look and feel larger, making a house with less square footage more appealing.

Tip No. 4: Make smart materials choices

A lot of people blow their budgets by insisting on stained wood baseboards, hard coat plaster walls, and granite counter tops. Resist the urge to compete. An attractive floor can be built using materials from a warehouse wholesaler, and what’s wrong with laminate counter tops? Bold colors can add an inexpensive touch of glamor, and durable materials save additional money by being low-maintenance.

Tip No. 5: Buy at discount warehouses or online

Expensive showrooms are a budget hazard, as the products have huge markups without any appreciable extra benefits. You can purchase hardware, furniture, lights, and accessories from online retailers. A lot of people visit showrooms to decide what they want, and then buy the same units online at a fraction of the price. Plumbing fixtures can be trickier to buy over the Internet because the retailers don’t always sell the right internal housing for the shower heads and faucets, but a local plumbers’ supply warehouse can help you coordinate these particular needs.

Focus more on what you need than what you want or think you should have. Sticking to a budget will require you to compromise, but you won’t spend years afterward paying off the build costs.

Questions about construction law? Building your own home and need legal support? We can help – give us a call today at (305) 227-4030!

23Feb 2015

Getting a construction loan can be difficult, but the good news is that it doesn’t have to be. The right approach and advance preparation can result in the approval you’re looking for.

New home sales are on the rise, putting construction loans in great demand as homebuilders try to cash in on the limited supply of available properties. Here are four tips that will improve your knowledge of project financing and maximize your chances of approval.

  1. Confirm that you can afford to pay back the amount you want to borrow. Before going out to buy land, make sure you can prove to the lender that you are able to afford the monthly payments. They will also want to know your FICO score, how much (if any) money you have for a down payment, the extent of your construction experience, and how you plan to accomplish the proposed project.
  2. Investigate your financing options beforehand. There are different types of construction loans out there. One of the more popular options is the “one-time close,” which provides you with one fee schedule and one closing. You can also get a 12-to-18 month construction loan that will have to be refinanced into a conventional mortgage once the project is completed. This involves two sets of closing costs and two loans, but once construction is finished you can look around for mortgages that suit your circumstances and budget.
  3. Investigate interest rate options. Interest rates can be locked until construction ends, but they tend to be higher under this type of arrangement. If the rate remains the same after the project is finished and the loan is converted into a mortgage, you need to ensure that a floating interest rate won’t impact your ability to afford the monthly payments when rates go up.
  4. Take interest reserve into account. This reserve, which is added onto your loan total, is an estimated interest payment covering the construction period. It eliminates the need to make monthly payments while the project is being built, but because this reserve is added to the loan amount, you will pay interest on it. Decide whether you want the interest rate to be added, or if you want to make monthly interest payments instead.

If you don’t have perfect credit or a strong relationship with an existing lender, obtaining an affordable construction loan will be challenging, but if you only apply for what you can truly afford, approval is more likely to happen, especially in today’s booming housing market.

If you’ve got questions about construction law, we can help. Contact us today!

11Feb 2015

In the construction industry, contracting parties have the freedom to agree to whatever method to determine the amount of compensation for the amount of work performed on a contract. This article will discuss the general types of methods of compensation for contractors, which are: lump sum contracts, measurable or re-measurable contracts, and cost plus contracts. Although parties are free to combine or create new methods of compensation, as long as mutually agreed upon.

A lump sum contract is where a contractor agrees to perform the labor in the contract for a fixed amount or lump sum. The contractor carries the burden of being liable for unforeseen contingencies, if the expenses to complete the labor are greater than the contracted fixed amount of payment, in a lump sum contract. However, one exception is where the contractor has performed additional work outside the terms of the contract, which may be compensable. Finally, under common law, the contractor is not entitled to payment until the contractor has completed all the work under the contract.

Under a measurable or re-measurable contract, a contractor’s right to payment is determined under a contractual mechanism which considers: (1) the final amount of labor performed, which is measured; and (2) payment at the previously agreed upon rate, which is based upon the final amount of labor performed, which is valued. A contract administer must measure and value the work performed using the rates and amounts stated in the contract. The contract administrator has the power to increase or decrease the rates and amounts that are found to be unreasonable, where the actual amount of labor performed is greater than or less than what was billed. Additionally, where the work performed was drastically different than to what the contractor could have anticipated, such as worse conditions, a revision of contract rates may be appropriate.

