Indemnity clauses in construction contracts require one party to cover losses or claims for another. It’s essentially a worst-case scenario clause, but it’s a reality that some Florida construction projects face and contracts must address.

However, sometimes, the law imposes this obligation even without a contract. As an indemnitee, ensuring you receive what you’re entitled to can be complex. It’s important to understand how to approach these complex issues and to ensure each party is given the best opportunity to adhere to the law and signed contracts.

Relying on Contract Language

The starting point for any indemnity claim is the contract itself. It should clearly define the scope and limits of indemnity. Your Florida construction contracts should answer most of the questions that arise during matters of indemnity.

For example, the contracts all parties signed should define what events can trigger the indemnity in the first place. Is there a limit on how much can be paid out? Your contract should also make it clear if the indemnity covers first-party losses, third-party claims, or both. 

When indemnity is imminent, questions must be answered such as whether there is a duty to defend as well as indemnify and who gets to select defense counsel for the case ahead.

Insurance Coverage for Indemnity Claims

Contracts often include both insurance and indemnity provisions. These can conflict, especially regarding the coverage of losses. In Florida construction contracts, for example, the owner might need to buy property or builder’s risk insurance, while contractors must have liability insurance. These policies often include waivers of subrogation, which can complicate the determination of which insurance applies and the extent of each party’s liability.

When a loss occurs, it’s crucial to determine which insurance policy applies. Courts often place the risk of loss solely on the insurance, barring subrogation claims against other insured parties. However, disputes can arise about the cause of the loss and whether it was due to external forces or contractor negligence. These disputes can lead to complex chains of indemnity claims among contractors, subcontractors, and their insurers.

Tendering a Claim

To protect indemnity rights, indemnitees must understand the requirements for tendering a claim. While most states only require notice, some require a formal tender to trigger an insurer’s duty to defend. Issues can get more complicated depending on the insurance policy terms, such as “other insurance” clauses, deductibles, and policy hierarchies.

Navigating the Legal Issues of Indemnity

Indemnitees should involve their indemnitors early in the defense and settlement discussions. This can prevent the loss of indemnity rights. Contracts can address control over the defense, allowing indemnitees to choose their own counsel. Additionally, when insurers issue a reservation of rights, indemnitees might retain control over the defense.These issues are inherently complex. A proactive approach to involving an experienced Florida construction law attorney in the early stages and contract drafting of any construction project in the Sunshine State is the best way to protect yourself. If you find yourself on either side of an indemnity matter, contact Florida Construction Law Group today.

The Federal Trade Commission (FTC) formally voted to ban non-compete clauses in employment contracts, including for most construction workers. This is a major change for construction contracts and workers in the industry, as non-compete clauses have long been used for protecting investments both in construction employees and construction work.

Many construction companies invest in training skilled workers so they are able to regularly rely on their work and build lasting relationships with them. Now, it will be harder to justify those training investments and retain hard-working construction employees.

What Does the FTC Non-Compete Ban Say?

This ban, expected to take effect in September, targets clauses used to protect business interests, reduce competition, and safeguard trade secrets. The enforcement timeline may be affected by legal challenges.

The ban applies to all existing non-compete clauses in employment contracts, with limited exemptions. The most notable exemption in the construction industry is for executives (defined as those who make over $151,164 and have policy-making decisions within their organization). The FTC argues that this will enhance competition, boost wages, and create a fairer job market.

Future non-compete clauses in new construction employment contracts will also be unenforceable. Regardless of their inclusion in contracts, these clauses will not hold up in court if challenged by employees. This change necessitates a significant shift in how businesses approach contract negotiations with new hires.

What Does It Mean for the Construction Industry?

In the competitive field of construction, non-compete agreements with independent contractors and subcontractors help protect a company’s efforts in developing customer relationships and securing repeat business. Construction work relies on predictability. If you are regularly working with the same crews, then you are able to set more realistic project timelines and understand the resources your crew actually needs for the job.

While this does create greater risk, it highlights the importance of working with an experienced attorney. Attorneys well-versed in Florida construction law will be able to use other restrictive covenants to protect the important work of Florida construction crews while also shielding your team from unnecessary litigation that slows down the work and cost you significantly.If you’re looking to navigate a post-non-compete world for your construction company or team, contact Florida Construction Law today. Our team of experienced attorneys will help you implement legal strategies that safeguard the work, ensure the integrity of your team, and proactively shield you from construction litigation matters.

We work with Florida construction workers and project managers every day and one of the biggest legal issues that come up is projects that fall off schedule or lack the necessary preparation for the job in the first place. This often disrupts change orders, payment schedules, and project goals.

Our team understands how crucial it is to head into a job with an effective and realistic schedule in place. Florida Construction Law Group regularly assists clients who are either facing or pursuing construction litigation related to off-schedule construction projects in Florida. Our goal is to help contractors, subcontractors, and project managers establish and manage construction project schedules effectively to avoid these legal issues.

What Should a Construction Project Schedule Cover?

A construction schedule is essential for defining every task and event in an upcoming project during the planning phase. It outlines all the resources required at each step and how to distribute them across teams throughout all stages of development—from conception to completion.

A comprehensive construction schedule should include:

• Scope of work
• Relevant deadlines
• Resource management and allocated assets
• All project deliverables
• Specific tasks that need completion (and those responsible for task oversight)
• Task durations
• Any existing task dependencies

Each of these elements plays a critical role and must be carefully tracked and updated throughout the course of the project lifecycle should changes be necessary.

What Does an Effective Schedule Mean for the Work?

An effective construction schedule organizes all the above elements to maintain project integrity and to set a comprehensive and realistic plan forward. Your schedule should be crafted to maximize the productivity of each contractor or subcontractor involved but not necessarily for the absolute fastest path to completion (often referred to as the Critical Path Method) unless that’s what the project calls for.

Construction scheduling is crucial as it enhances workflows, streamlines projects, and fosters better communication among all relevant stakeholders. It also allows for timely and sufficient procurement of materials that lends itself to ideal productivity to complete the project within the targeted timeline and budget.

Effective scheduling also improves resource planning, including the contractors and subcontractors, maximizes quality control measures, and gives team members proper notice to plan their work each day. Prioritizing work schedules to accommodate various conditions, such as weather-sensitive activities, is an element every project needs to rely on.

Choose the Right Schedule and Contracts for Florida ConstructionOur experience has shown us that construction projects can falter due to poor planning. The team at Florida Construction Law Group supports the Florida contractors and construction workers who are building our homes and communities. We are ready to help you draft effective schedules and contracts based on our extensive experience. Contact our team to ensure your next project’s success through effective planning.

Florida construction projects are the work that builds our communities. Whether you’re looking to build or renovate your home, a business, or other structure, it’s important to understand the financing options available to you before committing to any loan options.

When people seek out financing for a construction project, it’s often the first time they’ve ever heard the terms “single-close” or “multi-close” loans. Construction jobs generally require (at least) two loans or terms: a construction loan that funds the work over the time of the job and then a term that extends long-term like a 30-year mortgage. As you weigh your options, we want to help you understand what each of these options is so you are able to proceed with clarity and confidence.

What is a Single-Close Construction Loan?

A single-close construction loan is a process that streamlines securing construction financing into a single transaction. It consolidates the construction phase financing and the subsequent long-term mortgage into one comprehensive loan application and closing. Upon the completion of construction, the initial loan transitions into a traditional mortgage, hence the alternate names “all-in-one” or “construction-to-permanent” (CTP) loans.

The appeal of single-close loans lies in their simplicity and cost-effectiveness. Applicants face just one set of paperwork and one closing event, significantly cutting down on administrative burdens and closing costs. Moreover, the security of knowing your long-term mortgage’s terms and interest rates upfront eliminates the uncertainties that come with securing additional financing post-construction.

What is a Multi-Close Construction Loan?

In contrast, multi-close construction loans introduce a degree of flexibility to the construction loan process. This model necessitates obtaining two distinct loans: one for the construction phase and another for the long-term mortgage that refinances the initial loan upon project completion. The first loan covers construction costs, while the second, secured post-construction, transitions the financial commitment into a 15 or 30-year mortgage.

Opting for a multi-close loan opens up additional possibilities that could lower costs, but it comes at the expense of certainty. Although it involves more steps, with separate approvals and closings for each phase, this route can offer lower rates and more favorable terms for the long-term mortgage. It caters to those willing to take on the uncertainty of a second approval process while preparing for potential financial or project changes that could lead to better loan conditions down the line.

Proceed With CertaintyAt Florida Construction Law Group, we are ready to help the hard-working people of Florida through the construction loan process. We understand the weight of these financial decisions, and we are committed to guiding you toward the financing option that best suits your project’s needs and your financial situation. Contact our team to schedule a consultation and get started on the road toward making the most informed choice possible.

Handling change orders and preventing scope creep without legal complications is a balancing act for contractors and developers. While change orders are a normal part of construction projects, they can sometimes lead to disputes and additional costs. The process is meant to adjust the project as it moves forward, but it can lead to unexpected challenges without careful management. Understanding the legal framework and having clear protocols can significantly affect handling these changes.

Change Leads to Possible Disputes 

It’s not uncommon for the initial agreement to be modified in construction projects. These modifications, known as change orders, adjust the original scope of work, whether by adding or removing tasks. Florida law defines a change order as any modification authorized by the property owner that changes the originally agreed-upon labor, services, or materials. While contractors might see change orders as an opportunity to increase project value, they also acknowledge that these can extend the project timeline. 

Disputes often arise when there’s disagreement over whether a task is a change order or was included in the initial contract, whether the change was authorized, or if the cost of additional work was agreed upon. Including a ‘construction change directive’ in contracts allows owners to make unilateral order changes. This can sometimes make it hard to predict how changes affect project costs and timelines. A written agreement on extra work, signed by both parties, can also help clarify expectations. Identifying authorized individuals who can approve change orders on behalf of each party is crucial. This approach minimizes confusion and ensures that modifications are documented and agreed upon.

The Critical Path & Extensions 

Change orders potentially increase the project’s scope and affect the project’s completion timeline and costs. For a delay to be considered compensable, it must impact the project’s critical path. The critical path is the sequence of stages determining the minimum time needed to complete a project. However, not all delays will extend the project’s completion time. Understanding which delays affect the critical path and could lead to compensable claims. Additionally, change orders can extend the deadline, allowing a contractor to get a lien on the property. 

This extension is valid as long as the change order work was agreed upon in good faith and completed within a reasonable timeframe. The court uses the Aronson/Michnal test to determine if work counts as final furnishing, extending the time for filing a claim of lien. This test checks if the work was done in good faith, within a reasonable time, according to the contract, and was necessary for a complete job. The ‘punch list’ work, blending repair, and additional work under a change order illustrate how specific tasks can extend the lien filing period if authorized as change orders. Ensuring that change order work aligns with the contract and is completed promptly protects your ability to secure a lien, highlighting the importance of clear, mutual agreements on project changes.

Solidify Your Project With Florida Construction Law Group 

If you’re facing challenges with change orders or scope creep in your construction projects, seeking professional advice is essential. Consulting with an attorney experienced in construction law can help you understand your rights and obligations and ensure that your contracts are structured to manage these issues effectively. Schedule a consultation today to get the guidance you need to navigate these challenges successfully.

Encountering delays and budget overruns is a given. These are issues that can be mitigated as opposed to outright eliminated. Despite how common they are, don’t overlook the importance of developing pre-emptive ways to limit their impact on your project’s timelines and finances. Indirectly, this will also safeguard your relationships with your clients. The secret to overcoming them lies in adopting a proactive stance and being equipped to address arising issues promptly. This approach is pivotal in steering construction projects toward successful completion.

Be Proactive with Construction Delays

The initial step in confronting project delays is pinpointing their root causes. Typical culprits range from adverse weather conditions and supply chain disruptions to modifications in project scope. Understanding the underlying issue is a prerequisite for developing a solution that works for you and your clients. For example, weather-induced delays call for a revised work schedule, whereas supply chain issues could be mitigated by identifying alternative suppliers or materials. Moreover, a thorough reassessment of the project timeline may reveal opportunities for recuperating lost time, potentially through workforce augmentation or extended working hours.

Evaluating the ramifications of delays on the project’s overall timeline and budget is imperative. This evaluation should be accompanied by transparent communication with subcontractors and suppliers, given their critical roles in the project. Documenting the delays and their justifications will be referenced by your attorney (if necessary), and it will assist you with the discussions with your clients when there is an alteration to the timeline. Proactively managing delays and incorporating buffer periods into project timelines can significantly reduce their impact.

Maintaining open lines of communication is crucial. Ensuring that all project participants, including team members, stakeholders, and clients, are apprised of delays and the measures being implemented for resolution is essential for sustaining trust and managing expectations.

Legal Considerations for Managing Cost Overruns

Dealing with cost overruns begins with a detailed project budget analysis to determine where your additional expenses came from. These could stem from unforeseen site conditions, fluctuations in material costs, or other factors. It may be necessary to reassess the project’s scope. During this time, look at your options for making adjustments, ultimately allowing you to fulfill your obligations. Engaging with your team members to brainstorm cost-saving strategies can yield creative alternatives.

Establishing a contingency fund for unexpected expenses is one financial strategy for construction projects. Negotiating favorable terms or rates with suppliers and contractors can alleviate financial pressures. Consulting with a financial expert specializing in construction projects can offer insights into budget management and risk mitigation. Being transparent with budgetary concerns with stakeholders can preempt misunderstandings and preserve the project’s integrity. You should have budget reviews regularly to address some of the financial challenges you’re facing at their earliest stage. 

Maintaining an open dialogue with clients about cost overruns is essential. Candid discussions regarding the situation and potential remedies, such as project downsizing or pursuing more economical options, are difficult to have—but they are better than late-stage surprises.

Lawyers Who Understand the Construction IndustryFacing delays and budget overruns in construction requires a comprehensive understanding of the issues, effective communication, and practical problem-solving strategies. Should these challenges arise, consider consulting with a law firm with significant construction law experience. Contact us to schedule a consultation.

There are numerous challenges that people face when they build a new home. One of the more significant hurdles you may encounter is learning that defective construction materials were used. Any future homeowners in this position must address these challenges effectively. Doing so protects your investment and will avoid delays and extra costs. 

What To Look For

The first step in managing defective materials is being close enough to the project to observe it. When materials arrive or are being used, inspect them closely. If you notice that the materials need to be of better quality or match what was agreed upon in your contract with the general contractor, document these discrepancies immediately. This documentation could include taking photos, noting the delivery dates, and recording all communications regarding these materials. 

Be sure to compare the materials against the specifications in your contract to confirm the defects. Involving an independent inspector can also objectively assess the material quality. Keep track of any additional costs incurred due to these defects. It’s also wise to stop using defective materials immediately to prevent further issues in the construction process. Informing your architect or designer about the defective materials can provide additional support, as they might offer technical advice or alternatives. Regular updates to your general contractor about material inspections can also help maintain quality control throughout construction.

After identifying the defects, communicate with your general contractor right away. This communication should be in writing, detailing the defects and attaching any evidence you’ve gathered. Review your contract with the contractor to understand any terms related to material quality and handling defects. The agreement might specify steps such as returning the materials or getting replacements from the supplier. Emphasize the urgency of the matter in your communication and request a prompt response to avoid further delays in your home construction. Establishing a clear timeline with your contractor for resolving the issue is essential, including deadlines for replacing the materials. If the contractor sourced the materials, remind them of their responsibility to ensure quality and adherence to the contract specifications.

Finding the Path Forward 

Once you’ve informed your general contractor, figure out the next steps together. This may involve deciding whether to wait for new materials or source them from a different supplier. Consider how these decisions will affect your home’s construction timeline and budget. If the defective materials cause significant delays or extra expenses, these should be discussed openly with your contractor. Discuss potential temporary solutions or adjustments that can be made while waiting for the new materials. Maintaining a collaborative approach with your contractor is essential to finding the best solution. Keep detailed records of these discussions and any agreements made to ensure a clear understanding between both parties. Consider also the possibility of seeking a reduction in costs or compensation from the contractor for the inconvenience and delays caused by the defective materials. Ensuring these negotiations are documented will record any agreed-upon concessions or compensations.

If the response to your complaint about the faulty materials is unsatisfactory, or if these materials have significantly impacted your home construction, legal consultation may become necessary. Your attorney will explain your rights and potential actions based on your contract and specific circumstances. Legal support is paramount in negotiations with the contractor or supplier or if legal proceedings are required. A lawyer can also help you understand any

compensation you may be entitled to for the delays and additional costs caused by the defective materials. This legal advice can be invaluable in ensuring your rights are protected, and you receive fair treatment under your contract.

