20Jul 2017

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.

22Jun 2017

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

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

Start with a Realistic Agreement

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

Communicate Frequently  

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

Look at Compromise Options

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

Get Legal Help

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

20May 2017

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

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

Prove the Debt

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

File the Documents

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

Serve Notification

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

Avoid Potential Problems – We Can Help

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

24Apr 2017

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

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

Schedule of Values

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

Number of Draws

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

Inspections

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

What to Do with Changes in the Job

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

Contact Us

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

20Mar 2017

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.

21Feb 2017

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

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

Purpose Clause

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

Drawdown Requirements

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

Repayment Information

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

Events of Default

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

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

Get Help with Your Funding Agreement

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

20Jan 2017

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.

20Dec 2016

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

Construction Loan Agreement

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

Funding Agreement

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

Construction Supervision Agreement

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

Design Certification Agreement

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

Contact Us

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

20Nov 2016

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.

20Oct 2016

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.

20Sep 2016

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.

  1. 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.

  1. 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.

  1. 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.

  1. 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.

  1. 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.

  1. 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.

20Aug 2016

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.

  1. 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!).

  1. 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.

  1. 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.

  1. 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.

  1. 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!

25Jul 2016

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.

23Jun 2016

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.

20May 2016

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.

22Apr 2016

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.

23Mar 2016

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.

23Feb 2016

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.

02Feb 2016

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

27Jan 2016

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.

22Dec 2015

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.

23Nov 2015

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.

29Oct 2015

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

20Oct 2015

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.

23Sep 2015

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.

20Aug 2015

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.

05Aug 2015

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

05Aug 2015

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. 4th 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

23Jul 2015

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.

14Jul 2015

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.

19Jun 2015

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!

20May 2015

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!

11May 2015

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

11May 2015

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

10May 2015

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.

20Apr 2015

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!

10Apr 2015

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!

23Mar 2015

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

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

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

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

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

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

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

10Mar 2015

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

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

Tip No. 1: Think small

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

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

Tip No. 2: Keep it simple

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

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

Tip No. 3: Eliminate extra walls

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

Tip No. 4: Make smart materials choices

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

Tip No. 5: Buy at discount warehouses or online

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

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

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

23Feb 2015

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

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

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

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

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

12Feb 2015

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!

11Feb 2015

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

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

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

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

Ray Garcia, Esq.

Board Certified in Real Estate Law

by the Florida Bar

www.floridaconstructionlawgroup.com

20Jan 2015

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!

10Jan 2015

A construction defect is a condition that lowers the value of a home, condominium, or similar property. This defect can be in workmanship or design, or be connected to land movement. There are two principal defect categories that allow homeowners or homeowners’ associations to recover damages:

Defects in materials, workmanship, and design: This category includes stucco and siding deficiencies; water entry via sliding glass doors, roofs, and windows; faulty electrical wiring; insufficient insulation; defective mechanical and plumbing; termite infestation; and more.

Land movement: Examples include underground water sources, inadequate drainage, expansive soils, landslides, earth movement, improper compaction, and similar conditions.

Both categories of defect can be catastrophic and result in personal injury as well as substantial property damage.

Every builder’s warranty differs in terms of what is and isn’t covered, length of the coverage period, and what the builder will do to correct construction issues. Most warranties will not address the majority of typical construction defects, and they will often require you to arbitrate and refrain from suing in court. Be sure to read the fine print, because the warranty may also state that you could pay the developer’s costs if you lose your case. Whatever you do, do not blindly assume that the developer will correct any defects to your satisfaction. Warranties are marketing tools more than anything else.

To prove that a defect exists, you will need to hire an independent expert with the education, experience, and training to testify about defect causes in court. If your roof has a defect that causes it to leak, you will want to engage an expert who has designed sound roof systems and has experience in evaluating defective roof systems. Although an expert may help win your case, they can be expensive (up to $300 or more per hour), so consult an attorney before hiring the expert to control the expenses and protect the information.

In terms of recoverable damages, courts will award condominium owners’ associations the cost of repairing the defects. You can also claim any reasonable amounts paid to experts to determine the cause of the defects and supervise the repairs. Any amounts paid for temporary repairs (i.e. to prevent further damage) can also be recovered. If you had to leave your home because the defect(s) made it uninhabitable, relocation costs may be reimbursed. If the developer has defrauded the buyer, courts may award punitive damages.

If you’d like to learn more about any element of construction law, we are here to assist. Please contact us today!

23Dec 2014

Whether you are the contractor or the owner in a construction project, having a good contract in place before any work is started is absolutely essential.  It will help to make sure everyone is on the same page so there is no confusion or miscommunication.  It can also help to minimize the risk of litigation after the job has begun.

Unfortunately, even when a contract is signed, there are often mistakes which undermine the integrity of the document.  Below are four specific mistakes to watch out for:

Oversimplifying the Contract – Many people try to keep the contract extremely simple.  While there is generally no need for a 200 page document, the contract MUST include everything that each party has agreed to orally.  Make sure all contracts answer the main questions about the job, which can be summed up as “who, what, when, where, how and how much.”  If your contract does not answer one or more of those questions, it should be revised.

Improperly Identifying Individuals & Companies – Remember, the contract is a legal document so you should be using the legal identifiers of everyone involved.  If hiring a contractor or sub-contractor, for example, make sure to use their full business name throughout the contract.  In addition, make sure the person signing the document has the legal authority to sign on behalf of the company.

Using Standard Contracts without Necessary Revisions – Many contractors use generic legal contracts to help simplify the process.  While this can be a very useful option, it is also important to make edits to it as needed.  Make sure the final version of the contract properly reflects the actual work that is being done as well as any other details that are being agreed upon.

