Insurance and Bond Exhibit

In the prior version of the AIA-A201 all of the insurance and bond requirements were provided for in the general conditions. Now the insurance and bond requirements are provided for in an exhibit, the AIA-A102, as well as in the general conditions, section 11 of the AIA-A201. Accordingly, parties need to be cognizant to carefully review both to ensure that there are no inconsistencies. The advantages of having the insurance and bond requirements as an exhibit allows for greater flexibility in the type of insurance product, the coverage provided, and the party responsible for payment. Additionally, the AIA-A102 can be specifically tailored to meet the insurance and bond requirements for any type of construction project.

Notices Can Be Sent Via Electronic Transmission

Recognizing that it is the twenty-first century, the AIA-A201 now allows for notices to be sent to parties via electronic transmission provided that a method for electronic transmission is set forth in the contract between the parties. However, any notices of claims are required to be served by certified or registered mail, or by courier providing proof of delivery. This is going to be a potential pitfall for parties that do not carefully review the notice requirements pursuant to the contract, I am confident that there will be some improper notice of claims submitted by parties that fail to recognize that electronic transmission will not be sufficient.

Contractors Can Be Required to Submit Release and Waiver of Liens With Applications For Payment

Contractors can now be required to provide releases and waivers of liens from subcontractors and material suppliers if it is requested by the owner or architect. Many smaller subcontractors and material suppliers often times have enough issues with preparing their own applications for payment. They will now have to have the waivers and releases of liens carefully prepared and reviewed along with the submission of their applications for payment. This requirement can be potentially be very problematic to smaller contractors and material suppliers that do not have a lot of project management experience.

Minor Changes in the Work

Minor changes in the work are changes that do not change the contract sum or the time for completion of the contract. In the event that the architect orders minor changes in the work that the contractor reasonably believes will change the contract sum or the time for completion, then the contractor must notify the architect. After notifying the architect, the contractor has the right to not proceed or implement the change in the work.

Owner Must Provide Evidence of Financial Arrangements        

While the prior 2007 version provided for evidence of the owner’s financial arrangements, the 2017 AIA-A201 has more extensive language regarding the owner’s ability to pay for the labor, materials, and/or services rendered to the project. This is a clear response to the recent recession that devastated the construction and real estate industry. Prior to the commencement of work and upon written request by the contractor, the owner shall provide reasonable evidence that the owner has the ability to pay for its obligations under the contract. After the commencement of work and upon written request by the contractor, the owner must provide evidence of financial arrangements only if one of the following occur: the owner fails to make payments under the contract; the contractor identifies in writing a concern regarding the owner’s ability to make payment when due; or a change in the work performed under the contract materially changes the contract sum. If the owner fails to provide the reasonable evidence of its ability to pay for the work then the contractor can refuse to proceed forward with the work or even suspend work. Any financial documentation provided by the owner under these circumstances is to remain confidential, absent a subpoena, court order, or the like. This provision is geared towards protecting the contractor and not the owner. Owner’s may potentially lose some of their bargaining power or negotiating arguments when they are forced to disclose financial information. Additionally, I am very curios to see in practice what will be considered as reasonable evidence of the ability to pay, there are likely going to be creative arguments about what constitutes reasonable evidence. Moreover, if the owner doesn’t have the money to pay for all of the work under the project, then they are going to be potentially forced to get creative with their reasonable evidence.

Termination for Convenience Compensation

Termination for Convenience allows the owner to terminate the contractor without cause. In the prior general conditions, the payment to the contractor that is terminated for convenience was for reimbursement for reasonable overhead and profit for work not executed. In the new general conditions, the owner is responsible to pay the contractor for the costs attributable to termination of the subcontracts, and the termination fee, if specified for.