Florida Construction Law Group Dealing with defective construction materials during home building demands careful handling to mitigate impacts on your project. Each step is equally important, from monitoring materials to documenting and discussing issues with your general contractor. Consider scheduling a consultation if you face challenges with defective materials in your home construction and need legal guidance. The Law Office of Ray Garcia, P.A. is prepared to assist you with these issues, ensuring your dream home project stays on track.

Delays are an inevitable reality. While minor setbacks are often absorbed into the project timeline, more significant delays can have far-reaching consequences. They disrupt project schedules and increase costs. When substantial delays arise, the question of who bears responsibility and the extent of compensation becomes a complex legal issue. This is where delay claims come into play.

Delay claims are formal notifications sent by a contractor to the project owner or another responsible party alleging that their actions or inactions caused a delay in the project’s completion. These claims seek to recover damages incurred due to the delay, such as increased labor costs, overhead expenses, and lost profits. 

Understanding the intricacies of delay claims is crucial for Florida contractors to safeguard their interests effectively and navigate the legal landscape surrounding these complex disputes. We wanted to explore the legal aspects of delay claims to provide contractors with valuable insights into identifying, documenting, and pursuing delay claims in Florida.

Identifying Delay-Causing Events

The first step in handling delay claims is to identify and document the events that caused the delay. Accuracy is critical. This requires a detailed overview of the project’s contractual obligations, the original project schedule, and the actual progress of the work.

Common causes of delay in construction projects include:

• Owner-caused delays: These delays arise from actions or inactions of the project owner, such as late or incomplete design changes, delays in obtaining permits, or interference with the contractor’s work.
• Subcontractor-caused delays: Delays caused by subcontractors can disrupt the overall project schedule if their work is critical to the project’s progress.
• Unforeseen events: Unforeseeable events beyond the control of any party, such as severe weather conditions or natural disasters, can also cause delays.

Documenting the Delay

Once the delay-causing events have been identified, it is essential to document the delay. This documentation should include:

• Date and time of the delay event: Accurate timestamps are crucial for establishing the sequence of events and determining the impact on the project schedule.
• Nature of the delay event: Clearly describe the event that caused the delay, providing specific details and supporting evidence.
• Impact of the delay event: Analyze how the delay affected the project’s progress, including the specific activities that were hindered or halted.
• Communications with the project owner: Document all communications with the project owner regarding the delay, including notices, letters, and meeting minutes.

Pursuing Delay Claims in Florida

In Florida, contractors can pursue delay claims under the Florida Prompt Payment Act (FPPA). The FPPA establishes a framework for resolving payment disputes in construction projects, including delay claims.

To pursue a delay claim under the FPPA, contractors must follow specific procedures, including:

• Providing timely notice of delay: Contractors must provide written notice to the project owner within 20 days of becoming aware of the delay.
• Submitting a formal delay claim: A detailed delay claim must be submitted to the project owner within 45 days of the substantial completion of the work.
• Negotiating a resolution: Contractors should attempt to negotiate a settlement with the project owner before resorting to litigation.

If negotiations fail, contractors may have to pursue their claims through litigation. This process can be complex and time-consuming, and it is highly recommended that contractors seek legal counsel from an experienced construction law attorney.

Legal Insights for Contractors

As Florida contractors navigate the complexities of delay claims, here are some valuable legal insights:

• Proactive approach: Early identification and documentation of potential delay-causing events can strengthen a contractor’s claim.
• Effective communication: Maintaining open and transparent communication with the project owner can help resolve delays amicably.
• Seek legal counsel: Consulting with an experienced construction law attorney can provide invaluable guidance and representation throughout the delay claim process.

Delay claims are a prevalent issue in the construction industry, and Florida contractors must be well-versed in their legal rights and responsibilities when handling them. By understanding the causes of delays, documenting delays, adhering to FPPA procedures, and seeking legal counsel, contractors can protect their interests and navigate the complexities of delay claims.

Florida Construction Law GroupIf you need help with delay claims in your construction projects, don’t navigate these complex situations alone. Schedule a consultation with Florida Construction Law Group to ensure your interests are protected, and you have the legal insights to handle these claims effectively.

Construction work is the backbone of our cities, an essential but complex combination of hard work, meticulous planning, and substantial financial transactions. The industry not only builds our communities but also shapes them to be better, safer places to live.

All of this also comes with complex legal issues that require diligent attention. Throughout the course of work, significant documentation must be not only drafted, agreed upon, and signed, but kept securely to reference when needed.

This is one critical aspect that will make or break the success and legal standing of a construction project: record keeping. Verbal agreements, while sometimes legally enforceable, are far from the best practice in the construction business. The foundation of any solid construction project management lies in the meticulous documentation of physical and digital records, and ensuring multiple copies are safeguarded.

Protect Yourself from Litigation

The construction business, with its myriad of transactions and interactions, is no stranger to litigation. It’s an inherent part of the business landscape. However, being dragged through legal proceedings doesn’t have to be a norm for your company (nor is it what you signed up for when you got into construction).

A comprehensive and accessible paper trail acts as a shield against the risks of litigation. By meticulously documenting every transaction and maintaining a record of all work completed, you create an armor of evidence that can protect your interests. This systematic documentation can be the difference between a resolved dispute and a prolonged (and expensive) legal battle. To safeguard your work from unnecessary litigation, it’s imperative to keep precise records that capture all the information necessary to defend your projects and your company.

Maintain Records Long-Term

It’s not just about keeping records while the work is active. The conclusion of a construction project doesn’t signal the end of the need for its records. In Florida, the statute of limitations on construction litigation is up to four years post-completion. That number can be extended to ten years in cases where the defects are considered to be latent.

This sets a minimum standard for how long records should be kept, but the savvy approach is to maintain these documents indefinitely. These records could be pivotal in future legal disputes or serve as a blueprint for handling subsequent projects and disputes. The longevity of your records could mean the longevity of your legal and financial security.

Establish a Consistent Record Keeping for Your Construction Business

Consistency is key. You need to prioritize efficiency and reliability in record keeping. When records from various projects are uniform in the way they are drafted and maintained, it not only streamlines management but also reinforces their credibility in the legal realm.

Courts tend to raise an eyebrow at records that lack consistency, casting doubt on their authenticity. A haphazard approach to documentation can lead to confusion, errors, and legal complications. It is crucial to establish and adhere to a consistent record-keeping protocol.

Ensuring that your record-keeping practices are beyond reproach is not just good business – it’s a legal imperative. At Florida Construction Law Group, we take pride in crafting consistent legal documents for your projects. Contact us today to fortify your record-keeping strategies and cement the legal standing of your construction work.

At Florida Construction Law Group, we regularly discuss the importance of strong construction contracts and how they safeguard any project’s progress and ultimate completion. Your work is best protected when you draft, sign, and thoroughly understand strong contract terms.

One of the most important elements of these contracts is the scope of work clause. This sets the stage for much of the project and is one of the key aspects of a construction contract that not only settles disputes but also proactively prevents them. Everyone should understand the scope of the work at hand so nobody is able to dispute strong work being done in the future. 

What is a Scope of Work (SOW) Clause?

A scope of work clause, commonly referred to as an SOW, serves as the blueprint of your construction project. It outlines the materials, activities, project milestones, deliverables, and, ultimately, the end product expected in the work.

Think of it as the document that gets everyone on the same page. It should leave no room for ambiguity, ensuring that both parties understand their responsibilities and expectations from the very beginning.

An SOW allows all stakeholders to align their efforts and resources effectively. Whether you’re the property owner, general contractor, or subcontractor, a well-drafted scope of work clause is your compass.

How Scope of Work Clauses Protect Your Project

These are often the key to preventing and resolving some of the most common construction disputes. Before you take any other steps when a dispute arises, refer to the SOW to see if the dispute is able to be quickly resolved.

Imagine a scenario where there’s a disagreement between the property owner and the general contractor regarding the quality of materials used. Without a comprehensive scope of work clause, this dispute could spiral into a costly and time-consuming legal battle. However, if the scope of work clause clearly defines the materials to be used and the quality standards to be met, it becomes a straightforward resolution.

Work with Florida Construction Law Group on Your Contracts

When it comes to protecting your Florida construction project, partnering with experienced legal professionals who understand construction law is vital. At Florida Construction Law Group, we have significant experience in drafting, reviewing, defending, and disputing terms in Florida construction contracts. We are able to handle disputes from either side because we understand the scope of work being done to build and preserve our communities.

Don’t leave the fate of your construction project to chance. Rely on Florida Construction Law Group to draft and defend your next construction contract.

In construction law, performance bonds play a pivotal role in securing financial commitment to a project. These financial instruments ensure that construction projects are executed smoothly and without disruption.

However, when disputes arise and claims are made against performance bonds, a complex dance of legal intricacies commences. When a surety is facing potential liability due to a performance bond claim, it’s imperative that a thorough investigation takes place to verify the claim and find potential remedies.

What is a Performance Bond?

Performance bonds guarantee the value of the work is not lost if a contractor is unable to pay, faces bankruptcy, or is dealing with a similar circumstance. These bonds ensure progress is not stalled on the project when financial issues arise. They provide protection through payment guarantees for labor, materials, and services rendered.

Verifying a Performance Bond Claim

Upon receiving a performance bond claim, the surety’s initial duty is to launch a comprehensive investigation. This process serves as the cornerstone for determining whether the bond principal (the party responsible for fulfilling contractual obligations) is indeed in default. Verifying this is an important first step before anything else is able to move forward.

Once liability is confirmed, it’s important to investigate each and every aspect of the agreement and its ties to the project. By delving into the specifics, the surety gains a panoramic view of the circumstances, allowing them to determine the most appropriate course of action.

Investigating a Performance Bond Claim

The investigation process during a performance bond dispute is vital to finding a resolution that satisfies all involved parties. As a surety, engaging in a thorough and expeditious investigation is not just a legal obligation but a strategic move to uncover remedies, safeguard interests, and facilitate a fair resolution.

A thorough investigation not only demonstrates the surety’s commitment to remedying the situation. The investigation serves as a crucial element for the surety to identify potential avenues for resolving the dispute while mitigating the impact on all parties involved. All options should be on the table, including renegotiations or even collaborative solutions to rectify the situation without entering litigation.

Work with an Experienced Florida Construction Law Firm

In the realm of construction law in Florida, a surety’s responsibility is not one that can be taken lightly. The intricate web of legalities, obligations, and potential liabilities requires a steadfast dedication to due diligence. That’s where Florida Construction Law comes in.With a deep understanding of construction law and performance bond intricacies, we provide clients with unwavering representation and advice through every phase of a surety claim and construction project. Whether you are facing a claim or attempting to execute a claim, we handle both sides. Contact our team and get the best representation for your performance bond dispute today.

What’s in a contract? For construction contractors, the answer should be everything. Contracts are the backbone of Florida construction work, and it’s imperative that these contracts are fortified with careful and thorough legal consideration.

But, what terms do you really need and what do some of the common terms actually represent when you’re signing a contract? We want to make sure you have peace of mind before you sign anything.

Pricing Terms

Fixed Price – For fixed-price contracts, all work must be done for the defined price that will either be paid for all at once (lump sum) or over the course of the work.

Guaranteed Maximum Price (GMP) – Under GMP terms, there is a price limit set for the work. Any work done beyond this upper limit is paid for by the construction manager.

Time and Materials – This type of contract requires the contractor to bill the owner for labor, materials, and hours worked. This is best for jobs where the amount of time and materials required is unclear.

Unit price – Unit pricing uses a fixed price on a defined “unit” such as price per square foot. Contractors bill for each individual unit in the work.

Draw Request – Many contractors are paid out in phases over the course of the job. A draw request is made when more money from the loan is needed and a phase of the work is complete. These often result in draw request disputes.

Dispute Resolution Terms

Dispute Resolution – Dispute resolution in construction contracts ensures a proactive approach when disputes arise involving draw requests, payments, materials needed, and other issues.

Indemnification – This is applied when any damages are incurred due to actions or omissions by a contractor. The contractor is held responsible for these costs as opposed to the owner unless otherwise defined.

Forced Arbitration – Certain contracts will include language for forced arbitration which requires that the involved parties enter into legally-binding arbitration as opposed to filing a lawsuit to resolve issues that arise.

Termination – Construction contracts must define when a job is able to be legally terminated. This includes when contractors are able to walk away and when the owner or client is able to terminate the work to either hire new contractors or abandon the project.

Use Florida Construction Law to Review Your Construction ContractsThese are just a sample of the many key terms included in Florida construction contracts. It’s important to have an attorney review your contracts before committing to a job. This protects you, your employees, and the work being done. Contact Florida Construction Law Group for a thorough contract drafting or review today.

One of the best and most efficient ways to help ensure payment as a construction contractor is to file a mechanic’s lien. A lien, in general terms, is a legal guarantee that the lienor (person who filed the lien) gets money if the property is ever sold. There may be multiple liens on one project or property, which is one reason why contractors should file a lien as soon as they believe it would be beneficial.

This blog will walk through the general process of filing a mechanic’s lien and enforcing the lien through a foreclosure action.

Step 1: File the lien in accordance with Florida law. 

The most important thing to keep in mind at the beginning is the deadline for filing a Florida mechanic’s lien. As long as you are privy to the project’s prime contract, you have 90 days from the project’s last work to file a lien. If the prime contract was terminated earlier than the project’s last work, you must file within 90 days of that contract termination. 

The lien itself must contain certain information about the project and be filed with the county clerk’s office where the project is located.

Step 2: Send notice to interested parties. 

After filing your mechanic’s lien, the real work begins. Florida law requires lienors to file copies with the project’s interested parties within 15 days of the lien’s filing. Copies should go out to developers, owners, lenders, subcontractors, and material suppliers. 

In many cases, simply giving notice that you are planning to file a lien will get you the payment. A Notice of Intent to Lien is not required in Florida, but it may result in payment all the same.

Step 3: Consider filing a foreclosure lawsuit to enforce the lien. 

You’ve filed a lien and haven’t heard anything from the project owner despite the lien notice and multiple attempts to contact them. It might be time to tighten the screws.

Under normal circumstances, the lienor in Florida has one year from the date of the lien’s recording to bring a foreclosure action. However, that statute of limitations can be drastically shortened in two ways. One, the property owner can file a Notice of Contest of Lien to shorten it to 60 days. Two, the deadline can be changed to just 20 days if the interested party comes back with a counter-lawsuit after receiving notice of the lien.

Step 4: Talk with your lawyer and turn over everything.

Your attorney should handle all the technical requirements, like filing the foreclosure lawsuit with the appropriate court and arranging for service of process to the other parties. However, you can do your part by giving your attorney relevant documents, contracts, pictures, and other information. Being transparent and forthcoming can help your case.

A successful case will usually result in a sale of the property or project. You may have to wait before you get the money you are owed. In some cases, successful claimants (lienors who enforce their liens by filing a foreclosure action) receive reimbursement for attorney’s fees.

A Skilled Attorney is Your Greatest Resource

Filing and recording a mechanic’s lien requires great attention to detail, as does ensuring you did so in the appropriate amount of time. Filing a foreclosure lawsuit to collect on that lien is much more complex; hiring an experienced attorney is the best thing to do. You deserve to be paid for the work you did, and our firm would be glad to help make that happen. Call us at 305-227-4030 or fill out a form on our website to get in touch with Florida Construction Law Group.

You have probably heard all about home solar panels- go green to save the earth, with no money down, and pay almost nothing on your electric bill. It sounds like a no-brainer if you are a homeowner to use clean energy to cut back on your electric bill.

With over 11,000 solar panel companies nationwide, the ease and availability of equipping your home with panels are unending. Homeowners can pay cash, take out solar loans, and use solar leasing. We are going to look at one specific funding option known as PACE

PACE (Property Assessed Clean Energy)

PACE loans are increasing rapidly throughout Florida. PACE loans are a low-cost, long-term financing option for homeowners. Through the PACE program, homeowners can purchase energy-efficient equipment through a non-ad valorem assessment that is repaid through the homeowner’s annual tax bill. There is no upfront cost for the homeowner, but a lien is then placed on the property equaling the value of the improvements, then assessed and added to the future property taxes. There are some considerations and concerns surrounding the program.

Underwriting Issues

With these PACE programs, the lenders are not thoroughly looking at the owner’s financial ability to repay these loans. They are m looking at your history of re-paying your mortgage and the equity in your home.

Lender Concerns

PACE Providers have not been upfront in explaining that the lien placed will likely inhibit any additional bank financing while the lien is still on the property. Lenders are rightfully concerned because the lien can potentially impair their rights as the lienholder. Certain banks will not back mortgages that currently have a PACE lien against them.

