Disclaimer: Nothing in this blog should be interpreted as a substitute for professional advice from an attorney practicing in your community. Only local counsel can appreciate the business and legal environment under which a construction contract is drafted, negotiated and executed. Gary W. Moselle represents Craftsman Book Company, publisher of Construction Contract Writer.
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Recovery from Hurricane Florence
A week after Hurricane Florence passed through North and South Carolina, rivers are still above flood stage, schools are still closed and owners are still assessing the damage. The number of homes flooded will be in the low six figures – not as many as from Hurricane Harvey (over 200,000) or Hurricanes Katrina and Rita (close to 1 million). But Hurricane Florence is still a catastrophe for the communities affected. Unlike Harvey in Houston or Katrina in New Orleans, damage from Florence is mostly rising water – not covered by home insurance. About two-thirds of homes affected by Hurricane Florence have no coverage. That’s going to complicate and delay recovery from Hurricane Florence. Continue reading
How Does A Contractor Find More Work?
A few years ago, I sat down with an architect friend, Bill Mitchell, to answer a simple question, “How does a contractor find more work?” Bill knows construction. He’s been designing and building residential, commercial and industrial projects for over 30 years. Here’s our list of what it takes to sell construction services in a competitive market: Continue reading
If you’ve never met a GMP contract, let me provide an introduction. GMP is a handy tool put to good use by many contractors.
Back in July of 2010, I explained why home improvement contractors in six states (CA, IL, MA, NV, PA and TN) use GMP contracts. In those states, time & material contracts aren't legal for most residential work and can't be enforced. That makes GMP contracts an obvious choice. What I didn’t explain back in 2010 was how to write a GMP contract. So here goes. Continue reading
Changes in Construction Contract Law -- First Half of 2018
So far this year, eighteen states have changed how construction contractors have to do business. Some changes are trivial. Others will affect most contractors in the state.
Here’s a state-by-state run-down on the most significant changes in Construction Contract law.
Limits on Warranty Claims.
Is this your worst nightmare?
You get a call out of the blue complaining about a job you finished many years ago. The caller complains your work was defective – required a lot of repairs, many thousands worth in fact. And the person complaining isn’t even someone you know. It’s someone who bought the house years later!
In a nutshell, that’s what happened to Chip Buerger of Chip Buerger Custom Homes, Inc. in Spicewood, Texas. When Chip didn’t pay what was asked, James and Maureen Maroney filed suit. That was February 2016. Last week, the Texas Court of Appeals decided the case. I’ll explain what the appellate court ruled. But first I’ll make an important point about warranty claims, and not just in Texas. Continue reading
The Wrong Way to Close-Out a Project
A few years ago, Eric Novelli, a Tennessee contractor, agreed to have Wagner Heating & Air install the HVAC system in a new 3-story home Novelli had under construction. There was no written contract.When work was done, Wagner called for final inspection by the City of Chattanooga. The inspector found no deficiencies. Two months passed. Novelli didn’t make a final payment on the job. Instead, Novelli showed up at the inspector's office with pictures showing what he claimed were defects in Wagner’s work. A senior building inspector re-checked the job and found some problems. Wagner made repairs and called for another inspection. This time, the entire system passed. But that wasn’t the end of the story. When Wagner presented his final bill, Novelli wadded it up, threw it away and told Wagner not to come back to the job. With no other option, Wagner filed a claim for $12,000.
Earlier this month I got a question from a construction contractor negotiating a deal with the owner’s attorney. The attorney wanted a termination clause in the agreement. The contractor wanted the job but didn’t want to give his client the right to back out of the deal once work started.
“Why even have a contract if the owner can terminate the job any time he wants?”
Good question. But there’s a good answer. First, a few basics.
Construction contract law can be more than a little complex. Every state has different requirements – notices, disclosures, warranties, waiting periods, penalties. The list grows longer every year as consumer protection laws multiply. What’s a contractor to do?
I’m going to have a suggestion a little later. But first I’ll offer an example of what not to do.
In January of 2015, Nicholas and Monica Koudela selected Bill and Bob Johnson to build their new single-family craftsman style home in Willowick, Ohio. The Johnsons offered a contract to do the work for $227,200. The heading on the signed agreement showed "Johnson & Johnson Builders" as the contractor.
Johnson & Johnson Custom Builders, LLC is a limited liability company licensed to do business in Ohio. The Johnson’s contract with the Koudelas omitted the words "Custom" and "LLC" from the company name. A little mistake. But it kept the Johnsons in court for two years, as you’ll soon see. Continue reading