Sweeney Law, P.A. Regularly Handles

Construction Contract Preparation & Negotiation

Brendan A. Sweeney, Esq., of Sweeney Law, P.A., has drafted, negotiated, and litigated millions of dollars of construction contracts for all different sectors of the construction industry. From public entities, general contractors, subcontractors, to residential homeowners. Brendan A. Sweeney, Esq., is an AV Preeminent Martindale Rated Attorney, that has been recognized as a Florida Legal Elite Rising Star Attorney in 2014, 2015, 2016, 2017, and 2018. If you have any Florida construction law questions and/or issues then contact Sweeney Law, P.A. at (954) 440-3993 immediately to protect your rights. www.sweeneylawpa.com.

Harm Mitigation

Construction delays are often caused by unforeseen circumstances that are not properly addressed (or not addressed) when identified. The owner, contractor and sub have a meeting to review the project budget. The contractors foresee that the budget for cement may not cover the anticipated need. An order for the additional amount needed will take an additional week for delivery. The contractor miscalculates and does not engage in activities that will address the issue. This is one example of how a delay may arise. Other causes of delays include miscommunication between involved parties, over or under budgeting, foreseen acts of God. Hiring an attorney is a great start to mitigating harm. An outside expert can review documents, plans, and the budget, to provide advice on points that are easily overlooked by parties involved. Another strategy is to anticipate the harm before it occurs. This requires special attention to the progress of the project. Anticipated harm should not be ignored, but properly addressed no matter the likelihood of its occurrence. Engaging in this activity also allows time to mitigate possible harm.

Proper Documentation

Documenting foreseen harm creates a reliable record in case of legal recourse. This is especially the case with the revolving door of subs and service providers.  The project foreman should create a culture of record keeping (note-taking, noting observations and calls, retention of important documents that are relevant) providing ease when investigating the delay. Parties who do a better job at record keeping also have a higher chance of prevailing in court should a party bring the delay issue into court. With data collection and record keeping comes analysis. Contractors should analyze important records as a means to anticipate delays and mitigate harm.

Contract Terms Concerning Damages

Studying the construction contract can help when faced with a lawsuit. For one, it is worth knowing the specific term concerning damages for delays. This can help with strategizing if a delay does occur. The type of damages term agreed upon carry varying implications. These implications usually manifest in court or at the settlement stage. But you do not have to wait until then to become familiar. Actual damages require more concrete and specific harm. In other words, if you seek actual damages, record keeping and solid evidence is essential. Liquidated damages are agreed upon by the contracting parties and may not cover the magnitude of the damage. When contacting around delays, it is wise to consider the damages term and how it will work in your favor.

Your Florida Construction Law Attorney

Although construction delays can be unavoidable, there are ways to mitigate harm by anticipating loss. The first step is hiring an experienced construction law attorney who can guide you through the contracting stage and advise on possible risks.  Attorney Brendan A. Sweeney is an experienced construction law attorney with years of experience litigating and advising on construction law issues.  Contact us for a consultation.

Resource:

law.cornell.edu/wex/actual_damages

By way of example, a plumbing contractor starts providing labor, materials and/or services to a project on July 1, 2017, the project’s Notice of Commencement was recorded on January 1, 2017, the plumbing contractor does not get paid and records a claim of lien on October 1, 2017, if done correctly the plumbing contractor’s claim of lien will relate back in time, without the assistance of the DeLorean, and will be deemed effective nine months earlier to January 1, 2017.

What is a Notice of Commencement? Pursuant to Florida construction law, an owner or an owner’s agent, with some exceptions, is required prior to commencing construction or recommencing completion of a project, to record a Notice of Commencement in the public records of the project’s location within 90 days of construction in order to be valid. The Notice of Commencement should include the legal description of the property, street address, tax folio, if available, the names and address of the owner, contractor, the lender, and the surety if the project is bonded. The requirements for a Notice of Commencement and form can be found at § 713.13, Fla. Stat. Additionally, the owner is responsible for posting a certified copy of the Notice of Commencement at the project. While it is the project owner’s responsibility to prepare, record, and post the Notice of Commencement, if a construction lender is involved the construction lender will want to ensure that the Notice of Commencement is prepared and published pursuant to Florida law. Unless specified otherwise the Notice of Commencement will be effective for one year. If a project is going to take long then the Notice of Commencement should be amended and served upon all lienors that provided a notice to owner.