Sale of Property

If the property is sold, the lien may need to be repaid in full before the home is sold.

Loan Disclosures

The PACE loan providers slickly gloss over the details and critical implications of agreeing to the loan. In their agreement, PACE states that they have a right to foreclose upon their investment if there is a failure to pay. Therefore PACE can take the property away from the homeowner.

Contractor Issues

The PACE program does not install the solar panels themselves. They hire contractors, which does not guarantee that the contractor is reputable or responsible. There have been several circumstances where the contractor does not complete the project correctly or even walks away from the project, and the homeowner is still liable for the lien on their home.

Get Representation

Let our experienced and dedicated attorneys at the Florida Construction Law Group help you with any questions or issues you may have surrounding the Florida PACE program or its loans.

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

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

How disputes will be handled

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

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

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

Specific project schedules

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

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

Force majeure provisions

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

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

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

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

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

1. Professional liability insurance.

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

2. Workers’ compensation.

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

3. Subcontractor default insurance.

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

4. Inland marine insurance. 

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

5. General liability insurance. 

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

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

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

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

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

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

Design Defects

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

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

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

Material Defects

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

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

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

Construction Defects

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

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

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

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

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

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

Mediators Are Independent Third Parties

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

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

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

You Hold the Power

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

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

Cheaper and Quicker Alternative to Other Solutions

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

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

What is PACE Financing?

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

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

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

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

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

Understand Your Contractor’s Terms

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

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

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

Greater Control of Intermediary

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

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

Customizable Discovery and Preliminary Procedures

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

The Hearing

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

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

Look Over Your Contract

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

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

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

Rights to Lien Cannot Be Waived

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

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

Filing a Release of Lien

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

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

WAIVER AND RELEASE OF LIEN

UPON PROGRESS PAYMENT

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

  (description of property)  

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

DATED on  ,   (year).       (Lienor)  

WAIVER AND RELEASE OF LIEN

UPON FINAL PAYMENT

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

  (description of property)  

DATED on  ,   (year).       (Lienor)  

Proving Timely And Accurate Payment

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

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

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

Set a Clear, Reasonable Schedule

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

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

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

Keep All Receipts

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

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

Document and Explain Changes

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

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

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

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

The project doesn’t fit your portfolio

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

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

Too good to be true

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

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

Your team is stretched thin

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

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

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

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

1. Document and review all contract details

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

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

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

2. Don’t be afraid to start over

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

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

3. Constantly review the project

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

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

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

4. Call an attorney

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

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

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

Conduct a Survey and Evaluation

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

Have a Thorough Plan and Timeline

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

Verify Access to Utilities

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

Clear the Land

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

Verify Local Laws and HOA Requirements

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

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

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

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

Owner provides materials

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

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

Fixed-price contracts

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

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

Materials provided but not paid for

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

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

Leftover materials are negotiable

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

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

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

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

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

Causes of construction loan foreclosures

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

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

Causes of construction loan foreclosures include:

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

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

Consequences of construction loan foreclosures

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

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

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

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

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

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

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

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

Communicate immediately

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

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

Gather all documentation

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

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

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

Stick to the original agreement

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

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

Contact your attorney

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

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

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

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

Claim of Lien

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

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

Contest of Lien

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

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

Selling under lien

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

Protect your hard work

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

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

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

Everything Will Go According To Plan

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

They Can Speed Up as Necessary

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

The Price Will Never Change

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

It Should Take the Same Time as Another Project

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

Get the Help You Need

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

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

Direct Damages

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

Consequential Damages

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

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

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

What are Liquidated Damages?

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

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

Precluding Consequential Damages in a Construction Contract

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

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

Understanding Consequential Damages is Critical 

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

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

Two Types of Construction Loans

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

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

Construction Loan Foreclosures

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

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

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

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

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

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

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

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

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

Ways to Avoid Needing a Change Order

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

Some ways to improve the change order process include: 

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

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

Traditionally, the design-bid-build project delivery method was favored by private and public owners. This offers cost-efficient decisions at two major points in the project. Another project delivery method that’s taken shape over the past few years is the construction-manager-at-risk (CMAR) method. The CMAR project delivery method, in short, provides the same opportunities for cost-savings while providing a single point of contact for the owner or developer. 

How the CMAR Project Delivery Method Works

Construction project owners commonly develop requests for proposal (RFPs) for both the CMAR and design at the same time. However, most owners interview and select the CMAR prior to selecting the project’s designer. If the CMAR agrees and executes the pre-construction agreements, he or she may assist in the designer selection. An experienced CMAR may also suggest designers who would be good fits for a particular project. With this project delivery method, owners and developers are often free to select the designer on desired criteria—which may or may not be the lowest responsible bid.

After the chosen designer agrees to the other major pre-construction project, the CMAR determines the Guaranteed Maximum Price (GMP). The GMP is arguably the most attractive feature offered by a CMAR project delivery method. In most cases, the CMAR assumes all financial liabilities exceeding the GMP threshold. There are occasionally exceptions to this rule—most notably change orders. CMARs often include wiggle room for contingencies in their service price. 

During construction, the CMAR essentially acts as a consultant to the owner or developer. Because the CMAR assumes most financial obligations exceeding the GMP, he or she is keen to keep costs down. The owner or developer can therefore enjoy a less hands-on approach to managing the project while having peace of mind that his or her wishes are being advocated for. 

Potential Drawbacks of the CMAR Project Delivery Method

One major pitfall of CMAR arrangements is that owners or developers often mistakenly believe the construction manager will assume every financial liability exceeding the GMP. Mistakes in pre-construction contracts can result in price overages that must be absorbed by the project owner or developer. 

It’s also important to insert the CMAR at the right time. Having your design team come up with a blueprint without the input of the CMAR could be a huge risk, as the design team may not be willing to make changes the CMAR suggests. At any stage, the owner and CMAR need to be on the same page; not communicating the owner’s input could be catastrophic for all parties. 

Conclusion

In many ways, the construction-manager-at-risk project delivery method is a more cost-efficient way of executing the design-build delivery method. Using the design-build or design-bid-build project delivery method is preferred by many owners and developers, but the CMAR method is often worth considering. Finding the right CMAR and crafting effective contracts is essential for a successful project. 

Our firm helps construction clients implement legally sound contracts and resolve litigation. We can also help with just about everything in between. Call Florida Construction Law Group at (305) 227-4030 to discuss your firm’s legal needs today.

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.

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!

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.

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. 

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.

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.

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. 

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. 

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.

Dealing with the government can be intimidating. Many people are frightened of going to the courthouse to deal with traffic citations. Some people pay advisors to do their taxes for them, so they won’t make a mistake and upset the IRS. How many of us enjoy going to the DMV? For construction workers, the Miller Act was created to make things a little bit easier.

The Miller Act was passed into law back in 1935. The act requires that all contractors hoping to take on government jobs have bonding secured for the price of the job and the cost of the materials. This means that all contractors hoping to have their construction company build something for the job must first get assurance that a payment bond will cover the cost of the project should the job fall apart for any reason.

The Miller Act led to more trust between construction companies and the federal government. The Pentagon was built as a direct result of it passing. It indicated that the United States was serious about expanding its infrastructure, and serious about their relationship with the contractors that they use.

Under the Miller Act, all contractors must have two types of bonds secured:

• A performance bond, which guarantees that an amount be paid if the job is not done or not done well.
• A payment bond, which guarantees payment for all materials and subcontractor fees undertaken on the job.

The Miller Act is mutually beneficial. For the government, it assures that if a job does not go well, they will not be paying for it themselves. They will also not be passing the cost of the unsuccessful job onto taxpayers. The performance bond means that the government can use the bond to pay another contractor to do the job successfully. The payment bond means that the government will not be sued for the costs of the material on an incomplete job. The bond system in general ensures that the government will be working with trustworthy contractors.

For contractors, the Miller Act should give a sense of security too. It means that if you work hard at crafting your construction company, you will get approved for a bond. This rewards good behavior and makes you more likely to secure the contract with the government, which is normally well funded. It also means that a bond is in place to cover the costs undertaken on materials and subcontractors should anything go awry. It means that the government has confidence in you, and you can have confidence in the job.
If you have any questions, contact the Florida Construction Law Group. We want to consistently exceed your expectations.

Just about any seasoned contractor will tell you which type of construction agreement should be used for a simple job like building a deck adjacent to a one-story house: a lump-sum contract. Also called fixed-price contracts, they’re quite simple: the contractor offers a bid encompassing all expenses for a construction or renovation project, and the owner can take it or leave it. As this blog will cover, there are plenty of pros and cons to this relatively straightforward construction agreement. 

Advantage: Price Certainty

The fear of the unknown is quite prevalent for construction owners before the first shovelful of dirt is moved. Fortunately for owners, though, contractors largely assume the risks in a lump-sum agreement. It’s assumed that contractors build a small bit of monetary insurance into the initial bid to cover any surprises. For peace of mind and price certainty, project owners often willingly accept this exchange. 

Advantage: Simplified Paperwork

Compared to other types of construction agreements, the paperwork involved with lump-sum agreements is fairly light. Because the project’s price is agreed-upon prior to project commencement, the contractor doesn’t need to submit itemized invoices or justify every expense related to the project. However, this can easily lead to distrust between the contractor and project owner if things go south for the project. 

Disadvantage: Lack of Transparency

The vast majority of contractors using lump-sum agreements operate in good-faith. However, there’s seldom a way for project owners to verify that. Because detailed invoices and expenses are not given to the project owner, he or she isn’t able to identify the precise margins for the contractor—and where those margins are coming from. 

Additionally, contractors in lump-sum construction projects are generally free to shop around for the least-expensive materials. Again, it isn’t typical for distrust to plague these types of projects, but there is room for distrust to creep in. 

Disadvantage: Contractor Assumes Risk

Contractors operating under lump-sum agreements take on a substantial amount of risk. If an unexpected expense arises, the contractors are the ones who will shoulder the burden. That’s why contractors should only take projects with a clearly defined scope of work. Also—the fewer moving parts, the better. 

Conclusion

Contractors and construction project owners have a menu of options from which to choose the type of agreement that will shepherd the project through to completion. Lump sum contracts are relatively straightforward agreements, but you need to be sure the project you’re bidding on is conducive to that type of contract. There are also ways to negotiate lump sum contracts to more closely align interests and goals between the owner and contractor. Florida Construction Law Group has extensive experience drafting, negotiating, and reviewing construction contracts and would be glad to help with yours. Call us at 305-227-4030 to discuss your options with our team.

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.

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.

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.

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.

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.

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.

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.

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.

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. 

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.

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.

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

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.

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.

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. 

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.

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.

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.

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.

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.

When working on a construction project it is important to have a good contract in place. In many cases, a standard form contract can be used to help facilitate communication between the various parties involved with the project. The most commonly used contracts like this are known as AIA contracts. The AIA is the American Institute of Architects, which is the group that came up with various contracts that can be used in a variety of situations.

Types of AIA Contracts

There are multiple different types of AIA contracts that can be used based on the situation. The following are the categories of AIA contracts that can be used:

• A Series Contracts – These are contracts used between the project owner and the contractor(s) involved.
• B Series Contracts – These are designed to be used on agreements between the owner and the architect.
• C Series Contracts – Other agreements that don’t fall in another category will typically use this set of contracts.
• D Series Documents – These are not contracts, but miscellaneous documents that are used in many agreements.
• E Series Documents – The E-Series documents are for digital practice documents that are used in specific situations.
• G Series Forms – This category is for contract administration and/or project management forms.

The AIA is committed to helping contractors, architects, project owners, and others involved in the construction process with the various contracts and other agreements that are needed. Using the AIA contracts can help make it a lot easier and less expensive to insure a construction job has the necessary legal documents in place to protect everyone involved. In addition to these contracts and other documents, the AIA also offers educational materials to help ensure their contracts are used properly. Their training and educational materials can be found on their website, HERE.

Get the Legal Help You Need

While AIA contracts are commonly used for construction projects, that does not mean that an attorney is not needed. Whenever starting a new project it is a good idea to go over the arrangement with an experienced construction law attorney who can help ensure everything is covered. Here at FCLG we can let you know when AIA contracts are going to be sufficient, and in what situations you may need a more customized approach. Please contact us to discuss your next construction project and what type of legal contracts you need. We can also help to enforce existing contracts to ensure your rights are protected.

If you work in the construction industry as a contractor, a builder, or any other professional, you have undoubtedly heard the term “sustainable design.” This is a concept where a home or other building is designed to meet the needs of the current occupants, while also planning for the future needs of humanity. In an age where being environmentally friendly is not just good for the planet, but also beneficial for marketing, budgeting, and more, this type of design just makes sense. This blog will offer a brief introduction to what sustainable design is, and how it is done. 

Goals of Sustainable Design

When engaging in sustainable design, the goal is to find a way to ensure a structure is both functional, and that it will have a minimal impact on the environment. There are many things that are done to help accomplish this goal, including: 

• Choosing Materials – The materials used in sustainable design should be renewable, sourced from sustainable areas, focused on recycling, and generally ensure there is as little impact on the environment as possible. 
• Efficiency – A structure should be built with proper insulation to help minimize the energy that is needed to keep it at a comfortable temperature. 
• Renewables – Ideally, the building should take advantage of renewable energy such as solar, geothermal, or wind to provide power, heat, and even cooling. 
• Durable – Even with sustainable design, a new construction project is going to have an impact on the environment. By focusing on durability, a new structure will last for decades so there isn’t further environmental damage by having to rebuild it later. 

Considering the Big Picture

A new construction project that is done with sustainable design strategies will need to take a big picture look at how things are done. It isn’t enough to simply build an energy efficient building, for example. It is necessary to also try to source materials locally so they don’t need to be transported long distances. Looking at the overall impact that a project is going to have today, and for years to come, will help to guide any sustainable design project. 

Clear Goals

When starting a new construction project with sustainable design goals, it is important to make sure they are clear to everyone involved. This means including the exact requirements in the legal contract that is made. All parties involved including the owner, architect, builders, contractors, suppliers, and others will need to be aware that the project has sustainability as a main goal in its execution. Having an attorney include this in the contract will help to avoid miscommunications. Contact us to go over your project plans and get the contract you need.

The construction industry relies on legal contracts to ensure everyone is on the same page regarding their roles and responsibilities. A properly written contract can help avoid misunderstandings and help promote a successful project. Once an agreement has been made, it is necessary to have a legal contract written up to make it binding. When having this done, it is best to have an attorney either write it or review it to ensure everything is included. Both the owner of the project and the contractor will need to be assigned specific duties.

Perform Services Appropriately

One of the most important duties of a contractor is to perform their services in an appropriate manner. This starts with completing the work according to the specifications laid out in the contract. Additionally, they need to inform the owner of any potential issues that they discover along the way. For example, if the contractor finds that a building design provided by the owner will violate safety standards, the contractor must inform the owner.

Cooperate with Contractors

The owners also have an obligation to cooperate with the contractors so that the contractors can complete their jobs in a reasonable way. For example, once an owner has told the contractors what they want done, they should largely stay out of the way and let the job get completed. Owners should not try to micromanage how each step in the process is completed, but instead only step in if there is a major concern that will impact the quality or safety of the work.

Craft an Effective Contract

In order to meet those requirements, both parties must also negotiate a fair contract in good faith. Understanding some of the key clauses that should be included is a great place to start. The following are clauses that should be in every construction contract:

• Changing Conditions – In the event of unforeseen events or conditions, the risk of loss or delay will shift from the contractor to the owner.
• Termination for Convenience – When a project becomes overly expensive or hazardous, the owner can stop the contract without liability. This clause will specify what, if any, compensation would be due to the contractor.
• Site Investigations – Contractors need to investigate the site to confirm that the conditions are appropriate for the completion of the job.

Speak with an Attorney

Whenever starting the process of entering into a new construction project, it is important to have an attorney there to represent your interests. Contact FCLG to discuss your situation and have your contract drafted or reviewed right away.

When working on a construction project, it is important to take steps to ensure the final results will be fully in compliance with the ADA and FHA requirements. This isn’t always as easy as it should be since there is a lot of conflicting information out there, and the requirements get changed and updated. The following are some important areas that should be checked before completing any project.

1. One Wheelchair Accessible Entrance

When it comes to making an entrance or exit to a structure, many people believe that they all need to be wheelchair accessible. The fact is, however, that only one entrance in a public building needs to be easily accessed. This can make a project much easier to plan and build since there are fewer requirements in these areas. When making the wheelchair accessible entrance, however, it is important to ensure it is wide enough to fit through (typically 60”+) and that the automatic door opener is easily reachable from a wheelchair.