A cost plus contract is where a contractor is compensated for both the financing of the construction project and for a fee as profit. A contractor’s right to payment arises through indemnity and is entitled to costs, such as: wages, site establishment costs, subcontractors, suppliers, and off-site overheads.  Typically, cost plus contracts require evidence of the costs incurred, in which an invoice will suffice. However, invoiced costs must be deemed reasonable, or at least not challenged by the owner or contract administrator to be reimbursable. Finally, a contractor is not entitled to reimbursement for interest accrued on money borrowed to fund the construction operation.

Ray Garcia, Esq.

Board Certified in Real Estate Law

by the Florida Bar

www.floridaconstructionlawgroup.com

08Dec 2014

Most contractors know that one of the biggest complications for their business isn’t related to finding or completing work, but rather litigation.  Whether the customer wasn’t clear on what they wanted, or they are just looking to take advantage of a situation, the costs of litigation can cause major problems for any contractor or construction company.

To help you reduce the risks of being sued in your next job, here are ten tips:

  1. Review the Plans – Take the time to go over all of the plans and any specs related to the job with your client before you place your final bid.  Making sure you are on the same page with the client can help to prevent many problems.
  2. Always have a Written Contract – No matter how nice the client seems or how small the job is, a written contract should be required for every job you perform.
  3. Get Extras in Writing – If the client wants any extras, include that in the contract.  If they add them on after the contract is signed, write up an addendum to the contract and have both parties sign it.
  4. Document All Delays – All contractors know that there is always the potential for delays due to unforeseen circumstances.  When this occurs, make sure to document it clearly.
  5. Document all Disputes – If you run into any sort of dispute or disagreement with the client, make sure to keep a detailed record of what the dispute was, and how it was resolved.
  6. Speak with a Construction Attorney – Ideally, you should have an attorney who specializes in construction law review all contracts.
  7. Keep Records – Keep detailed records of the exact work you performed, the supplies you purchased, and everything else that happens on each job.
  8. Give Specific Due Dates – Every job should have a set date by which you are committed to have each step done.  This will help avoid miscommunications and other problems that can end in litigation.
  9. Document Payment Schedules – If you are allowing the client to make payments on a job, make sure it is clear when each payment is due, and what happens if the payment is late.
  10. Educate Employees – If you have employees or sub-contractors working on a job, make sure they know to document their work and any disputes they may have while on the job.

These ten tips will help reduce the chances of facing a lawsuit – but there is no substitute for having an experienced construction law attorney on your team. Please contact us today if you’d like to learn more!

 

 

08Dec 2014

If you need to hire a contractor to build a new office building, condo or other structure, it is important to ensure you have the right contracts in place.  It can be difficult to get everything done properly because most people don’t work with these types of contracts very often.  This gives the contractors, who frequently deal with these matters, an upper hand. In order to level the playing field, take some time to review the following five important points:

Start with the Basics

The first thing you need to do is make sure the contract covers all the basics of what work is going to be performed.  Items such as the scope of work, the date and time by which the work must begin, the date and time by which the work must be completed, the price, and details about who is responsible for the closeout. Cover these items, and any others that are specific to your job, with enough detail to ensure there is no ambiguity.

Don’t be Pressured into a “One Size Fits All” Contract

Most contractors will have a general contract that they customize for each new job they take on.  While these are often well written, they can have problems.  Make sure you closely read through the contract that they present and only agree to use it if it meets your needs to.  Some contractors will try to pressure you into using their contract because it is easier for them, but the most important thing should always be to use a contract that represents your interests.

Identify Pre-Construction Responsibilities

Clearly identify who is responsible for what, and which groups will be working together prior to the actual construction taking place.  In most cases, the construction company will have to work with an architect, have supplies delivered, and perform a number of other tasks before ‘breaking ground.’  Make sure these activities are covered in the contract to avoid problems.

Include Details on the Construction Process

Like the pre-construction responsibilities, it is a good idea to clearly outline what types of things the construction company will have to do during the actual construction. Things like working with other contractors (plumbers, electricians, etc).  You can also include where you want the construction company to purchase the materials for the job if you have a preference.

Clearly Identify the End of the Job

The end of the job, or job closeout, is often somewhat unclear.  Make sure you put in what exactly will signal that the contract has been fulfilled.  For example, you may indicate that the job is only completed when the local inspectors have completed their inspection and given their final approval.

If you have any questions about a construction contract, or you would like to review one before you sign it, please give us a call today!

07Nov 2014

If you are having problems with a contractor, sub contractor, homeowner or supplier and considering hiring a Florida construction law attorney you should not participate in the process alone.

Florida construction law and procedures are quite complicated. For example, if you place the wrong or incorrect information on a Notice to Owner or Claim of Lien it could have serious consequences. An experienced Florida construction law attorney is necessary to navigate the procedural waters.