While the framework of the Notice of Commencement seems rather simple at first glance, it is ripe for issues and potential litigation regarding lienors lien priority. For example, issues often arise with respect to whether the Notice to Owner is valid, that is whether it complies with the requirements under Florida law, whether it was effective, that is whether it was renewed/amended pursuant to Florida law if the project takes longer than one year, whether the lien can relate back to the Notice of Commencement, whether the construction lender or home lender has priority over contractors Ch. 713 liens. The difference in a lienor’s priority on a project is critical because the better priority a lienor has the more likely they are able to get paid in full.

Sweeney Law, P.A. Regularly Handles Florida

Construction Law Matters

Brendan A. Sweeney, Esq., of Sweeney Law, P.A., has litigated complex high-dollar construction law claims for all different sectors of the construction industry throughout the state of Florida. Additionally, Brendan has extensive experience in navigating the complex requirements that are required in Florida in order to protect, prosecute and defend one’s lien rights under Ch. 713, Fla. Stat. Brendan A. Sweeney, Esq., is an AV Preeminent Martindale Rated Attorney, that has been recognized as a Florida Legal Elite Rising Star Attorney in 2014, 2015, 2016, 2017, and 2018. If you have any Florida construction law questions and/or issues then contact Sweeney Law, P.A. at (954) 440-3993 immediately to protect your rights. www.sweeneylawpa.com.

Construction defects are germane to the building industry. Defects can arise from bad workmanship, manufacturer defects within the components or they can even arise from the builder choosing incompatible parts. Due to the specialized nature of construction work, what seems like a minor detail can grow to have a huge impact on the construction project. To complicate the matter, there are different ways defects can show up. Defects that are patent are easily recognizable and identifiable. On the other hand, latent defects can go undetectable or do not become detectable until it has grown into a larger problem. Construction defects can become quite burdensome depending on the type and severity of the defect. Property owners must have mechanisms in their contract to protect themselves should a defect arise. To help alleviate some of this burden, Florida has mandated that parties include a certain contractual provision in their contracts as it relates to construction defects.

Florida’s Notice of Claim Provision

Chapter 558 of the Florida Statutes is a statute of repose governing construction defects claims. It requires all parties contracting over residential and commercial construction projects include a Notice of Claim clause within the agreement. Pursuant to Chapter 558, a property owner must wait 60 days before bringing any legal action. Within that time frame, the owner must send the other party a written notice of the specifics regarding the alleged defects. The notice must provide the other party the opportunity to inspect the alleged construction defects. In addition, the property owner has the right to request that the other party make an offer to repair or pay for the alleged construction defect. The property owner must keep in mind that they are not obligated under Chapter 558 to accept any offer. This entire process follows a strict deadline to which the parties must adhere. If the parties cannot reach an agreement within the allotted time period, the aggrieved party is free to pursue a lawsuit.

Pros and Cons of Chapter 558

From a policy standpoint, Chapter 558 is an effective way of keeping defect claims out of the courts by allowing individuals the room to resolve their own issues. Courts see utility in creating laws that reduce in-court claims. In effect, Chapter 558 creates a dispute resolution mechanism much like arbitration or mediation, thus giving the parties power to reach the most mutually beneficial resolution. At the same time, Chapter 558 is not without fault. One can imagine a scenario where a contractor can take advantage of an uninformed property owner in the contractor’s effort to resolve the defect. Still, the threat of legal recourse serves as encouragement for contractors to provide the best service possible–if a defect actually exists. Whatever the outcome of a Chapter 558 negotiation, the statute provides parties with an avenue to resolve their construction disputes.

Florida Construction Defects Attorney

Sweeney Law, P.A. is well-versed in construction defects litigation and the requirements under Florida Statutes Chapter 558. If you are the subject of a Chapter 558 claim or you have discovered a defect, call us now. Attorney Brendan A. Sweeney has years of experience guiding clients through the pre-suit notice of claim process and any subsequent defects litigation. Contact us now for a consultation.