2. Designing the Bathrooms Properly

The ADA has very specific requirements when it comes to how the bathroom, and specifically the toilet, is installed. These requirements include:

• The top of the seat must be between 17’’ and 19’’ from the floor.
• The center point of the toilet must be between 16’’ and 18’’ from the side walls.
• There must be at least 60’’ of turning room so that a wheelchair can properly maneuver.
• Open space under a sink does not count in measuring these areas.
• Grab bars must be installed on the side walls and behind the toilet.

3. Installing Light Switches

Placing light switches, electrical outlets, and other essential items is something that needs to be carefully considered. These items must be able to be easily reached and operated by those who are in a wheelchair. If you are building a multi-family home, it is also necessary to have the thermostat or other environmental controls accessible.

4. Ground Floor Only

It is common to assume that all the ADA and FHA requirements will apply to an entire building, but that is not always the case. If your project has two or more floors, but no elevator, than the locations on the upper floors don’t have to meet these requirements. This is a common situation for apartment buildings and other multi-family homes.

5. Don’t Leave it to ChanceThe ADA and FHA have a lot of requirements that builders need to be aware of, and they aren’t always clear. If you are ever questioning what needs to happen in a given situation, it is a good idea to consult with an experienced construction law attorney who can provide customized advice. Please contact FCLG to discuss your situation and get the help you need.

When it comes to a construction project, contractors are an essential part of the team that is responsible for completing a wide-variety of different phases of the job. In order to ensure the job is completed on time, and it is done correctly, many jobs will include a retainage in the construction contract. Understanding what this is, and how it will impact the various parties involved with the job, is important for ensuring everything goes smoothly.

What is Retainage?

When having a construction contract written up, you may want to include a retainage to ensure the contractors complete the job correctly. This is an amount of money that the contractor will be paid, but it is not distributed until after the contractor has completed the work that they were hired to do. The retainage can also set a specific date in the future on which they will be paid for the work they have completed.

In many cases, the contract will include multiple different retainage points so that money can be released to the contractor as goals are accomplished. For example, a contract could include a retainage that states that the contractor will receive 20% of their payment up front, then another 20% only after the foundation has been laid and approved. A further 20% will be paid out when the frame is completed, and the remainder of the money owed will be paid once the project is done. This type of arrangement allows the contractors to have the money they need to pay for the supplies they need, while also ensuring that they complete the work on schedule.

Issues with Incomplete Jobs

While a retainage goes a long way towards preventing incomplete jobs or other issues, problems can still arise. If a contractor fails to complete a job or completes it improperly, they will likely still get paid at least a portion of the money. If the property owner has to hire a new contractor to complete or fix a job, they will end up having to pay the original contractor for the portion of the work that they did correctly complete. If completing or fixing the job costs more than the retainage, than the original contractor won’t be entitled to any payment since they did not provide the promised value.

Importance of Contracts in Construction

Whether you are a property owner or a contractor, you know the importance of making sure your contracts are properly written. When using retainages, this becomes even more critical since it will directly impact how people are paid. Contact FCLG to discuss your specific needs for your next project, and we’ll help create a strong contract that protects all parties involved.

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

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

What Happens if a Contract is Terminated?

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

Termination of Convenience in Private Contracts

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

Get the Right Contract

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

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

What is First Furnishings?

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

What Counts as First Furnishings?

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

Who Needs to File the Notice to Owner?

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

Never Assume a Thing

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

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

Building Code Violations

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

Failure to Obtain Necessary Work Permits

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

Abandoning the Work

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

Unqualified or Unlicensed Subcontractor

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

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

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

Ensure All Contracts are Clear

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

Identify Steps for Changes

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

Keep Lines of Communication Open

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

Prepare for Disagreements

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

Review All Contracts with an Attorney

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

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

Use Clear Language

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

Quality of the Work & Materials

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

How Conflicts Will be Solved

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

Process for Modifications

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

Work with an Experienced Construction Law Firm

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

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

It’s Much Faster

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

It’s Much More Affordable

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

You Choose the Arbitrator

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

You Get a Final Decision

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

The Goal is Mutual Satisfaction

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

We Are Here for You

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

If you have been notified of a construction defect either by the purchaser, or more likely, by the courts, it is important to know your rights. Most construction defect lawsuits are based on the contract that was in place by the owner of the home or other structure and the developer. Contractors and subcontractors (including architects, engineers, suppliers, and others) can also be named in the suits. While it is unfortunate that defects can occur in construction projects, that doesn’t always mean the developer is at fault. Protecting your rights throughout this process is critical for the success of your business.

What Exactly Is a Construction Defect?
A construction defect is any type of condition in your home or other structure that will reduce the value from where it would otherwise be. Some of these defects occur with the normal aging of the building, and others can be the result of something that happened when it was originally built or when an expansion or other project was completed. If the defect can be traced back to work done on behalf of developers, the owner may be able to file a lawsuit.

What are Common Types of Construction Defects?
Some of the most common types of construction defects that result in lawsuits include water issues related to defective piping (this could include mold issues), electrical problems, problems with drainage on the property, foundational issues, structural failure, and more. In many cases, multiple different defects will be discovered and included in the legal action.

Opportunity to Cure Defects
One of your most important rights, which is found under Chapter 558 of the Florida Statutes, says that developers have the right to inspect the defect and take steps to cure them before any legal action can be taken. In many cases, fixing the problem will be far less costly and time consuming than going through with the lawsuit.

Obtain Discoverable Material
You have the right to perform testing and other actions on the defect to determine fault. It may be possible, for example, for you to show that while the defect exists, the problem was with a particular piece of material and there was no way you would have been able to know. This may then make it so the supplier of that material would be responsible, not your firm.

Statute of Limitations
No structure lasts forever, and the State of Florida recognizes this in their laws. In most cases, the owner of the structure must bring a cause for action related to a construction defect within four years of either the date of actual possession, the date of the issuance of a certificate of occupancy, the date of abandonment of construction, or the date of completion/termination of the contract.

Get the Legal Help You Need
The potential for a lawsuit due to a construction defect can be quite frightening, but you do have important rights. Contact Florida Construction Law Group to set up a consultation and go over your options to get through this event.

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

Be Clear with the Draw Schedule

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

Stay on Schedule

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

Clearly Identify Milestone Accomplishments

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

Keep Open Communication with the Client

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

Take Action Quickly on Any Disputes

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

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

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

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

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

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

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

1.   What Work is Required?

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

2.   Include Important Dates

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

3.   How to Exit the Agreement

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

4.   Insurance Requirements

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

5.   Signatures & Initial Areas

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

Get the Help You Need

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

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

What Does the Performance Bond Do?

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

Ensuring a Job is Completed

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

Contractor Investigation

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

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

Getting the Help You Need

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

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

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

Payment Arrangements

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

Work Schedule

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

Tools & Equipment

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

Importance of Getting it Right

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

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

Use Specific Language in All Agreements

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

Regular Communication

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

Negotiate & Mediate Conflict

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

Have an Attorney at Your Side

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

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

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

When Can a Construction Loan Be Foreclosed?

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

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

Working with an Attorney

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

When someone wants to hire a contractor to take care of a job for their home or business, one of the first things they will often look for is a contractor’s license. Contractor licensing is important both for the clients (it gives them peace of mind) and for the contractors (it helps them to get customers, and provides many other important benefits).

Required by the State

In the state of Florida, all contractors who work on either residential or commercial projects need to be licensed and insured. Any contractors who are performing construction related tasks without a contractor’s license are violating regulations and can be fined by the state.

Get More Customers

Florida residents are able to look up and find licensed contractors without any trouble. If you don’t have a license that is valid, this will drastically limit the number of people who are able to contact you for your services. In addition, most people will refuse to work with a contractor who is not licensed due to the added risks that exist should something go wrong.

Contractor’s Insurance

Licensed contractors will also carry insurance on the work that they perform. This insurance is in place to pay for any damages that are caused due to the work of the contractor in question. Whether the problem was due to a problem with the quality of the work done, or the material that was used, this insurance will step in to make sure the client’s home or business can be fixed right away. Without a contractor’s license, it isn’t possible to carry this type of insurance.

Shows a Specialty

There are a variety of different types of licensing requirements for contractors in Florida. While this can make it more challenging to get the licensing needed, it also helps to show clients that you are proficient in specific areas. If you carry a plumbing contractor’s license, for example, your clients will be confident in hiring you to complete that particular type of job.

Preventing Scammers

One of the most often overlooked, yet very important, reasons it is important to get a contractor’s license is to help protect Florida from scammers. If it became commonplace to do this type of work without any license, many unscrupulous people would begin offering their “contractor’s services” in the area, and scam many residents and businesses out of a lot of time and money. By complying with licensing laws and regulations, contractors in Florida are helping to keep the quality and reputation of the industry strong. For help with your Florida construction law matter, call our firm at (305) 227-4030 today!

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

Essential Parts of a Remodeling Contract

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

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

We’re Here to Help

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

When drafting or reviewing a construction contract, it’s important to watch out for a few important things. These contracts are designed to clarify what work needs to be done, how it should be completed, the costs involved, and much more. When drafted correctly, a contract can help to avoid disputes over a job. When written poorly, however, they can lead to costly legal battles.

Material Terms
In almost all construction jobs, it’s a good idea to identify the exact materials that are going to be used in the project. For example, if you don’t have the specific material terms in the contract, one party may have cherry wood in mind, and the other may be thinking of pine to keep the costs down. Needless to say, this will have a big impact on the project’s end result, and will almost certainly lead to conflict. Listing exactly what types of materials will be used can help you to avoid costly mistakes and possibly litigation.

Prices
Listing exactly how much a contractor or other party is going to be paid, how they will be paid, and at what points along the project the payments will be made is important. Including items like who will pay for any supplies, how subcontractors will be paid, and other related details are also critical for the success of a construction contract.

Time Frame
Identifying how long a job is going to take is one of the more important parts of a construction contract. In addition to including things like dates by which a given part of the project should be finished, it should also include what penalties will be issued if a project takes longer than indicated. For some contracts, there may be a clause that says if the contractor completes a job early, they get some type of bonus.

Termination Options
Ideally, a construction contract will only end once all the agreed-upon work is completed and payments are made. Understanding that it may be necessary to terminate a contract early, however, is an important part of any agreement. Identifying how to properly and legally terminate the contract can help to avoid any type of conflict or legal action should it become necessary.

Warranties & Guarantees
Having detailed information about the warranties or guarantees that the contractors (or others) provide on their work should always be in a contract. If this type of thing is not present, and something goes wrong, it will leave you in a much weaker legal position.

Let Us Help You with Your Next Construction Contract
Depending on the specifics of the contract, there can be many other things that need to be addressed and reviewed. Contact us to discuss all the ways we can help you before, during, and after you enter into any type of construction contract.

“Subrogation” is the right and power of an insurer to legally go after third parties that caused the insured a loss. This is so the insurance company can recover what they paid to the insured. When writing or reviewing a new contract for a construction project, you may hear about something known as “waivers of subrogation” clauses. If you haven’t worked with these in the past, it may sound intimidating or even confusing. These clauses essentially make it clear that the parties involved in the contract waive the rights that their insurers have to file any type of subrogation claim after a loss has already been paid out.

This is intended to help allow the parties to maintain a positive working relationship, even when there is some type of event such as a fire or flood. Whenever the property owner’s primary insurance policy pays out to cover damages, it prevents that insurance company from suing the insurance company of the contractor or construction company. Of course, this is not an ironclad option, and if it can be proven that the construction company caused the fire or other event, the insurance company may still have a claim. Reducing this risk, however, can have a positive impact on the long term working relationship.

During the Construction Project Phase

Waivers of subrogation are most commonly put into effect to cover the timeframe where the construction project is actually being performed. Due to the fact that construction companies and contractors are actively working on the project, there is an elevated risk that something could go wrong through nobody’s direct fault. While people typically work hard to ensure everything is done correctly and safely, it is impossible to eliminate every risk. Should something go wrong during this phase, the waiver of subrogation will typically prevent a subrogation suit.

Post-Construction Incidents

There are some cases where the courts will rule that the construction company or contractor is responsible for an event even after the project has been completed. A court’s determination will vary on a case by case basis. If an apartment building has been built and then an electrical issue causes a fire for example, the property owner’s insurance company may want to seek damages from the insurance company of the construction company.

These types of cases require that the clause is written clearly and precisely to avoid any ambiguity. Courts tend to honor the waivers and dismiss these types of cases, but that certainly doesn’t happen 100% of the time. Having an experienced construction law attorney write or review a waiver of subrogation clause is the best way to ensure you are protected in as many situations as possible.

Experienced Legal Help

If you are entering into a contract for a larger job, having a waiver of subrogation in place can mitigate the risk of conflict. Contact FCLG to discuss your situation and see if this might be something worth adding to your agreements. We can write up the contract, modify an existing one, or simply review something before you sign. Whatever you need, we’ll put our experience to work for you.

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

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

Making a Claim

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

Potential for Partial Payment

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

Types of Surety Bonds

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

Getting a Custom Surety Bond

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

When you need a construction job completed properly, it is very unlikely that you’re going to want to manage the day to day activities that need to be completed. To get things done right, you’ll need to hire a construction manager to oversee the project. Part of hiring on a construction supervisor or manager is drafting a construction management agreement to ensure everything is handled according to your wishes.

What is a Construction Management Agreement?

Simply put, a construction management agreement is a contract that is signed between a property or project owner, and the construction foreman. It details information about the job in a format that ensures all parties understand their roles and responsibilities for the project in question. These types of agreements are important because they can help avoid confusion, which all too often leads to conflict in projects like these.

What is in a Construction Management Agreement?

This type of agreement will contain a significant amount of information about the project in question, the property owner, the foreman, and much more. Each agreement will be unique, but they should contain the following information:

• Deadlines – Identifying deadlines for when different milestones within the project must be completed.
• Wages – The amount available for wages to pay contractors, employees, and others involved in the construction project.
• Project Specifications – The details of the project. This would include things like the architectural designs, any specific types of materials to be used, and more.
• Responsibilities of Foreman – Any specific responsibilities that the foreman has to take on.

The level of detail, and the specific things that need to be included will depend largely on the complexity of the project. A small single-family home that needs to be built will not require the same things in the contract as a large multi-million dollar construction project. That being said, anytime a property owner is hiring a construction company or firm to complete a project, it is a good idea to have this type of contract in place. In fact, most construction managers will require one before they can start work.

Get the Help You Need

If you have a construction project coming up and you need a construction management agreement, it is important to work with an attorney experience working on construction contracts. Contact Florida Construction Law Group to talk about your project and see how we can help you draft or review your contracts.

Construction companies and contractors are typically able to accept and complete jobs without any significant problems. Unfortunately, disputes related to these types of jobs are all but inevitable when you’ve been in this business for long enough. In many cases, these types of disputes can be resolved through dialogue, mediation, and other resolution techniques. Sometimes, however, they end up going to court to be litigated.

Litigation can be a time-consuming and very costly option, and knowing when a dispute is headed in that direction can help you to better prepare for it. The following signs can be strong indicators that a particular disagreement is going to end up in court.

Only Able to Speak to Other Parties’ Attorney

If the other party begins to tell you that you should be speaking with their attorney, this is one of the most obvious signs that your case is heading to court. While retaining an attorney for a construction dispute is a good idea, it is a bad sign when the other party completely refuses to speak with you without their attorney present.

Unwilling to Compromise

In virtually every construction related dispute, there is room for compromise. If the other party won’t give an inch and is essentially just repeating their demands every time you speak with them, it is likely going to be necessary to litigate the case. In these types of situations, the courts will often force the compromise to take place, so you may be in a strong position.

Poorly Drafted Contracts

Few things can prevent a construction dispute better than a clear, well-written contract. When a contract has all the necessary information, it becomes difficult to have a dispute because all the potential problems have been dealt with ahead of time. Sadly, a large percentage of construction contracts are missing some essential components. A competent lawyer will catch it.

Breakdown in Communications

When a dispute is just starting, both parties are typically willing to talk about the issue and try to work it out. At some point, the other party may stop accepting your phone calls, and be unwilling to meet with you to try to resolve the issues. They may even be trying to ignore the problem until it goes away. If all, or even most, of the communication has stopped, it is likely time to get the courts involved.

Don’t Hesitate to Reach Out to Us

No matter what your dispute is about, we are here to help. Contact FCLG to go over the details of your situation, and get advice on how to best proceed. If your dispute does indeed need to go to court, we will aggressively represent your interests to help you to get the best possible outcome.