Be watchful of so called Florida construction law attorneys who claim to specialize in this complicated area of the law. Because construction disputes in Florida have dramatically increased over the last years and many lawyers are jumping on the band wagon and claiming to be what they are not. We strongly recommend that you hire someone who concentrates in this area of the law. Consider the following factors when hiring a Florida Construction Law Attorney.

1. How long has the attorney practiced Construction Law?

2. You want an attorney that actually handles the case themselves and does not simply refer the case out to another lawyer. The reason for this is that the initial consultation is vital and immediately determining whether you have a claim or defenses is crucial.

3. Ideally, you want your lawyer to be able to handle both litigation and transactions in the area of construction law. This is important because this allows the lawyer to advise you as to how to handle the current litigation and how to prepare the proper documents int he future to avoid litigation. Good lawyers keep their clients out of court. If a lawyer does not handle both construction litigation and the transaction portion, he may not be able to determine what is right for you.

4. You want to inquire of your lawyer if he is Board certified in Real Estate or construction law because this means that he has completed a series of examination that allow him to consider himself an expert in his field.

5. Finally, you want to ask you lawyer how many Florida Construction law matters he has handled as this will allow you to gage his experience.

Positive answers to the above questions will help you in hiring the right lawyer for you.

Ray Garcia, Esq.
Board Certified in Real Estate Law
by the Florida Bar
www.floridaconstructionlawgroup.com

02Nov 2014

Section 713.13, F.S., provides that the recording of a Notice of Commencement (NOC) gives constructive notice that claims of lien may be recorded and will have priority over any conveyance, encumbrance or demand not recorded against the real property prior to the time the notice is recorded. However, any conveyance, encumbrance or demand recorded prior to the time the notice is recorded and any proceeds thereof, regardless of when disbursed, shall have priority over liens. The NOC must be recorded with the clerk of the court where the property is located by the owner or the owner’s agent before a contractor actually begins an improvement to real property or recommences completion of any improvement after default or abandonment. A certified copy of the recorded notice or a notarized statement of filing and a copy must be posted at the jobsite. The NOC must include the legal description of the property, the street address and the tax folio number, if available. It must also include a general description of the improvement, the name and address of the owner, the name and address of the contractor, the name and address of any person designated to receive notices, and the anticipated expiration date if different from one year. The form for the NOC is provided in s. 713.13(1)(d), F.S.

For contracts greater than $2,500, the applicant for the building permit must file a certified copy of the recorded notice or a notarized statement of filing and a copy with the building permit authority. The notice must be filed before the first inspection or the property will not be inspected.7

A NOC is specifically not required prior to issuing a building permit.

The building permit must include a 14-point capitalized notice regarding the filing of a NOC. All liens from persons who do work to improve a property relate back to the filing of the NOC.

The NOC is valid for 1 year, unless otherwise stated in the notice. Any payments made by the owner after the expiration of the NOC are considered to be improper payments.

If the improvement described in the NOC is not commenced within 90 days of the recording of the notice, then the notice is “void and of no further effect” which results in any payments after that time also being improper.

Ray Garcia, Esq.
Board Certified in Real Estate Law
by the Florida Bar
www.floridaconstructionlawgroup.com

02Nov 2014

Section 713.20, F.S., provides for the waiver or release of a lien by any lienor giving a Notice to Owner and may be requested by the owner before making a payment to the contractor. The provision does not allow the lienor to waive the right to payment in advance of doing the work, but nothing prohibits the waiver prior to receiving payment. These waivers must be obtained by the owner prior to each payment to the contractor if the owner has received a Notice to Owner from a subcontractor. If the owner fails to request a Waiver or Release of Lien prior to each payment, the payments become improper. If the owner’s payments become improper, he or she may become liable to any lienor who has properly served notice and recorded a lien and therefore may end up paying twice for services or materials. Requiring and obtaining a Release of Lien at each payment for every Notice to Owner filed by a subcontractor “closes the loop” and releases the owner from liability for those payments.

Ray Garcia, Esq.
Board Certified in Reale Estate Law
by the Florida Bar
www.floridaconstructionlawgroup.com

02Nov 2014

Section 713.06(2)(a), F.S., provides that, prior to filing a lien, a lienor who does not have a direct contract with the homeowner must serve the homeowner with a Notice to Owner that sets forth the lienor’s name and address, a description sufficient for identification of the real property, and the nature of services or materials furnished or to be furnished. The Notice to Owner must be served before commencing, or within 45 days of commencing, to furnish the service or materials by the potential lienor. The notice must be served before the owner’s final payment to the contractor, after the filing of the contractor’s affidavit.