Resource:

leg.state.fl.us/statutes/index.cfm?App_mode=Display_Statute&URL=0500-0599/0558/0558.html

Unlicensed Contractors May be Subject to a Misdemeanor or a Felony. Any person who practices, offers to practice, or holds themselves out as licensed to practice contracting is subject to criminal prosecution pursuant to section 489.127, Fla. Stat. The first offense is a first degree misdemeanor under section 775.082, Fla. Stat.  Further offenses are third degree felonies under 775.083, Fla. Stat.  Moreover, any offense committed during a Gubernatorial declared state of emergency is a third degree felony under section 775.083, Fla. Stat.

Unlicensed Contractors Have No Lien Rights. Pursuant to section 713.02(7), Fla. Stat., “notwithstanding any other provision of this part, no lien shall exist in favor of any contractor, subcontractor, or sub-subcontractor who is unlicensed…” Additionally, an unlicensed contractor also loses their bond claim.

Unlicensed Contractors’ Contracts are Unenforceable. Pursuant to section 489.128, Fla. Stat., contracts entered into by an unlicensed contractor shall be unenforceable in law or in equity by the unlicensed contractor. However, in Brock v. Garner Window & Door Sales, Inc., 41 Fla. L. Weekly 571 (2016), the Fifth District Court of Appeal held that unlicensed contractors may raise the statute of limitations applicable to the construction contract as a shield. Accordingly, while unlicensed contractors are unable to enforce their contractual rights, they are able to assert the statute of limitations as a defense.

Unlicensed Contractors May Be Subject to Administrative Penalties. Pursuant to section 489.13, Fla. Stat., any person who practices, offers to practice, or holds themselves out as licensed to practice contracting is subject to civil penalties up to $10,000.

Unlicensed Contractors May be Subject to Treble Damages. Section 768.0425, Fla. Stat., provides that a consumer harmed by an unlicensed contractor is entitled to treble damages, which means triple the amount of the actual/compensatory damages, and attorney’s fees.

Unlicensed Contractors May be Faced with Disgorgement of Fees. There is the potential that the unlicensed contractor is forced to repay the monies that were paid to them. The support for this theory derives from case law regarding other unlicensed professionals. See Cooper v. Paris, 413 So2d 772 (Fla.1st DCA 1982); Vista Designs, Inc. v. Silverman, 774 So. 2d 884 (Fla. 4th DCA 2001).

Unlicensed Contractors are Subject to FDUTPA. The Florida Deceptive and Unfair Trade Practices Act, Ch. 501, Fla. Stat. was implemented to provide consumers with stronger legal protection. Unlicensed contractors can be faced with penalties for violations of the FDUTPA, ranging from the imposition of personal liability to providing for prevailing party attorney’ fees.

As one can see, the penalties for unlicensed contracting in Florida are severe. Parties that are victims of unlicensed contracting should consult legal counsel to ensure that they are enforcing all of their legal remedies. Anyone faced with allegations of unlicensed contracting should consult an attorney immediately due to the gravity of the penalties. Sweeney Law, P.A. is well equipped to assist clients in any issue regarding unlicensed contracting in Florida.

Sweeney Law, P.A. Regularly Handles Florida

Construction Law & Unlicensed Contracting Matters

Brendan A. Sweeney, Esq., of Sweeney Law, P.A., has litigated complex Florida construction law issues throughout Florida. Brendan A. Sweeney, Esq., is an AV Preeminent Martindale Rated Attorney, that has been recognized as a Florida Legal Elite Rising Star Attorney in 2014, 2015, 2016, 2017, and 2018. If you have any Florida commercial leasing questions and/or issues then contact Sweeney Law, P.A. at (954) 440-3993 immediately to protect your rights. www.sweeneylawpa.com.

Tenant Improvement Required by Lease Agreement

If a tenant contracts for improvements because the improvements were required by the lease agreement with the landlord, then the lien may extend to the landlord’s property interest. The lien will not attach to the landlord’s interest if the improvement is optional.