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

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

Start with a Realistic Agreement

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

Communicate Frequently  

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

Look at Compromise Options

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

Get Legal Help

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

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

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

Prove the Debt

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

File the Documents

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

Serve Notification

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

Avoid Potential Problems – We Can Help

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

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

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

Schedule of Values

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

Number of Draws

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

Inspections

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

What to Do with Changes in the Job

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

Contact Us

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

A mechanic’s lien is fairly simple in concept, but can get complicated in practice. To put it simply, this type of lien helps to provide assurances to the people who are doing the actual work on a job that they will get paid. This is important because many construction companies will perform the work with the agreement that they will get payment once the job is done, or once the project is sold.

A mechanic’s lien kicks in should the firm that is getting the work done is unable to pay, and they go through a liquidation process (often as part of a bankruptcy). When this happens, the mechanic’s lien ensures that qualifying groups and individuals will get paid out first, before all others. This dramatically reduces the risk of non-payment to the construction companies, so they can take on jobs with a higher degree of confidence.

Does Not Apply to Auto Mechanics

One of the most common misconceptions about a mechanic’s lien is that it is the lien that allows mechanics to take possession of a vehicle they have fixed it they have not been paid within a set amount of time. This concept is actually known as an artisan’s lien, and has nothing to do with the mechanic’s lien.

Who Qualifies for a Mechanic’s Lien?

There are many groups of people who will qualify for a mechanic’s lien. Whether for a new construction project, improvement work, or most any other job related to the construction field, the following people will likely be covered by a mechanic’s lien:

• Laborers – Those who are performing the on the site work. This includes carpenters, laborers, electricians, plumbers, HVAC contractors, and others.
• Lumber Yards – As one of the main sub-contracted groups involved in most construction jobs, lumber yards will typically qualify for the mechanic’s lien.
• Architects – The architect (and, if applicable, civil engineers) who worked on the plans related to the job.
• Off-Site Fabricators – Those who create items specifically for the job may qualify for the mechanic’s lien.

Length of a Mechanic’s Lien

A mechanic’s lien will typically remain in effect until those protected by the lien are paid in full. This typically occurs once the construction project is completed, but it may extend further depending on the situation.

Enforce Your Mechanic’s Lien

If you have performed supplies, labor, or something else to a construction project and have not been paid, you may be able to enforce the mechanic’s lien. It is important to act quickly, however, as companies that are going through bankruptcy or liquidation often have many different creditors trying to get as much out of them as possible. Florida Construction Law Group [Link to CONTACT US page] has years of experience working with mechanic’s liens, and we would be happy to represent you throughout the process.

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

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

Purpose Clause

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

Drawdown Requirements

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

Repayment Information

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

Events of Default

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

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

Get Help with Your Funding Agreement

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

Construction projects can be extremely costly and complex, which is why it is important to have everything in order before anything is started. Customers and construction companies should also keep in close contact throughout the job to ensure there aren’t any miscommunications. Once a project is finished, both construction companies and those who hire them often think that everything is set, but that is not the case.

Before a job can be considered finalized, a notice of acceptance must be sent to the construction company. This notice essentially lets the construction company know that the job has been completed and the contract has been deemed fulfilled.

When to Send a Notice of Acceptance

A notice of acceptance should be sent only after a job has been completed and properly inspected. If there are any issues with the job itself, they need to be fixed before a notice of acceptance should be issued. If an individual or company issues a notice of acceptance prior to completing inspections and they then find something wrong, the construction company would not be obligated to fix the issue as part of the original contract.

What Is Included with a Notice of Acceptance?

A notice of acceptance should include the construction number and the proper wording to confirm that the job has been completed. It should also verify that all needed quality control checks have been performed. Along with this notice should be a copy of the quality control checklist that identifies everything that has been inspected on the project. If there were any additional tasks or corrections that the construction company had to perform, the inspections on those items should be included as well.

Why Is a Notice of Acceptance Required?

The notice of acceptance provides legal proof that the contract for the construction job has been completed to the satisfaction of everyone involved. If someone attempts to sue the construction company for something related to the construction job after this notice of acceptance, the courts will be very hesitant to rule in their favor. This also allows construction companies to be able to have a firm end date for each contract, which makes planning and budgeting much easier.

Sending & Receiving Notice of Acceptance

Whether you operate a construction company or you’ve got a contract with a construction company, it is important to send or receive notice of acceptance documents properly in accordance with the law. Having an attorney write up the notice and confirm acceptance is very important. Florida Construction Law Group has years of experience helping both contractors and customers, so contact us to discuss this type of notice today.

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

Construction Loan Agreement

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

Funding Agreement

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

Construction Supervision Agreement

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

Design Certification Agreement

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

Contact Us

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

Whether building a small home or a skyscraper, construction projects are always very complex. They involve multiple parties, including the architect, the construction company, sub-contractors, the customer, and many others. With all these different parties working on a single project, it is really surprising that disputes aren’t more common than they are.

Years ago, most serious construction disputes would end up in court. This was very expensive and costly, and even had the potential to disrupt the construction process enough that it would never be completed. In recent years, however, more construction disputes have been turning to mediation to solve disputes. This is because of some of the incredible success that this type of conflict resolution has had in just about every type of dispute.

Required or Optional Mediation

Mediation has become so successful that some construction contracts are being written to include a requirement that all disputes go through mediation before the courts are involved. Even when this is not the case, however, the parties in dispute can agree to come to the table and use mediation to attempt to solve the problem.

Bringing Everyone Together

The goal of a mediator is not to help find the winners and the losers in a conflict (which is what the courts do). Instead, the mediator is trying to find solutions to problems, which will maximize the benefit to everyone involved. With this focus, the mediator will bring the parties together and help guide the conversation toward ideas that are mutually beneficial.

Accepting Sacrifices

In many disputes, the hardest thing for the parties to do is compromise in a way that doesn’t work out in their favor. A mediator can help everyone realize, however, that if all sides are able to give in a little bit, they can avoid costly court battles and the possibility that the entire project will be lost. In the end, mediators are often able to help convince all parties to accept less than they would have desired in order to keep the construction project moving forward.

Learn More about Construction Mediation

Having an attorney who is dedicated to construction law working as a mediator can help bring a lot of insight into the process. If you are having a conflict about a construction project or you would like help in avoiding these types of conflicts, please contact FCLG today. We’ll be more than happy to work with you to find creative solutions to construction conflicts throughout Florida.

When beginning most types of construction projects, it is a good idea (if not a requirement) to have assurances in place that the job will be completed properly, and that everyone involved with the project will get paid properly. There are a variety of ways to do this, the most common of which are to use performance and/or payment bonds. These bonds are issued by a Surety Company prior to the start of any job.

Understanding what each of these two types of bonds are, what protections they offer, and which ones should be used in a given situation is important for all construction companies, and those who hire construction companies.

What is a Performance Bond?

A performance bond acts as a guarantee that the project in question will be completed properly, according to the details laid out in the construction contract. In the event that the construction teams (the Principal listed in the bond) fails to complete the project according to the agreements, the Surety Company that issued the bond will need to step in to have the job completed.

What is a Payment Bond?

A payment bond is issued as a guarantee that those who are involved with the construction project will receive their payment from the principal. This protection extends to any workers, subcontractors, equipment or supply providers, and others who are directly or indirectly involved with the project. Should the principal named in the bond fail to pay, the Surety Company will issue the payment.

Which One is Needed?

While some jobs will only need either a performance bond or a payment bond, the majority of them actually have both. Having both types of bonds in place offers the stability needed to ensure the job gets done properly. Due to the fact that many construction projects are not paid in full prior to the start of the project, these types of bonds are necessary for the different companies involved in the project to be able to finance the work being done.

A construction company being asked to build a bridge, for example, will need to invest potentially millions of dollars in labor, equipment, materials and more. Depending on the job, they will typically only receive a fairly small percentage of the payment for the job up front, which means they will be financing these expenses. Having both a performance and a payment bond in place helps to significantly reduce the risk involved, so the construction companies can get the financing they need without any trouble.

Avoid Problems with Surety Bonds

Performance and payment 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. Contact the Florida Construction Law Group and will help ensure everything is set up and handled properly throughout the project.

Should you enter into a construction contract if you’re uncertain about the terms? You might prefer to trust that everything will go smoothly, but in reality, any number of things can go wrong when you start a new construction project. It’s worth checking your contract for any possible error or flaw. If you do, you could save yourself a great deal of legal trouble in the long run.

1. Time frame

Make sure the contract provides a time frame that works for both parties. As the property owner (or person receiving construction services), you may have a strict deadline in mind, with other scheduled tasks that depend upon timely project completion. For example, you may be a homeowner looking to finish an addition before you can list the property for sale. In turn, the contractor should only accept if the proposed time frame is feasible.

2. Prices and pricing scheme

While it may seem obvious to agree upon a price for the construction services, contractors sometimes include additional charges that were not initially discussed. You should ask about the possibility of extra fees and request an estimate. These details can be included in the contract to help you avoid any financial surprises. You should also specify the pricing scheme—in other words, whether the cost will be paid in a lump sum, a rate per unit, or another pricing method.

3. Payment terms

The contract should specify whether you will be paying a lump sum or in monthly installments. If you are making monthly payments, make sure the payment dates are practical for you, and decide whether the contractor should be able to issue late penalties.

4. Construction lien law protection

Florida law requires certain types of residential contracts to include a visible lien law notice. If you are engaging in a project that exceeds $2,500 and relates to the improvements of real property, your contract should include the lien notice. It essentially states that if your contractor fails to pay subcontractors, sub-subcontractors, or material suppliers, those parties are legally entitled to file a lien on your property. This means your property can be sold against your will to make sure everyone—including the original contractor, if you failed to pay them—is adequately compensated for unpaid labor, materials, or other services. You can add a stipulation to your contract in order to protect yourself from Florida lien law, but it’s best to consult an attorney to ensure that you understand every aspect of this provision.

5. Recovery fund disclosure

Most types of construction contracts that must include a lien notice must also include a recovery fund disclosure. It must be visibly placed within the contract. This disclosure outlines your right to seek compensation when a contractor’s unlawful actions result in losses on your end.

6. License number

The lien law notice, the recovery fund disclosure, and the contractor’s license number are all required by Florida statute. Make sure all of these elements are clearly visible on your construction contract, if applicable, before signing. Any violation could result in a hefty fine.

7. Disputes and termination

Your contract should also include specific methods that you and your contractor will use to resolve disputes or problems. For example, you may include an arbitration clause to avoid having to settle disputes in court. Contracts can be dissolved if one or more parties breaches the contractual terms. Mistakes in the contract can also lead to termination, so make sure all the information is correct. If you both mutually decide to terminate the contract for any reason, you can draft a document stating the contract has been voided.

A qualified lawyer can ensure that the terms of your construction contract benefit you as much as they benefit the other party. Call the Florida Construction Law Group to discuss your upcoming construction project and see how we can help protect your legal rights in the form of a contract.

The most important decision you’ll make during the renovation or home-building process is which contractor you choose to hire.

This decision can be as difficult as it is important. Choose the wrong contractor, and your project could be delayed and poorly executed. The work may even have to be redone entirely. Choose the right contractor, and ideally the work will be finished on time and done right, the first time. But how are you supposed to know how good a contractor is before they’ve even started working for you?

The following tips will help you find a contractor who can do the job right.

1. Don’t Stop After the First Interview

You might feel the urge to end your search immediately if your first interview goes well, but don’t give in to that temptation.

See multiple contractors and give yourself multiple bids to choose from. The first contractor might seem like a good option, but the second or third contractor that walks in the door might be just as skilled and even more affordable. There’s no way to know if you don’t look.

A good rule of thumb is to check out at least three contractors before you choose one.

2. Go Local

If you’re choosing between a contractor who works for a local company and one who works for someplace like Home Depot and all other factors are equal, go for the one from the local company. Companies that are more involved with the local community are more likely to go above and beyond for their local customers (that’s you!).

3. Make Sure They Are Licensed and Insured

Licenses confirm that a contractor can actually do what they say they can do (from both a practical and legal perspective), and proof of insurance gives you the peace of mind of knowing you won’t be financially responsible if some scaffolding falls on neighbor’s new Porsche.

4. Get Everything in Writing

Before the contractor starts working, you want to get everything in writing first so that there are no misunderstandings in the middle of the project, and there is documented evidence of your agreement and expectations should a lawsuit become necessary.

5. Pick A Contractor Experienced in What You Want to Do

Just because a contractor has a lot of experience doesn’t mean they have a lot of experience in the specific project that you’re working on. Make sure that they have that specific experience.

6. Take a Look at Work Samples

Of course, contractors are biased. They want the job. If you ask them how skilled they are in the kind of project you need them to do, many of them will reply “very” even if that’s not an entirely true answer.

So get proof. Ask to see images of projects they’ve completed in the past and judge their work yourself. If they’re not able or willing to provide examples of previous projects they’ve worked on, that’s a huge red flag and you should move on to another option.

If you have any questions about choosing a contractor, or you are having issues with a contractor you’ve already hired, contact the Florida Construction Law Group today and let’s talk!

As we have discussed in a previous blog, there are a number of pros and cons to utilizing arbitration as a means of resolving a construction-related dispute. In many circumstances, this type of Alternative Dispute Resolution (ADR) can be a highly effective means of achieving an efficient and effective resolution which is beneficial for all parties involved.

But how exactly does arbitration work? It is always useful to have a clear understanding of how the process will play out prior to invoking an Arbitration Agreement or suggesting arbitration as a potential option to an opposing party. Thus, we have provided a brief, step-by-step overview of what you can expect. Please be aware that this is just a simplified outline, and is not necessarily precisely how your unique case will play out. The terms detailed in an arbitration agreement may serve to modify the procedure followed.

Step 1 – Set the stage

In Florida, even if there is no arbitration agreement in place that legally necessitates the use of arbitration to resolve a dispute, the parties involved in a dispute can voluntarily agree to participate in binding arbitration.

Once it is established, either voluntarily or through contractual obligation, that arbitration is to be utilized, the parties may need to agree to certain aspects of procedure. For example, they may choose to utilize a single neutral arbitrator or a tribunal of arbitrators. They may decide to adhere to the standard American Arbitration Association rules of procedure, or they may choose to customize the procedure and rules to suit their unique dispute and circumstances.

Once all procedural elements are defined and agreed upon, the case can proceed to arbitrator selection.

Step 2 – Arbitrator selection

One of the key benefits of arbitration is the ability to select a neutral arbitrator who is knowledgeable about the subject matter at hand in your dispute. In a litigated case, there is no guarantee your judge will have a solid understanding of the unique nuances and issues inherent in construction. With arbitration, you can select someone who specializes in the area to help ensure a fair judgment. Generally speaking, arbitrators will be selected from a pre-approved list of neutral candidates. Once they are selected, a preliminary hearing will be held to finalize the procedural elements of the case and facilitate what can and cannot be included in the arbitration hearing (witnesses, evidence, etc).

Additionally, there may or may not be a discovery period prior to the hearing where all parties involved will be required to share their evidence and other information with opposing parties. The extent and rules of the discovery period will likely depend on your arbitration agreement or the terms you settled upon when you voluntarily agreed to arbitrate.

Step 3 – The hearing

Arbitration hearings are much less formal than litigation hearings, meaning their location and scheduling are much more flexible. Not unlike a trial, however, each party will have opportunities to present their case to the arbitrator(s). They may call witness to offer testimony and present whatever evidence they may have. Conversely, the opposing parties will be able to question and challenge the witnesses and evidence presented.  

Once the hearing is complete, the arbitrator(s) will retire in order to deliberate. In some cases, attorneys for either party may be allowed to submit post-hearing documentation to further support their case or challenge actions taken by the opposing party.

Step 4 – The award

Finally, the arbitrator(s) will issue a decision and dictate an award. Unlike mediation, the decision will be considered binding with very limited recourse for any sort of appeal. The parties will be required by law to adhere to the terms of the arbitrators’ decision, since Florida courts recognize a presumption of enforcement of arbitration. The courts will, however, review the case to ensure there was no fraud or misconduct at play.

If you are involved in a construction dispute, and you are either legally bound to utilize arbitration or you wish to voluntarily pursue this option, please do not hesitate to contact the Florida Construction Law Group today and let us fight to protect your best interests.

We live in a highly litigious society, and the complex nature of construction projects all but ensures a high probability that a dispute and potential litigation may occur. However, there are a number of different factors you should consider before jumping into a potential detrimental legal battle.

No matter your relationship to the construction project, if you are considering filing a lawsuit over some sort of dispute with others involved in the project, be sure to ask yourself the following five questions:

1) What is the cost/benefit?