Failing to Read the Entire Contract – This is perhaps the biggest mistake people make when it comes to any legal document.  Even if you trust the people involved, it is best to have everyone read through the contract completely to ensure there are no mistakes or misunderstandings.  We highly recommend that you have a construction attorney read it as well.

By avoiding these four common mistakes you can help ensure that the job will go much more smoothly.  In addition, everyone will have the written document that they can refer to in the event that there are any disputes during or after the job.

If you have any questions about construction contracts, please don’t hesitate to contact us – we look forward to assisting you!

 

 

08Dec 2014

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

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

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

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

 

 

08Dec 2014

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

Start with the Basics

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

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

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

Identify Pre-Construction Responsibilities

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

Include Details on the Construction Process

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

Clearly Identify the End of the Job

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

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

07Nov 2014

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

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

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

1. How long has the attorney practiced Construction Law?

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

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

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

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

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

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

04Nov 2014

Florida Construction lien law contains many notice and deadline requirements and failure to comply with the requirements of Florida Statute Sect. 713. Unfortunately, a common occurrence among contractors is the attempt to inflate a claim of lien amount due to various reasons, either an attempt to offset potential costs and fees that will be incurred in enforcing the lien or simply to intimidate the property owner to resolve the matter. Many times it is done as a result of the contractor anger in providing work and payment to subcontractors and then having the homeowner fail to make payments to the contractor.

The filing a fraudulent lien in Florida means that a contractor intentionally misstated certain information on the Claim of Lien that is untrue. This action on the part of the contractor can result in severe penalties. The contractor would likely be subject to the loss of his lien and the imposition of attorneys fees against the non-prevailing part. It is strongly recommend to be as accurate as possible when determining the amount of the lien and be certain to have the necessary documents to support the amount detailed in the claim of lien.

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

02Nov 2014

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

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

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

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

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

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

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

02Nov 2014

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

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

02Nov 2014

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

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

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

27Oct 2014

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

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

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

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

18Sep 2014

Florida contractors have developed a reputation for have suspect business practices such not completing jobs properly, using inferior quality products and overcharging for works or sub contracting work off to less reputable individuals. Here are some tips that may help you in avoiding being taken advantage of by a contractor.

1. Obtain Multiple Estimates. Contractors will often provide you a low estimate to get the job. Then, as the work progresses they will upsell you on products and services such change orders. Always get a very detailed estimate that includes the cost for materials, labor, fees and the contractor’s profit margin.

2. Create a progress payment schedule. A progress payment schedule incentivizes the contractor in continuing to working on the project. Avoid paying large upfront deposits that incorporates immediate profits. Schedule the payment whereby the contractor receive payment after completing portions of the work.

3. Ask the contractor for references. Find out from others or the contractor himself individuals who have used the contractor in the past. Then, ask those individuals how they heard about the contractor. Ask if you can visit the job to inspect the quality of the work and products used on the job.

4. License Status.  Contact the department of Business and Professional Regulation to see if the contractor’s license is in good standing or the contractor has received complaints from other consumers. Additionally, ask for a copy of the contractor’s insurance policy.

Ray Garcia, Esq.

Board Certified in Real Estate Law

by the Florida Bar

www.Floridaconstructionlawgroup.com

20Aug 2014

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

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

Ray Garcia, Esq.

Board Certified in Real Estate Law

by the Florida Bar

www.floridaconstructionlawgroup.com

11Aug 2014

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

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

Ray Garcia, Esq.

Board Certified in Real Estate Law

by the Florida Bar

www.floridaconstructionlawgroup.com

05Aug 2014

As tenant’s counsel you want to secure provisions in the lease agreement that the landlord’s build-out work as stated in the plans and specifications consists of items that a landlord may be required to complete by law such as local building code compliance work, structural work, roofing work and ADA compliance. In order to avoid the confusion as to what work would be considered the obligation of the landlord and what build-out work would be considered the obligation of the tenant, you would want the obligations spelled out in the lease agreement. Also, as an additional measure of precaution a tenant may want the landlord to complete his portion of the work at his expense and prior to the landlord turning over possession. This will avoid confusion and disagreements going forward.

Ray Garcia, Esq.

Board Certified in Real Estate Law

by the Florida Bar

www.floridaconstructionlawgroup.com

17Jul 2014

A lien is a method detailed by statute for a contractor or materialman who has provided labor, materials or services to obtain payment under Florida Statute Section 713. In order to obtain a lien, the contractor or materialman must prepare an affidavit stating that they have not been paid for either the labor, materials or services and that the real property was improved by the labor, materials or services. Florida Statute Section 713 states what types of items are lienable and who is entitled to a lien. Generally, improvements to real property, such as removing, repairing, demolishing excavating and landscaping to name a few are permissable improvements. Also, contractors, architects, interior designers, surveyors, mappers, engineers, materialman, contractors and subcontractors are the types of persons entitled to place a lien on real property.

Ray Garcia, Esq.

Board Certified in Real Estate Law

by the Florida Bar

www.floridaconstructionlawgroup.com

12Jun 2014

Florida Construction Law Group concentrates in both the prosecution and defense of construction loan foreclosures. In Florida, construction loan foreclosures can become very complex and entirely different from a typical residential loan foreclosures. Typically, construction loans are funded through draw requests, which are based on the progress of the project. Continue reading

03Jun 2014

A lien is a charge on real property used to secure payment for those who have furnished labor, materials or services to a project. Under Chapter 713, Florida Statutes, liens are affidavits prepared under oath by the lienor stating that the lienor has provided labor, material, supplies or services to improve real property and has not been paid.

There are several requirements for a Claim of Lien: Continue reading