Tenant Improvement is Considered “Pith of The Lease”

If a tenant contracts for an improvement because the improvement is “the pith of the lease” agreement with the landlord, then any contractor liens arising from the improvement will also extend to the landlord’s property interest. Improvements are considered to be the “pith of the lease” if they constitute the “essence” of the lease, they are “essential to the purpose of the lease,” or they are otherwise vital to the perpetuity of the lease. The general standard the court applies is if the lease would not have been executed but for the agreements regarding the improvements, then any such improvements will be considered to be the pith of the lease. Anderson v. Sokolik, 88 So. 2d 511 (Fla. 1956).

Steps the Landlord Should Undertake to Prevent Liens for Tenant Improvements

Express Language: the lease agreement between the tenant and landlord must include a specific provision in the lease that “expressly provides that the interest of [landlord] shall not be subject to liens for improvements made by the [tenant].” § 713.10(2)(a), Fla. Stat.

Recordation in Official Records: Prior to the recordation of the notice of commencement for the improvements, the landlord must record either: a copy of the complete lease or a short form memorandum of the lease that includes a copy of the express no-lien language. In a lot of commercial settings landlords will have several commercial leases for one piece of property. In these circumstances the landlord may record a blanket notice for the property which includes the following information: (a) the name of the landlord; (b) the legal description of the land to which the notice applies; (c) the specific language contained in the various leases prohibiting the landlord’s liability; and (d) a statement that all or a majority of the leases entered into for that parcel of land expressly prohibit this type of landlord liability. § 713.10(2)(b)(2), Fla. Stat.

Landlords Should Never Execute Certain Documents

Landlords should under no circumstance execute any permit applications and/or notices of commencement for tenant improvements. If this is done then the tenant’s contractors and lower tiered lienors may reasonably believe and rely that the landlord ordered the work and is responsible for payment. Furthermore, a contractor lien “extend[s] to, and only to, the right, title, and interest of the person who contracts for the improvement.”§ 713.10(1), Fla. Stat. What this means is that the tenant should be deemed the owner for applying for permits and recording the notice of commencement for the project, the tenant should be listed as a leasehold owner that a lien can be recoded against, and the landlord should be the fee simple owner that clearly provides that a lien cannot be recorded against the landlord’s interest.

Landlords Must Provide Lien Prohibition Language Upon Written Request or Face Consequences

In the event that a contractor is not aware of any prohibition of liens, the contractor can serve a written demand for same upon the landlord. Pursuant to § 713.10(3), Fla. Stat., a contractor may serve a written demand on the landlord for a copy of the specific provision in the lease prohibiting landlord liens. The demand must identify the tenant and premises at issue. The landlord must then provide a verified copy of the lease provision within 30 days of the request. If the landlord fails to provide the specific lease prohibition provision within this timeframe then landlord can be potentially subjected to the contractor lien. 

Sweeney Law, P.A. Regularly Handles Florida Commercial Leasing & Construction Law Matters

Brendan A. Sweeney, Esq., of Sweeney Law, P.A., has negotiated and litigated complex Florida commercial leasing and construction law issues throughout Florida. Brendan A. Sweeney, Esq., is an AV Preeminent Martindale Rated Attorney, that has been recognized as a Florida Legal Elite Rising Star Attorney in 2014, 2015, 2016 2017, and 2018. If you have any Florida commercial leasing questions and/or issues then contact Sweeney Law, P.A. at (954) 440-3993 immediately to protect your rights. www.sweeneylawpa.com.

For Cause

The For Cause termination clause is one of the most basic types of termination clauses parties will agree upon. A For Cause clause in a termination provision provides that if any one party breaches the contract, the contract is no longer valid.  Depending on the severity of the breach, the aggrieved party has the right to withhold performance or payment. At this stage, one party will assert that the circumstances are so egregious as to release him or her from obligations under the contract. A classic example of For Cause termination relates to timing. If a contractor agrees to furniture materials and begin construction by a stated date and does not fulfill the end of the bargain, there is a good argument for breach of contract and For Cause termination. As discussed above, the severity of the breach always solidifies whether a breach occurred. In the above scenario, if the work has not commenced for many weeks, then the more likely the lack of commencement serves as a For Cause breach.