The first thing you need to do when weighing the possibility of pursuing litigation over a construction dispute is conduct a cost/benefit analysis of the situation. Simply put, does the potential benefit you could possibly receive if you win a lawsuit outweigh both the potential detriments that would occur if you lose the case as well as the certain costs that will occur if you pursue the case. Generally speaking, the potential benefit of pursuing litigation should significantly outweigh the costs, including things like remobilization costs, potential damage to your reputation, interest, penalties, and legal fees. Thus, litigation is usually not worth it if your dispute—and the potential benefit should you win the case—is relatively insignificant.

2) Can you win?

This is going to be a major question to ask your attorney, but it is important to consider nonetheless. Based on the circumstances of your dispute and the evidence available, can you actually win the case? Even if you know you are in the right, if you do not have the evidence to prove it, the litigation is probably going to be a waste of time and money. Have your attorney analyze the facts of your case and advise you on your chances of winning a judgment should you pursue a lawsuit.

3) Do you want the attention?

Construction lawsuits usually draw significant public attention. Additionally, court proceedings are usually a matter of public record. Do you really want the details of your dispute being made available for anyone who wants to find them? Can you afford the potential negative attention that comes with being caught up in a public legal battle?

4) Can the dispute be resolved by other means?

Depending on the circumstances of your disagreement, litigation may be a necessary tool, but oftentimes the dispute can be resolved using some other means such as negotiations or even some form of alternative dispute resolution such as mediation or arbitration. Keeping your dispute out of court is particularly important if you want to maintain a working relationship with the opposing party after the issue is resolved, or you want to continue and finish the construction project.

5) If you win, can you actually collect?

When contemplating a potential lawsuit, especially in the construction industry, it is always important to assess your potential for actually collecting a judgment. If your dispute is over nonpayment of funding for the project, and the investor or owner did not pay because they are bankrupt, there may be nothing for you to collect even if you win the case.

Whether you are a lender, contractor, or homeowner, if you are considering pursuing litigation over a construction project, please contact the attorneys at the Florida Construction Law Group today and let us analyze your unique circumstances and advise you on the best course of action.

Our law firm works hard to keep construction contractors well-informed of the various steps they can take to mitigate the numerous legal risks inherent in the construction process. On this blog we often write about the contracts and other types of documentation you should use as well as the various potential mistakes and pitfalls you  must work to avoid. However, there is one key risk management element that far too many construction contractors overlook. It is one that does not get talked about enough, and it is perhaps the simplest measure of all: good customer service.

The fact of the matter is, reasonable people do not seek to sue people whom they like. Of course, there are many unreasonable people in the world, and there is nothing you can do to 100% guarantee you will not get sued, but working hard to keep your customers happy is a great place to start.

Below are five easy things every construction contractor can and should do to improve their customer service, improve their customer morale, and help minimize the risk of litigation by an angry and vindictive client.

Listen – Take the time to truly listen to the wishes and needs of your customers. Hear what they have to say and never assume. If your customer is unhappy, most of them will tell you so, giving you the chance to remedy problems before they get out of control.

Understand – Not only do you need to listen to your customer, but you should try to understand where they are coming from. You may recognize that their request is unreasonable, but that does not mean they do. Take the time to ensure that all communication between you and the customer is clear and that everyone involved truly understands what was said.

Be Responsive – Make yourself available to the client. Give them your personal number if possible, and be sure to respond in a timely fashion when they contact you. Few things frustrate a customer more than an ability to communicate or get in touch with their contractor.

Be Friendly – A little kindness goes a long way. Make an effort to get to know the clients as people. Be polite and friendly. As we mentioned before, the simple truth is that if they like you they will be far less likely to sue you.

Try to Accommodate – Do your best to give your clients what they ask for. It can be frustrating when a customer tries to change things at the last minute or makes difficult requests, but when you go above and beyond to make their vision a reality, you are also insulating yourself and your business from potential legal issues brought on by a dissatisfied customer.

For all of your construction and real estate-related legal needs and more, contact the Florida Construction Law Group today.

If you work in construction, there is no doubt that you probably have a massive workload. And no matter your profession, no one likes to exacerbate their workload with extra paperwork. However, when it comes to construction contracting, whether you are a prime or subcontractor, there are certain field documents that are absolutely vital to maintain.

Keeping a thorough record of your work and other important information is the most important thing you can do to mitigate your risk of losing a lawsuit, aside from utilizing strong contracts to begin with. Below we have outlined a few of necessities when it comes to your construction field documents. Please keep in mind that this blog is not intended as legal advice for your specific situation. Every project is unique and you should always have a skilled attorney review your project and advise you on the steps you should take to protect your business and your best interests.

Daily Logs

No prime contractor or subcontractor should ever conduct work without keeping meticulous daily logs. Your daily logs are one of the most important protections you can utilize to mitigate your risk of lawsuits. They should be thorough and accurate. Every day, your log should provide details of any and all activities that occurred at the construction site that day. This means detailing things like the location, the number of personnel, who was managing the personnel, tests and inspections that were performed, important meetings and conversations that occurred between key players in the construction process (owners, engineers, subcontractors, etc), and of course, the work that was actually completed that day.

Keeping track of all of this information every day may seem daunting, but you will be grateful that you have all of this information on record when a legal challenge inevitably arises.

Field Reports

You may be thinking, “You already said I have to fill out extensive daily logs, and now you want reports on top of that?” Unfortunately, field reports are nearly as important as daily logs. While the daily log is your big picture record of the work being conducted, your field reports are detailed records of specific things that require more in depth record-keeping than a daily log would include. For example, any time an accident occurs you should create an incident report. You should maintain periodic progress reports that help keep the property owner informed of how things are proceeding without all the superfluous extra information included in the daily logs. You will also want to write up inspection reports to record the results of any tests or inspections that were performed.

Force Account Records

If you have to procure parts and materials outside of the scope of costs included in the prime contract, you may need to utilize a force account. It is vital that you keep meticulous field documentation of all information relevant to your force account costs such as labor, parts, overhead, etc.

Change Orders

As a construction contractor, if you need to propose a change order you will likely need solid documentation to back up you claim that the contract should be amended. You cannot obtain a change order without the agreement of the other party to the contract which you wish to change. Keep field records identifying the exact change you are requesting, why you are requesting the change, and relevant details such as the impact on costs or deadlines. These records will be important in order to have a chance of succeeding in achieving a change order.

Proper field documentation can help you mitigate your risk and hopefully avoid legal challenges as a construction contractor. Our firm can help you with the necessities of risk management such as contract drafting and review. However, if you’re facing legal challenges relating to any construction or real estate matter, we are here to help. Contact the Florida Construction Law Group today.

Construction work tends to be one of the most dangerous forms of work for employees in the US, and as an employer, you are ultimately responsible for the health and safety of your workers.

The nature of unfinished construction—such as moving and securing large and heavy materials, exposed electrical systems, and numerous other hazards—involves a high degree of risk for anyone working on the job site or even bystanders. When accidents occur, there can be severe consequences for anyone held liable for the damages, including civil and even criminal penalties.

In order to be an informed employer when it comes to construction safety and liability, all construction employers should first be familiar with the Occupational Safety and Health Administration (OSHA) as well as OSHA laws. This government entity enforces strict safety standards and employer obligations with regard to protecting employees.

Construction employers—as well as employers in most other industries—are responsible for providing a safe workplace for their employees, as well as finding and correcting safety issues, providing safety training to employees, and much more. They must also report any serious injury or fatality incidents to OSHA.

As long as you maintain worker’s compensation insurance and you have fulfilled all of your obligations with regard to OSHA, you will likely be protected from personal injury lawsuits. However, in cases where an accident occurs as a result of intentional or severe negligence, there are a number of construction-related entities that have the potential to be held liable for damages in a Florida construction accident.

For example, construction site owners can face penalties for premises liability, general and subcontractors must fulfill their OSHA duties to their employees, prime contractors can be held liable if an accident occurs as a result of their construction responsibilities or as a result of actions taken by a subcontractor hired by the prime, and even engineers and architects can be held liable if they fail to ensure that the construction is being completed in accordance with their plans. Manufacturers, too, may be responsible if an injury or fatality occurs due to a defective product.

One important factor to consider regarding construction accident liability is that Florida is a pure comparative negligence state. This means you, as the defendant in a construction accident lawsuit, may reduce or eliminate the damages you owe based on demonstrating that the injured party was to some degree responsible for the accident. For example, if you were found 75% at fault for the accident, while the employee was 25% at fault, the employee could potentially collect 75% of the damages they could have otherwise collected if you were 100% at fault for the accident.

With so many parties being involved in construction projects, construction accident liability can be incredibly complex. It is vital that you enlist the services of a skilled construction attorney to advise you regarding your obligations under OSHA and to defend you in cases where an accident has occurred. Contact the Florida Construction Law Group today to learn how we can help.

Getting funding for a construction project, residential or commercial, is quite a different process than obtaining a standard mortgage on an existing property. That’s because funding a construction project is much more complex than a relatively cut and dry purchase of property.

A construction project will have its own requirements and needs for financing—which is usually disbursed on a draw schedule—based on sometimes difficult to predict costs for materials, labor, etc. Then, once the construction is completed, the project will usually be subject to a mortgage.

Generally speaking, there are two main types of construction loans which owners, lenders, and contractors can choose to utilize: One-Time-Close loans or Two-Time-Close loans.

As the name indicates, the main difference between these two construction loans is the number of closings that will have to occur. A closing is the final step in a real estate transaction.

Thus, one-time-close loans will only involve one closing. What this means is that the financing for both the construction and the mortgage on the completed project will be wrapped into one loan.

The terms of the loan, though not necessarily the final rate, will be decided upon before any construction begins. Once the loan is settled with the lender and closed, the construction can begin. Usually, one-time-close loans allow for a period of 12 months for the construction to be completed. Most owners will either pay interest on funds as they are released in accordance with the construction draw schedule, though some may begin making mortgage payments right away.

Once construction is completed, the loan will usually convert into a 29 year mortgage (accounting for one year of construction out of a standard 30 year mortgage). Depending on the lender, the rate may remain the same as it was during the construction period, or you may be able to pay to have the interest rate reduced.

A two-time-close construction loan is actually two separate loans. It involves obtaining financing for the construction project, and separately obtaining financing for the mortgage on the finished project. Since you will be seeking out two loans, there will be two closings as well which will mean you will have to pay closing costs twice instead of just once. The first closing will occur prior to the construction and it will detail the terms and draw schedule of the construction project. Owners will only have to make interest payments that will increase as construction progresses.

Once the project is completed, the loan will be refinanced with the lender into a permanent mortgage. Doing so usually allows the owner to obtain a better interest rate on the final mortgage compared to the construction interest rate. Two-time-close loans benefit from increased flexibility compared to one-time-close loans. If there are construction cost overruns, you can account for them in the second phase of financing.

If you are interested in obtaining a construction loan, or you are facing a construction loan dispute or foreclosure, please contact the Florida Construction Law Group today.

Construction projects lend themselves to the filing of claims and lawsuits unless everything relating to the construction project goes exactly as planned. In order to avoid claims and lawsuits, the contractor must avoid change orders, must avoid shortage of materials and labor, avoid delays of all kind whether it is payment, labor material, permitting and even weather. It not realistic for this to happen as most of these items detailed above are outside the control of the contract and property owner.

But just because the actions outside the control of the parties will likely occur, this does not mean that they have to lead to claim or a lawsuit. Contractor’s should work on pre-suit or pre-claim dispute resolutions as when the contractor and the property owner are unable to come to a resolution is actually when the lawsuit or claims are created. If you need help on resolving a dispute with a homeowner or contractor please feel free to contact us at 305-227-4030 or at ray@floridaconstructionlawgroup.com

Ray Garcia, Esq.

www.floridaconstructionlawgroup.com

Arbitration is increasingly being adopted and accepted in the construction industry as the go-to for settling disputes due to perceptions regarding the benefits of arbitration over litigation.

Chapter 682 of the Florida Statutes governs the state’s Arbitration Code, and it grants authority to voluntary binding arbitration. Generally speaking, this means that if two or more parties in a construction dispute agreed to arbitrate any disputes in their construction contract (known as an Arbitration Agreement), then the courts will likely enforce mandatory arbitration if and when a dispute arises.

In case you are not aware, arbitration is a form of alternative dispute resolution in which the dispute will be heard by a certified, neutral arbitrator or tribunal of neutral arbitrators. Arbitrators will hear evidence from all parties involved in a relatively informal hearing, and they will then make a binding decision to resolve the case.

Below we have detailed some of the pros and cons of arbitrating a construction dispute as opposed to litigating the case.

Pros

Cost – This is likely the most frequently cited benefit of arbitration over litigation. The perception is that, due to a lack of court fees and a full discovery period, as well as an expedited procedure, arbitration tends to be far less expensive than litigation. However, this is often disputed. We will keep cost as an arbitration pro, but keep in mind that arbitration costs can soar for more complex cases.

Timeliness – The second most frequently cited benefit of arbitration is that it tends to be much faster than litigation. Hearings do not have to be fit into a crowded court docket, arbitrators are generally juggling far fewer cases than judges, rules of procedure are simplified, and there is usually no appeal. Thus, arbitration is usually much faster than litigation.

Privacy – While litigated cases are public record, arbitration is a private process. You can generally resolve your disputes without the details of the case becoming public knowledge.

Expert decision-maker – While it is unlikely that a judge or jury deciding a litigated case will have any expert knowledge of the construction industry, arbitrators will be selected who are best suited to understand the case, meaning they will likely have a great deal of experience with construction and be better suited to resolve the dispute.  

Schedule flexibility – As previously stated, arbitration hearings tend to be much less formal than litigation, and they can essentially be scheduled to occur at any time in any place to better suit your availability to attend.

Finality – Arbitration decisions are binding and there is usually no potential for an appeal. This means the arbitrator’s decision will usually be enforceable by a court, and you won’t have to spend time and money dealing with a lengthy appeals process.

Cons

Finality – No, you are not seeing double. The finality of arbitration can also be a detriment if you lose the case. There are very limited grounds in which a court will overturn an arbitrator’s decision—usually only based on corruption or fraud. A legal error made by the arbitrator or counsel will not qualify you for an appeal when it comes to arbitration, as it would in litigation.

Lack of transparency – While the privacy may be nice, it also means there will be no oversight or transparency in the process, and therefore less incentive to ensure that the arbitration is fairly handled.

All-or-nothing – Oftentimes arbitration is an all-or-nothing system, meaning there is no middle ground between winning and losing the case. In litigation, there is a full discovery process and perhaps even mediation before the actual trial in which parties can assess the strength or weakness of the opposing party’s case and may have an opportunity to settle based on that evaluation. This is usually not the case in arbitration, and parties will likely see evidence for the first time during the hearing. The case becomes black and white, with a complete win in the case being the only chance for a positive outcome.

Evidence – In litigation, there are very strict rules regarding the presentation of evidence. Evidentiary requirements in arbitration do not adhere to most of these legal principles, meaning evidence may be prejudicial or misleading in nature, and there is little the opposing party can do to combat such issues.

Subpoenas – While arbitrators may issue subpoenas in order to force a witness to participate in a hearing, they tend to be much more difficult and laborious to enforce than a judge’s subpoena in litigation since arbitration occurs physically outside the court system.

If you are considering adding an arbitration agreement to your construction contracts, or if you are facing arbitration, please contact the Florida Construction Law Group today.

When it comes to getting everyone paid on a construction project, there can oftentimes be a significant amount of risk and potential for nonpayment. In general, there is a hierarchy of who is most likely to get paid, and subcontractors are usually at the bottom of the totem poll.

This is especially true if the contract signed by the subcontractor includes a “Pay-if-Paid” or a “Pay-When-Paid” clause.

These clauses are stipulation in construction contracts that protect the contractor in case of nonpayment by the property owner by shifting the risk to the subcontractor.

The pay-if-paid clause expressly states that the contractor will only owe payment for services to the subcontractor if the contractor gets paid by the owner of the property. If the contractor does not get paid, then they have no obligation to pay the subcontractor for the services he or she provided on the project.

Similarly, the pay-when-paid clause states that the subcontractor will be entitled to payment for the work performed, but only in a specific period of time following the receipt of payment by the contractor from the owner.

These are oftentimes contentious clauses between contractors and subcontractors, and the enforceability of these type of clauses has been challenged on numerous occasions. As it stands, the enforceability varies from state to state.

In Florida, pay-if-paid clauses have been found to be enforceable through case law, but ONLY if they are clear and unambiguous. As long as the contract makes it clear that a pay-if-paid clause sets the precedent for payment, and does not attempt to mislead, then there is very little potential for a subcontractor to challenge the contract once signed.

Pay-when-paid clauses are generally always enforceable in Florida.