If a Notice to Owner is not served, then a lien cannot be enforced. Section 713.06(2)(c), F.S., provides the form which should be used for the Notice to Owner. The Notice to Owner includes a warning to the owner that subcontractors may file a lien against the owner’s property even if the homeowner has made payment in full. Under s. 713.06(2)(d), F.S., a Notice to Owner may be served on a lender if designated in the Notice of Commencement as a person to receive the Notice to Owner. After receiving a Notice to Owner, the lender is required to make proper payments under s. 713.06(3)(c), F.S. If the lender fails to do so, it is liable to the owner for “all damages sustained by the owner as a result of that failure.”

Ray Garcia, Esq.
Board Certified in Reale Estate Law
by the Florida Bar
www.floridaconstructionlawgroup.com

27Oct 2014

Now that the Florida construction industry is recovering from years of downturn, the Associated General Contractors of America said in a new report that Florida Contractors are having a hard time locating skilled workers such as carpenters and electricians, . In the AGC’s survey of about 1,000 contractors nationwide of which only 11 contractors in Florida were represented.

According to the Associated General Contractors of America, Carpenters are in most demand in Florida,then drywall installers, electricians, equipment operators and painters, according to the survey by the Associated General Contractors of AmericaFlorida. In addition, Florida contractors also reported having trouble finding some professional workers, especially project managers.

According to the survey, South Florida contractors also have said they are having trouble filling some specialty jobs, citing the loss of workers to the oil industry and others who left the business during the recession and housing crisis to find employment in other indurties. The fact that the Florida construction industry is a good sign for real estate and market growth.

Ray Garcia, Esq.
Board Certified in Reale Estate Law
by the Florida Bar
www.floridaconstructionlawgroup.com

20Aug 2014

Florida’s Second District Court of Appeal in the case of Snell v. Mott’s Contracting Services, Inc. addressed an issue pertaining to lien rights and the difference between filing a lawsuit and resolving a dispute through arbitration. A big concern that this case resolves is that attempting to resolve your dispute through arbitration instead of litigation may cost you some of your Florida’s lien law rights.

The Snell case involved a construction contract between the homeowner and the contractor that had a provision which provided for disputes to be resolved through arbitration rather than litigation. In Snell,  the contractor properly recorded its lien, and the homeowners filed a lawsuit in which they asked the court to determine that the lien was invalid.  The contractor moved the case to arbitration based on the arbitration provision. The court agreed and the parties were to arbitrate the matter. The contractor prevailed in the arbitration and was entitled to recover its attorney’s fees in accordance with Section 713.29 of the Florida Statutes. The appellate court found that the contractor, by asking to have its dispute resolved through arbitration, did not bring an action “in a court of competent jurisdiction.” In doing so, the court held that the contractor’s rights under Florida Lien law had expired, and that the contractor had no basis for recovering its attorney fees. As a result of the hodling in Snell, a contractor may lose a substantial portion of its recovery merely because he followed the language of his contract by resolving his dispute through arbitration.

Ray Garcia, Esq.

Board Certified in Real Estate Law

by the Florida Bar

www.floridaconstructionlawgroup.com

11Aug 2014

As far as zoning is concerned, the tenants need to do their due diligence and independently ascertain that the location that they have selected to lease allows for the business that the tenant is carrying out. Tenants should try to negotiate into the lease agreement representations and warranties on the part of the landlord that the leased premises are zoned for the tenant’s intended business use. Landlords on the other hand, should include a provision that they make no warranties as to the zoning of the leased premises for the tenants intended use only when the landlord believe that the zoning for the lease premises may not permit the tenants intended use.

As far code violations, they should generally be handled in a similar manner as zoning issues referenced above with each party attempting to shift the burden of liability away from each other. However, with code violations, the tenant must thoroughly inspect the premises with a contractor to determine if there are any code violations. Real estate attorneys recommend to their tenant clients that they perform a lien search with a lien search company that includes, code violations and open permits before signing a lease agreement for the premises. The landlord also needs to take an extra precaution especially when a tenant is making improvements to the leased premises and require the tenant to indemnify the landlord from any costs and fees imposed by code violations caused by the tenant’s work on attempting to improve the premises. Again, the landlord should also incorporate into the lease agreement, the right to cure the code violations himself and assess the costs and fees associated with resolving the code violation on the tenant.

Ray Garcia, Esq.

Board Certified in Real Estate Law

by the Florida Bar

www.floridaconstructionlawgroup.com