For Convenience

Termination for Convenience permits either party to terminate the remainder of the contractual period without cause or fault on any side. If a contractor does not possess the manpower to complete the remainder of a construction project, then the owner of the property can terminate the contract on the basis of Convenience. In this case, the owner of the property will not interpret non-performance as a breach of the contract. Here, the owner has the option to terminate the contract without paying any remaining balances. Parties must write a For Convenience termination clause into a contract for it to possess validity. If the term is not stated in the contract then in the scenario above, the owner is obligated to pay the remaining balance under the contract.

Force Majeure

A Force Majeure termination clause calls for an end to all contractual obligations for both parties in the event of acts of nature, natural disasters and war. The Force Majeure clause is also known as the “Acts of God” clause. Therefore, the act must be severe enough to render the performance almost impossible. Due to the nature of this provision, the circumstances permitting termination based on Force Majeure are usually unforeseeable and unavoidable. For example, if a hurricane passes through an owner’s home and completely damages it, it would be difficult for a contractor to complete an addition to the home. All construction-based contracts must include a Force Majeure clause.

Florida Construction Law Attorney

A well-drafted construction contract is the first step to a successful and dispute-free constructional relationship. Florida attorney Brendan A. Sweeney is a dedicated construction law attorney with years of experience advising on complex construction issues. He has years of experience drafting and negotiating the best contract deals on behalf of his clients. Attorney Sweeney will ensure that your rights and responsibilities are clear and that your needs are well represented in the contract. Contact us now for a consultation.

Resources:

law.cornell.edu/cfr/text/48/52.249-2

law.cornell.edu/wex/force_majeure

Check the Contractor’s License

In Florida, building contractors must meet strict requirements before they are given licenses. These licenses communicate to customers that the company has the technical knowledge, financial stability and that it meets all legal standards as a construction company. The organization that registers contractors want to ensure that you are being served by skilled contractors who own legally compliant businesses. As a property owner, it is your duty to ensure that all licenses have been issued and are up to date. If a construction company has a license, they are more likely to perform skilled and professional work. You can verify a contractor’s license by visiting the Florida Department of Business and Professional Regulation website. Make sure that the license number is tied to the business name and is displayed on their advertising materials and vehicles.

Inquire about Insurance

Obtain certificates of insurance from the contractor showing coverage for personal and property liability damage as well as workers compensation. If a contractor possesses the listed insurance, it ensures their liability in case of an accident and it takes the liability away from you as the property owner. Starting a project without having proof of these insurances is risky, as you may be taking on unknown liabilities. You can simply ask the contractor to produce proof of insurance.

Carefully Read all Contract Terms

Most importantly, read all contract terms carefully. Ensure you completely understand all representations, warranties, conditions and timelines. Some construction deals can be so informal that written contracts are never drawn up to capture the agreement. Make sure you get all agreements in writing. It is best to involve a lawyer who can review and negotiate on your behalf as these contracts can get rather legalistic. Make sure to obtain a clear description of the work being performed. Can the contractor assure you that the work will be performed in a workmanlike manner? No matter the answer to that question, it is wise to get some kind of warranty term in the contract to protect your rights, your property and your money.

Your Florida Construction Law Attorney

Attorney Brendan A. Sweeney is an experienced construction law attorney who will provide you with the best representation. At Sweeney Law, P.A., our clients are our first priority. Whether you are experiencing an ongoing dispute or you are seeking advice on how to prevent one, Attorney Sweeney has a proven track record and he will make you his priority. Contact us now for a consultation.

Resources:

bbb.org/west-florida/news-events/consumer-tips/2017/05/bbb-tips-on-hiring-a-home-improvement-contractor-in-florida/

myfloridalicense.com/CheckListDetail.asp?SID=&xactCode=8020&clientCode=0602&XACT_DEFN_ID=2997