If you are a contractor and you want to include either a pay-if-paid or a pay-when-paid clause in your subcontractor agreements, you should always consult with an attorney to ensure that the wording is very obvious, and be clear in negotiating with the subcontractor about these terms for payment.

If you are a subcontractor, it is important to always make sure you completely understand the terms of the agreement you are signing with the contractor. If you overlook a clear pay-if-paid or pay-when-paid clause, you could potentially be waiting for a very long time before you receive payment for the work you did, if at all. Subcontractors should also seek out the services of a skilled and knowledgeable construction law attorney to ensure that their interests are protected.

In either case, please contact the Florida Construction Law Group today to learn more.

Whether you own a construction company that has been contracted to perform a job, or you are a property owner who has hired a contractor, there may come a time where you need to terminate your relationship with the other.

Construction projects can go bad for a number of reasons. There may be financial difficulties, there could be disagreements over the nature, quality, and timing of the work, or you simply may not get along with the other party.

However, there are numerous risks involved in terminating a construction contract, and it should only be used as a last resort when all other remedial measures have failed. When a termination becomes necessary, you also need to follow the termination provisions set forth in your contract to the letter.

A termination will end the contractual rights and obligations of one or both parties prior to the completion of the project, and any construction contract should include detailed provisions that describe the circumstances under which either party can terminate the contractual relationship.

There are two different kinds of construction contract terminations that can be executed by either party: “for cause” and “for convenience.”

A termination for cause can only occur when one party fails to adequately fulfill their contractual duties with regard to the project. For example, the property owner could conceivably terminate a construction contract for cause if the contractor was failing to perform the work in accordance with an agreed upon timeline. Alternately, the contractor could terminate a contract for cause if the owner failed to pay on time. Potential material breaches could be explicitly defined in the contract, or one could also terminate for cause based on general contract law.

If an owner terminates a contract for cause, he or she generally has a right to seize the building materials for use to complete the work, and the contractor could be held liable for any costs that it takes to complete the project above the original contract costs. The party that is responsible for the default will almost always have some sort of financial penalty or liability if the termination for cause is found to be valid.

Alternately, a termination for convenience is when a contract is terminated when there is no default or breach of obligations by the other party. A termination for convenience can be lawful only when defined explicitly in the contract. They are usually included in contracts as a way to allow each party to end their obligations in a manner which does not significantly harm either of them. In a termination for convenience, the contractor will usually be able to collect payment for work already completed as well as any demobilizing costs, while the owner will be able to avoid paying damages or anticipatory costs for cancelling the work.

However, if a party terminates for cause, but the cause is not found to be valid, then the termination will likely be considered one of convenience. If the factors that led to the termination for convenience are not allowable by the contract, then whoever instigated the termination would likely be liable for considerable damages to the other party.

Terminating a construction contract is an incredibly complex and risky proposition. It is vital that you utilize the services of an attorney who is well versed in construction law to guide you and ensure you are complying with all terms of your contract and your legal obligations. If you are considering terminating a construction contract, whether you are the owner or the contractor, please contact the Florida Construction Law Group today.

When a construction material supplier’s has not been paid for the work done on a construction project, the material supplier may seek remedies through lien rights under Florida’s Construction Lien Law, Section 713.001-37, Florida Statues.  The purpose of the Florida Construction Lien Law is to protect construction material suppliers from nonpayment, but strict compliance with the statutory law is required.

The first thing to understand is that a Notice to Owner is a prerequisite to perfecting a lien, unless you are in direct privity with the Owner.  However, if you are furnishing materials under an order by someone other than the Owner such as a general contractor or subcontractor then a Notice to Owner must be served.  Failure to properly and timely serve a Notice to Owner is an absolute bar to your lien.The second thing to understand is that a Notice to Owner is not a lien. The Owner can prevent paying twice for work by verifying pursuant to a lien waiver that money paid to the contractor ends up paid. The third thing you must understand is that the Notice to Owner must be served timely.  The Notice to Owner must be served within 45 days of first delivering materials to the jobsite.

The fourth thing you must understand is that the Notice to Owner must be served properly.  The Notice itself must be proper, and the service must be proper.  For the Notice to Owner to be proper, it must be in substantially the form, and include the information and warning, set forth in Fla. Stat. §713.06(2)(c). To prepare the Notice, you should use the information contained in the recorded Notice of Commencement.  If there is no recorded Notice of Commencement, then you should use the information contained in the building permit application.  Make sure to properly describe the services or materials that you are supplying; make it broad enough to cover all materials that you may supply for the project.

As to proper service, you must make sure to send the Notice to all required recipients and use the proper method of delivery.  The Notice must be sent to the Owner at the address stated on the Notice of Commencement.  If you are aware of additional addresses for the Owner, send the Notice to those addresses as well. The proper method of delivery is set forth in Fla. Stat. §713.18.  Always keep evidence of delivery of Notice whether through certified mail or photos of posting Notice to the jobsite.

Ray Garcia, Esq.

Board Certified in Real Estate Law

by the Florida Bar

www.floridaconstructionlawgroup.com

Typically, when a general contractor is approved for a construction loan, that does not mean the lender is going to disburse the entirety of the loan at once. The loan disbursement process for construction loans is incredibly involved, and will usually follow a predetermined scheduled based on milestones in the construction project.

Contractors will be required to submit a draw request to the lender for review and approval each time they need to receive a progress payment to fund various stages of the construction.

Any experienced general contractor knows how important it is to receive the money you need for your project when you need it in order to stay on track, on time, and on budget with your schedule.

Thus, a draw request dispute can derail the timing and efficiency of your project as quickly as any issue. You need the money you’ve been promised, and when a lender tries to withhold that money for any reason, it can be ruinous.

In this blog, we have detailed five potential negative impacts that a draw request dispute with your lender can have on your construction project.

1) Timeliness

It will always be a constant struggle to stay on schedule with your construction projects. There is a practically endless list of things that can throw off your timing, and draw request disputes are extremely high on that list. If you don’t have the money you are expecting from the lender on time, most other aspects of your plans will have to be pushed back as well until the dispute is resolved. This not only impacts your reputation, but it can also severely hurt your bottom line when it comes to other costs associated with falling behind schedule, including the following…

2) More interest payments

Delays caused by draw request disputes will force you to pay more interest payments on your loan. That’s more money out of your pocket the longer you have to wait to resolve a dispute.

3) Loss of labor

A lack of funds will prevent you from moving forward with your project, which will directly lead to a costly loss of labor productivity. An unexpected loss in labor productivity can cause your labor costs to skyrocket well beyond what you anticipated.

4) Remobilization costs

There will be unexpected costs involved both in having to cease construction, as well as remobilizing once your draw request dispute is resolved.

5) Failure to continue funding the project

The worst case scenario of a draw request dispute is that the lender will refuse to continue funding the project. Obviously, the weight of this negative impact is pretty clear. No more funding means no more construction, at least until you can find someone else to fund the project.

If you are in the process of negotiating a draw request schedule with your lender, or if you are already facing a draw request dispute, you need an experienced and knowledgeable attorney representing your interests and protecting you from the severe costs and issues associated with a lender’s refusal to pay what you were promised for your project. Please do not hesitate to call the Florida Construction Law Group today.

We’ve said it before and we will say it again: if you are a contractor, hiring a contractor, or you are involved in the business of construction in any way, you cannot afford to neglect utilizing strong, thorough contracts in your business dealings.

There is simply too much at stake and too much that can go wrong for you to not have a solid legal foundation supporting your actions and your interests. Construction contracts cannot guarantee that you will never have to deal with a lawsuit, but they will mitigate your risk and give you something legitimate and legally defensible for you to fall back on if things go awry.

Payment for a construction job in particular can be a lightning rod for people to attempt to take advantage of a situation by underpaying or overcharging. A good construction contact needs to explicitly detail how and when payment will occur and make provisions for unexpected developments or changes in the way the job will be completed.

Generally, there are three main classifications of payment for a construction job that need to be detailed in your contracts, depending on the circumstances of the work. We’ve detailed these three classifications below:

Lump-Sum

A lump-sum contract places almost the entirety of the risk on the contractor. This is the most common form of payment classification in construction contracts and is characterized by an agreed upon fixed price for an agreed upon amount of work. If the contractor is able to do the job for less than the lump sum, he or she will still be entitled to full payment of the lump sum, which means an increase in profits. Conversely, if they are not able to complete the work within the lump sum budget, he or she must foot the bill to cover the difference. When calculating a lump-sum payment contract, the contractor needs to plan for any contingencies or unexpected costs and build them into the fixed price.

Unit Price

This form of payment classification is normally utilized when there is easily quantifiable work that needs to be completed, as opposed to more complex construction projects. Unit price payment is when a specific price is known for a task, but not necessarily the quantities of the product needed to complete the task. The owner agrees to pay for however much of the unit is used to complete the scope of work. For example, the contractor may know the price for certain quantities of concrete needed to complete a project, but not exactly how much concrete he or she will need. Thus, the owner agrees to pay an amount of money per an amount of concrete up to however much it takes to complete the job. Unit price payment could be combined with other forms of payment, like lump sum, to cover one particular aspect of a job.

Cost-Plus (with or without guaranteed maximum)

In a cost-plus arrangement, the owner agrees to pay the contractor for the actual cost of work, plus a fixed fee or percentage of the overall costs. This way, the owner will not be paying for contingencies that were built in to the price but never used, as he or she would in a lump-sum contract. However, without a defined guaranteed maximum amount, there is little to no incentive for the contractor to keep his or her costs down. It is wise to include a guaranteed maximum price (GMP), which shifts the risk of additional, unexpected costs onto the contractor rather than the owner, which incentivises them to keep their costs down. GMP may also include provisions for sharing savings should the contractor complete the job for less than the expected costs.

If you are dealing with payment issues that have arisen from a real estate or construction dispute, or if you need help developing contracts for your jobs and deciding which form of payment to utilize, please contact the Florida Construction Law Group and let us work to protect your interests.

If you are a Florida contractor or you utilize contractors in your construction projects, then it is essential that you understand Florida Statute 713. This statute lays out Florida state law with regard to liens, and more specifically for our purposes, construction liens.

The dictionary definition of a lien is “a charge upon real or personal property for the satisfaction of some debt or duty ordinarily arising by operation of law.” In the case of construction projects, a lien refers to when a contractor, subcontractor, or material supplier (known as the “lienor”) has provided labor, material, supplies, or services for the purpose of improving real, private property, and for one reason or another has not been paid for those goods or services.

In order to secure payment for his or her services, the lienor swears under oath, which creates a legal affidavit, that the materials or labor was provided and the required payment was not furnished. This creates a “Claim of Lien” which is placed on the property where the work was performed.

Having a Claim of Lien on one’s property makes it extremely difficult to sell or refinance the property, and is meant, from the lienor’s perspective, to force the property owner to settle the unpaid debt in court. Furthermore, if the required criteria are fulfilled, the lien will be considered “perfected,” meaning the lienor will have the right to foreclose the property if the debt is not settled.

Any prospective lienor in Florida must file the claim within 90 days of the completion of his or her contracted duty. The claim must be recorded in the county in which the property is located, and must list detailed information about the project for which they were not paid, including:

• Lienor’s name and address
• Name of whomever contracted the lienor
• The materials, labor, or services rendered and their contract price
• Description of the property
• Name of the owner of the property
• Time when the first and last materials/labor/services were furnished
• The amount of money that remains unpaid

It is relatively simple to perfect a construction lien claim if the lienor was in “privity” with the owner, meaning they shared a one-on-one contractual agreement. If the lienor was not directly contracted by the owner, they must have given proper notice to the owner of the work they were contracted to complete on the owner’s property in order to perfect a Claim of Lien afterwards.

A Claim of Lien can only be used to recover the funds that were directly owed for the contracted services—it cannot cover damages or losses due to the nonpayment. An attempt to foreclose a property with a construction lien must be filed in court within a year of the Claim of Lien being filed.

If you are a contractor who was not paid for your services and would like to file a Claim of Lien, or if you are a property owner facing a construction lien against your property, please call the Florida Construction Law Group to discuss your options and to let us start fighting for your rights.

When contractors encounter owner-caused delay, they are typically entitled to recover both time and damages. While direct delay damages like increased equipment costs, incresed labor costs and material escalation costs are fairly easily calculated, indirect costs such as office overhead or general conditions costs are far less so. There are several methods for calculating office overhead costs and general condition costs. If you are experiencing problems with homeowner delays, please feel free to contact us because you may experience substantially more damages as we can assist in determining whatoverhead costs are recoverable and how to calculate office overhead costs. It is also important to determine the differences between “actual cost” and “total cost” calculation methods and determine the contractor’s obligation to mitigate damages.

Ray Garcia, Esq.

www.floridaconstructionlawgroup.com

Unlicensed contracting is a crime in Florida. Section 768.0425 provides that a consumer (typically a homeowner) harmed by an unlicensed contractor is entitled to treble damages and attorney’s fees.

In Home Construction Management, a general contractor sought the civil remedies under §768.0425 against its subcontractor for disgorgement and treble damages. Home Construction Management, LLC v. Comet, Inc. 125 So.3d 221 (Fla. 4^th DCA 2013).  The general contractor alleged that the subcontractor was unlicensed where the scope of labor required licensing and was thus harmed by the overcharges that had been paid to the subcontractor. The court held that the subcontractor was guilty of unlicensed contracting and ordered treble damages and attorney’s fees.

General contractors should be aware of this law as it can be used against unlicensed subcontractors to obtain an award of treble damages and attorney’s fees. Subcontractors, and any unlicensed contractor, should also be aware of the punitive damages, as well as criminal penalties they may face for committing unlicensed contracting in Florida.

Ray Garcia, Esq.

www.floridaconstructionlawgroup.com

Hiring a contractor to perform serious renovation work on your home can be an unnerving prospect for many people. You want to ensure that you are getting the best work at a fair price, but if you choose a bad or unscrupulous contractor you will probably get neither.

A poor job by a contractor could end up costing you a great deal of time and thousands of dollars more than you intended to spend, so it is essential that you choose your contractor wisely.

Keep an eye out for these 10 red flags when choosing your contractor or when they are just starting their project. If you do choose a poor contractor, it’s important to move quickly to let them go as soon as it becomes clear they are not living up to your expectations.

1. Be vigilant of scammers

Particularly if you’ve been the victim of a widespread natural disaster, be wary of profiteers and those who would prey on your vulnerability. Some signs that a contractor could be trying to scam you include a lack of contact details like a phone number and business address. They may also be going door-to-door soliciting their services.

2. Upfront payment

Avoid contractors who require 100% upfront payment for the job as well as cash-only payments. This could indicate a lack of legitimacy or skill, and could leave you high and dry if the contractor never comes back to finish the job.

3. High-pressure sales

Another red flag is those contractors who try to push you into signing a contract on the spot. They may offer you a “great deal” but only if you agree to use their services right then and there. Any legitimate contractor understands you need time to think through such a big decision so don’t be pressured to act hastily.

4. No references

If the contractor cannot refer you to another satisfied customer, then do not give them the job. You want a proven track record to ensure they actually have the ability to perform the work well.

5. Lack of permits, license, or insurance

If the builder asks you to obtain the building permits for the job yourself, this may indicate that they are not properly licensed or registered locally and want to avoid detection. Always verify their relevant licenses with the proper authorities, and only give them the job if they have proof of valid insurance as well.

6. Unsatisfactory answers to questions

Whether the potential contractor is overly vague, unwilling, or simply unable to answer your questions about the proposed work or contract, don’t accept unsatisfactory answers to your questions. You are entitled to details and a contractor who is willing to give them to you.

7. Lack of contract

This one is simple, never allow a contractor to complete a job without signing a thorough and legal contract. Period.

8. Lack of communication or poor communication

If you find you can never get in touch with your contractor and he or she doesn’t return your calls, this is a sign that you should not hire them or that you might need to fire them.

9. Solicits a job for you based on leftover materials

We already mentioned avoiding door-to-door contractors, but some may offer you a great deal because they’ve just completed a job for a neighbor and have leftover materials. This could indicate that the contractor is not local or legitimate.

10. Deal too good to be true

If the deal sounds too good to be true, it probably is. Avoid it altogether or make sure you conduct thorough research on the contractor to make sure you aren’t being taken advantage of.

Do your best to avoid contractor red flags when hiring for your renovation or construction project. If you believe you have been the victim of an illegal or illegitimate contractor, call the Florida Construction Law Group to talk about your options and give yourself a chance to recoup some of your losses.

In construction defect claims, various insurance policies are often implicated.  In Florida, there are multiple triggers for determining whether property damage occurs during a policy period.  One trigger is manifestation (which commences from the date of discovery or the date a reasonable inspection would show discovery of the damage) and another trigger is injury-in-fact (the property is blatantly damaged).   Under the injury-in-fact, the main inquiry is the date of the property damage.  If the date of the damage is during the policy period, then the policy is applicable.  Under the manifestation, the applicable policy is the one in place at the time of the discovery of the property damage. In Carithers v. Mid-Continent Casualty Company, the Florida federal appellate court held that injury-in-fact, not manifestation that determined the applicable insurance policy.

In Carithers, the homeowner filed suit for construction defects associated with their house and alleged the defects could not have been discovered until 2010.  The general contractor’s insurance company’s policy lasted until 2008.  Therefore, the insurance company provided a defense that they had no duty under the policy when the homeowner’s damage was apparent in 2010.

.

The Eleventh Circuit Court of Appeals concurred with the district court that injury-in-fact was applicable, not manifestation as the Insurance had argued that manifestation was appropriate.  The Court examined the applicable insurance policy and found that the plain language of the insurance policy stated that property damage occurs when the damage happens, not when it is discovered or discoverable.  However, the court, limited it’s holding to the facts of this case and did not rule on which trigger applies where it is hard to determine when the property was damaged. This case demonstrates that insurance policy’s language is central to the determination of when the damage commenced. The key for determining insurance coverage will be the language of the insurance policy and determining when the damage occurred.  If the policy language mirrors that of Carithers, and the damage date can be ascertained, the likely trigger will be injury-in-fact and not manifestation.

By definition, a construction defect is a condition that reduces your home’s value. There are two primary categories of defect: “patent” defects, which can be spotted right away, and “latent” problems that don’t appear until years after your home was built.

What causes defects?

These problems typically occur if inferior materials were used or the construction work was not completed in accordance with good practice. Other leading causes include:

• Improper site selection and planning
• Civil or structural engineering errors
• Problems with soil analysis and preparation

What are the most common types?

The construction defects most commonly involved in litigation include water problems, faulty drainage, mold, dry rot, and cracks that appear in the roof, walls, or foundation. For a claim to succeed, a homeowner must have an expert examine the defect, determine its source, and recommend ways to remedy it. This expert will then testify in court to back the plaintiff’s claim.

Who is responsible?

Most times, the responsibility lies with the developers, builders, and general contractors. Designers and architects can also be held liable for construction defects.

What damages are recoverable?

If your home shows a patent or latent defect, the amount of damages you will recover will depend on the circumstances of the case. Recoverable damages include:

• Repair costs
• Decline in the value of the property
• Cost of temporary housing during the repair
• Court costs

If anyone was injured due to the defect, the party responsible may be liable for associated damages. Punitive damages could also be levied if the court decides that their conduct was reckless or willful.

Is there a time limit for filing?

Laws will vary from state to state, but in Florida, construction defect lawsuits must generally be filed within four years from the latest of the following situations:

• The date you actually took possession of the home
• The date that a certificate of occupancy was issued
• The date that construction was stopped (if the work was never completed)
• The date of completion or termination of the contract between the engineer, architect, or contractor and the employer

If a latent defect is involved, § 95.11(3)(c), Fla. Stat. states that “the time runs from the time the defect is discovered or should have been discovered with the exercise of due diligence.”

Can repairs be made while a lawsuit is in progress?

As a homeowner you are required to prevent further damage to your property, so repairs may be made and the costs are recoverable. Otherwise, the defense may argue that you failed to mitigate damages.

Can a home be sold while it is the subject of a construction defects lawsuit?

While you are allowed to sell your home during the litigation process, Florida’s disclosure law requires you to inform potential buyers of all known facts about the property, such as taxes, past and present condition, and need for repairs. Litigation over construction defects arguably falls in this category.

If you have any questions on the subject, or if you need assistance with any aspect of construction law, we can help. Please contact us today to learn more!

When you’re a subcontractor searching for work, knowing what general contractors look for in the people they hire will give you a major competitive edge. To improve your chances of winning more jobs, keep these three important tips in mind.

Tip #1: Know your strengths

When bids come in for subcontracting jobs, the general contractor often finds it difficult to distinguish the different subcontractors except by price. Does this mean you can only stand out and win a job by presenting the lowest bid?

Not necessarily, if you market yourself more strategically. Ask yourself what you do that’s different or better from the way your competitors do it. Do you keep your certifications faithfully up to date? Seek new ones as the industry changes? Do you have a larger work crew who can get a job done faster? Do you have a perfect safety record? If so, use those details to present yourself as the best candidate for the job.

Tip #2: Know how to market like a pro

There are many ways that you can market your services to a general contractor.

• If you win a job, give the contractor material that they can use when presenting to the owners. If you can contribute to their success, they will remember you when future opportunities come up.
• Invest in your team’s professional development, and publicize the fact that you do so. General contractors considering your bid will know that they are obtaining trained and competent personnel for their job.
• After completing a job, remain in touch with the general contractor and send them any useful leads that you come across. It increases the chances of them returning the favor when they have another job on the table.

Tip #3: Always be professional

A professional image is important to your career. Give the contractor every reason to remember your work positively: make sure that your crew cleans up the site before going home each night, hold regular safety meetings to keep the project accident-free, and respect the contractor’s payment schedule. (Insisting on immediate payment will make you look desperate.)

Good marketing skills and a professional approach can hold more weight with a general contractor than the lowest bid. Invest in both and your career will only benefit. And if you have any questions about construction law, we’re here to help, so please don’t hesitate to ask!

Generally the terms of a construction contract are always upheld in court, as the parties both agreed to such terms. However, in Love’s Window & Door Installation, Inc. v. Acousti Engineering Co., Florida’s Fifth District Court of Appeal ruled on not enforcing a contract’s venue selection clause. In the multi-party suit, which commenced in Osceola County, an association filed a claim against the general contractor for a construction defect of a condominium. The general contractor, in turn, filed a claim against a corporation for improper installation who subsequently filed a claim against the subcontractor. The subcontractor moved to transfer venue to Volusia County pursuant to the contract it held with the corporation. Fifth District Court of Appeal ruled against the transfer of the case and the enforcement of the venue clause because of the multiple lawsuits, judicial labor, costs, and inconsistent results. Thus, a contract’s terms may not always be enforced by the Court.

Ray Garcia, Esq.

Board Certified in Real Estate

by the Florida Bar

www.floridaconstructionlawgroup.com

Florida House Bill 501 seeks to reduce the statute of repose from 10 years to 7 years for construction claims. HB 501 was introduced to the house in January 2015. If approved, HB 501 will take effect on July 1, 2015. This can vastly change construction law in Florida as a statute of repose bars a claim after the passage of the period of repose expires, unlike a statute of limitation which bars the filing of a claim after the accrual of time from the initial cause of action. Under Fla Stat 95.11(3)(c), the statute of limitations for construction defects claim is four years after the date the defect is first discovered or should have been discovered under due diligence. The current statute of repose expires after 10 years after the later of: (1) the date of actual possession by the owner; (2) the date of the issuance of a certificate of occupancy; (3) the date of abandonment of construction if not completed; or (4) the date of completion or termination of the contract between the professional engineer, registered architect, or licensed contractor and his or her employer.

Although, the proposed 7 year statute of repose will not apply retroactively and will affect claim made on or after July 1, 2015, there is an exception to claims that would not have been barred under the current statute of repose but will be barred under the proposed FB 501, those claims will not be immediately disallowed and may be commenced until July 1, 2016.

Ray Garcia, Esq.

Board Certified in Real Estate Law

by the Florida Bar

www.floridaconstructionlawgroup.com

Building your dream home is supposed to be one of life’s most exciting moments, and with careful planning and attention to detail, it can be. But if you start the project without knowing in advance what will and won’t work for you, or cut corners where you shouldn’t, the result could turn the dream into a nightmare.

This blog entry highlights five mistakes that people commonly make when building their new home, and how to avoid them.

Mistake #1: Not including a buffer in your budget

Once you’ve gotten all the necessary quotes from architects, contractors, and other building professionals, you will have a general idea of how much it is going to cost to build the home you want. But don’t assume that this is all you will end up paying before it’s over, because it could be more. And if your budget has been exhausted, the house could remain half-finished until you get more funds together.

Your budget should generally include a buffer of around 10% of the quoted cost. This will prevent the project from being derailed by unexpected costs such as wage increases, changes in material costs, etc.

Mistake #2: Short-term planning

Many people build homes with only short-term plans in mind. A small bungalow is fine for a young couple, but what if you have children? Will there be rooms available for them or will expensive renovations have to be done? Do you plan to eventually bring your parents in to live with you? If so, think about putting bedrooms on the ground floor. Your house should be built to accommodate important lifestyle changes.

Mistake #3: Failing to consider resale value

If you don’t plan on living out the rest of your years in the house, you’ll want to sell it eventually. A lot of people forget this, and either build the place in appealing but inconvenient locations, or design it to reflect their personal quirks and tastes. When the time comes to sell, buyers shy away.

To help ensure that your house brings a good return on investment, keep the layout and fixtures tasteful and timeless. Buy your build plot in a desirable location. All of these factors will contribute to a good resale value.

Mistake #4: Trying to bypass the permit process

Getting the go-ahead to build your home involves obtaining certain permits. The process can involve a series of time-consuming and expensive inspections, which is why people occasionally try to start construction first and worry about the permits later. Don’t do it: your project could be stopped and you may even be fined.

Mistake #5: Not vetting your builders or contractors

With so much at stake, you need to confirm that the builder and contractors you hire are competent and reliable. Don’t be blindsided by low prices: the work could end up being just as cheap.

Ask prospective builders for photos of past work and testimonials from previous clients. If possible, go view a house they built. If it looks good, you’re probably in good hands.

Building your dream home is a major life milestone: don’t ruin it by making mistakes that can be avoided with a little diligence.

You’re ready to build your dream home – or you think you are. You probably know exactly how many rooms you want to have and what their purpose will be, but have you thought through all of the key details?

Poor planning and badly managed budgets can cause far-reaching problems, so you need to approach the project from many angles. These tips will help you create a better design plan and budget for your dream home, so that the final result is everything you hoped for – and more.

1. Carry out space planning carefully. Unless you’re building a mansion, proper attention to space planning and design is paramount. Don’t go overboard on the storage space: do you really need a closet in the foyer, especially if you live in South Florida where coats aren’t regularly worn? Does the master bedroom closet have to be a walk-in one? If not, allocate the extra space to the bedroom or adjoining bathroom.
2. Hire an experienced builder. Any construction project is a major undertaking, but when you are building your dream home, you can’t afford mistakes. It can be tempting to save money by simply hiring the cheapest builder around, but is it really worth risking everything to save a few bucks? In construction you often get what you pay for… so don’t cut corners on your dream home!
3. Consider HVAC needs. It’s hot in South Florida – so make sure your new home can stay cool! HVAC systems should be in accordance with the size of your home. Large units in small houses will cause energy bills to skyrocket, while small ones in bigger homes will do a poor job of cooling and heating. Whatever size system you end up installing, don’t forget to arrange for regular maintenance: moisture and mold growth are common concerns that can negatively impact your family’s health.

Take your time and make all important decisions in advance, not as you go along. Poor design choices will make your home uncomfortable and possibly unhealthy. Work closely with your architect or builder: they will help you decide what makes sense given your family’s needs, and show you where you can save some money as well as where you absolutely should not cut any corners.

Questions or comments? Need assistance with the legal side of building your home? Please contact us today to learn more!

The litigation process can be contentious, stressful, and expensive. The time needed to get to trial and obtain a resolution often exceeds the time spent completing a construction project, and litigation drains the energy and attention of all participants from the project or job at hand. Similarly, professional reputations are damaged or lost in an industry where reputation is a valuable business asset.

Often, these negative dispute repercussions can be avoided entirely by opting for mediation or arbitration to reach an agreement.

Construction Mediation

One alternative to litigation is mediation, a private and informal method of dispute resolution that involves a mediator. The process is entirely voluntary, with no one being compelled to accept a settlement. Mediators are neutral and independent parties who assist disputants in reaching an agreement and a resolution to the problem at hand. Settlement terms are decided by the parties, not the mediator.

At the hearing, the disputants have the option of presenting evidence and/or documentation to support their position. The mediator facilitates the negotiation process but cannot issue a binding decision. Once a settlement is reached, the mediator will help draft the agreement terms, which can then be taken to an attorney and written into a legal contract.

Construction Arbitration

The purpose of arbitration is to privately settle a dispute by using a neutral third party as a decision maker. It is essentially a forum that permits the disputing parties to present their cases to a single arbitrator (or sometimes a panel) for a final decision.

Unlike trial judges, who often have no expertise in construction, engineering, and architecture, arbitrators can be experts selected for their technical knowledge. Their award decisions are also more likely to be final, which reduces the risk of costly appeals.

Arbitration is preferable to litigation in that it is a speedier and less expensive method of resolving disputes. It is also a more informal proceeding, and closed to the public. Both sides are allowed to present evidence and call witnesses to support their position, and each party can question the other’s witnesses and evidence. After everything has been presented, the arbitrator withdraws to review the case and make a decision.

In binding arbitration, any award made may be enforced in court. Judges will carefully review each case and its specific arguments to determine if anything in the proceedings invalidate the award, such as fraud or misconduct.

If you have questions about this process or about construction law in general, we can help. Please get in touch with us today!

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!

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!

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!

As a contractor, the last thing that you want to deal with is a legal dispute or a lawsuit. In this blog entry, we identify four ways you can take action to protect yourself and your business:

1. Only take a construction job that you thoroughly understand and know you can handle. This is of key importance. If the job requirements include duties that are outside your area of expertise, politely decline and, if possible, recommend an alternate contractor. You also need to pay attention to your gut instincts. If talking to the customer leaves you doubting that they will be easy to work with or you feel that their expectations are unrealistic given your resources, do not take the job. Don’t set yourself up for failure. Foresight is always better than hindsight in these scenarios.
2. Spend some time talking to the customer and going over all the job details. When you undertake a job, you need to have a clear understanding of the scope and nature of the work involved, and know what the customer’s expectations are. Both contractor and customer need to be in agreement on the material types used, timeline to completion, permit application procedures, parties involved in the actual work, etc. Do not assume anything.
3. Take precautions before doing jobs for family and friends. The family and friends of contractors often want more for less, although they may not explicitly state such. To prevent this type of dispute from arising, get everything in writing. Have the customer sign all drawings and specs, and put any change orders in writing, no matter how small. If you verbally agree to make a change, document everything afterward and have the customer sign your summary before proceeding.
4. Keep everything honest and Code-compliant from start to finish. If the customer asks you to build without obtaining the proper permits beforehand or to use materials that do not meet code specifications, decline the job. Following their directions will not protect you from claims or lawsuits that can result from unapproved actions and choices. You could end up covering the cost of rebuilding the structure to code along with any assessed penalties.

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

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

Your next real estate investment needs to be thought out carefully. Taking the plunge into an unknown opportunity is far too risky, particularly here in South Florida, as many investors have learned the hard way over the last decade. To improve your chances of success and maximize your working capital, it’s important to do your homework.

If you’re looking to invest in a condo project, avoiding these five common mistakes will help you avoid prevalent market traps and spot a genuine – and profitable – opportunity.

1. Buying at inflated prices: Don’t buy condos in a heated market, as the prices will be inflated. As the saying goes, you make money in real estate by how much you pay for it, not how much you ultimately sell it for.
2. Falling for developer hype: Heated markets inevitably attract amateurs out to make quick money. Developers will spend thousands of dollars making the project sound amazing, but a lot of their products lack design and quality. If you’re looking at a particular neighborhood, buy from a local developer with a successful product portfolio.
3. Not having a game plan: Before investing in a condo project, you need to formulate a specific plan. Ask yourself: will you manage the property yourself? Are you familiar with capital gains taxes? Is residential real estate the best project for you? If you don’t answer these pertinent questions in a way that makes sound business sense, you run the risk of losing your capital or worse.
4. Buying in an uncertain neighborhood and location: All condo investments hinge on their location and the surrounding neighborhood. This doesn’t mean that you should confine your buying to gentrified neighborhoods, but the project needs to have good resale and rental potential in order to be profitable.
5. Intending to sell before the project registers: Avoid new construction projects if you are not in a position to obtain a mortgage when they register. Condo assignments are flooding the market and a lot of them are selling below their original purchase price.

To be a savvy and successful investor in the condo market, you need to look at several deals before deploying your capital on those with the most potential. Over time, you will start thinking creatively and acting on instinct when you craft deals – two abilities that mark the successful investor. If you’re thinking about investing in a real estate project, we’d be happy to help. Please contact us today to learn more!