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Showing posts from 2009

Litigation-I Win, You Lose vs. Mediation-Win/Win

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  Litigation is a zero-sum game.  It destroys relationships and fosters enmity between the parties.  Parties rarely walk away happy.  Even if they win, the expense of litigation is enormous, and collecting on judgments is difficult. Disputes ultimately resolve, but the focus on winning at any cost can lead to prolonged legal battles.  Living with a lawsuit causes ongoing stress, which can distract you from your business and even have an effect on your health. In a courtroom, the final decision lies with a judge or jury who may not fully grasp the complexities of the case. Parties relinquish control over the outcome, potentially leaving them dissatisfied with the final judgment. Mediation has the opposite effect.   Rather than polarizing people, it enables the parties to attack the issues and not each other.     The process promotes open communication, collaboration and problem-solving, which enables parties to actively participate in crafting mutually beneficial solutions.   It res
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Green Houses are Booming

Statistics keep supporting the fact that green construction is up, even though the construction industry has been hit hard by the economy. If you aren't learning about green construction, you should be. http://content.usatoday.com/communities/greenhouse/post/2009/12/green-home-sector-booms-despite-housing-slump/1
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Challenge to Massachusetts Builders

Send me your residential renovation or new construction contracts (residential or commercial). After signing an engagement letter, I will review your contracts for free! If I don't find five things that might hurt your business, I will donate $50.00 to charity. If I do, you agree to donate $50.00 to charity. That's it. No strings attached. You do have to let me explain my recommendations to you; preferably in person.
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Conclusion of Risks in Green Construction

Conclusion More risk in green construction Maintain excellent communication with your clients Allocate risk and responsibility in your contract. Keep apprised of developments in state and local law. Maintain familiarity with available rebates.
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Dealing with Suppliers in Green Construction

Suppliers Only choose reputable suppliers Include disclaimers if consumers or designer insists on an unfamiliar product. Make sure you acquire all necessary documentation for installation, warranties and rebates. Make sure proper installation procedures are followed.
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Contracts with Designers in Green Construction

Designers: Allocate liability between builder and designer as clearly as possible Reserve right to trump designer if not feasible or in violation of local laws or building codes. Consider whether designer will remain involved throughout the project. Request indemnity clause. They will pay the builder back if they are held liable.
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Contracts with Subcontractors in Green Construction

Subcontractors: Include indemnity clauses for their role in the installation Require lien waivers when work is complete and subs have been paid. Make sure your subs are well versed in the installation of the “green” product. Provide them with manufacturer’s documentation in order to ensure warranty.
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The Green Contract with the Consumer

1. Contract with Consumer Include type of certification sought and appendix with all requirements. Have consumer initial all pages and sign off. Do not promise what you can’t deliver. Installation is on builder but can have indemnity agreement with subcontractor. Failure to install properly can invalidate manufacturer’s warranties. Designate who is responsible for rebates Can always provide a warranty for your workmanship. Include suggested guidelines for performance, but do not guarantee performance. Spell out homeowner’s responsibilities to ensure performance. Include change orders for a greater than ten percent increase in the cost of materials. Include the right to substitute like materials if a given item is no longer available.
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The Contract in Green Construction

The Contract is your most important protection against risk. Cover all potential areas of risk in your contract. Types of contracts i. Builder/Owner ii. Builder/Designer iii. Builder/Subcontractor iv. Builder/Supplier
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Performance of Green Buildings

1. Performance Avoid guarantees if possible. Allocate risk amongst builders, subcontractors, suppliers and owners. Account for regional variations Only pass on manufacturer’s warranties Discuss maintenance responsibilities
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Warranties in Green Construction Contracts

1. Warranties a. Clearly delineate warranties for materials, installation and performance. b. Allocate risk c. Beware of implied warranties in your state.
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Green Materials and Supplies

1. Green materials and supplies a. Beware of “greenwashing” and potential for fraud. b. Educate yourself about options. c. Include disclaimers for materials chosen by consumers d. Pass on manufacturer’s warranties e. Beware of implied warranties in your state
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The International Living Building Institute (ILBI)

In prior posts, I have brought up the possibility that other green certification standards may surpass LEED. Here is a blog post about a standard that claims to go beyond LEED and consider issues that LEED does not cover, such as beauty and aesthetics: http://www.examiner.com/x-27898-Green-Technology-Examiner~y2009m11d15-Move-over-LEED-make-room-for-ILBI?cid=exrss-Green-Technology-Examiner What do you folks think of the ILBI standard?
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Rebates and Tax Incentives

1. Rebates and Tax Incentives a. Familiarize yourself with requirements for rebates and tax incentives. b. Designate responsibility for the acquisition of rebates. c. Avoid guaranteeing acquisition of rebates to homeowners if possible.
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Considerations Regarding Certification

Certification a. Discuss options with homeowners. b. Consider design team to maximize cost savings c. Provide overview to homeowners. d. Decide whether it’s worth to receive a level of certification. e. Make sure homeowners are aware of increased financial burden f. Familiarize yourself with local and state laws that may affect certification (zoning, conservation commission). g. Changing nature of certification (requirements are fluid) h. Potential for need to renew certification.
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Types of Certification Available for Green Residential Construction

Many standards to choose from: LEED for homes NAHB Green Building Certification http://www.nahbgreen.org/Certification/homecertification.aspx Energy Star Proposed Standard 189, Standard for the Design of High-Performance Green Buildings Except Low-Rise Residential Buildings, is being developed by the American Society of Heating, Refrigerating and Air-Conditioning Engineers (ASHRAE) standard e. American National Standards Institute (ANSI). The resulting ANSI approved ICC-700-2008 National Green Building Standard defines green building for single and multifamily homes, residential remodeling projects and site development projects while still allowing for the flexibility required for regionally-appropriate best green practices. Similar to the NAHB Model Green Homebuilding Guidelines, a builder, remodeler or developer must incorporate a minimum number of features in the following areas: energy, water, and resource efficiency, lot and sit
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Why Green Construction Could Be Less Expensive

We in the field who follow developments in green construction frequently hear that it is wonderful to "go green," but unfortunately it is usually more expensive. For that reason, "green" is still more of an upper class option, or one for those who do it because they are committed to improving our environment. Some experts say that green can be a "no lose" proposition when the construction is carefully planned, and the energy savings performance offsets the increased costs of construction, materials and supplies. However, the amount of funds saved may not offset the initial cost of green construction for years. The calculations seem to indicate that they eventually will. One of the factors in making a green construction project a success is planning. Ideally, the project will have all of the subcontractors on board from the beginning. Materials will be chosen in advance. The team will coordinate and work together when the project commences. Design d
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Resources for Information Regarding Green Construction

Resources NAHB-National Green Building Program http://www.nahbgreen.org/ LEED for Homes http://www.usgbc.org/DisplayPage.aspx?CMSPageID=147 ANSI Green Building Standard http://www.nahbgreen.org/Guidelines/ansistandard.aspx ASHRAE Green Building Standard http://www.ashrae.org/pressroom/detail/16309 Green Real Estate Law Journal http://www.greenrealestatelaw.com/ Green Building Law Update http://www.greenbuildinglawupdate.com/ Green Building Law http://www.greenbuildinglawblog.com/
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Potential Areas for Risk in Green Construction

Potential areas for risk: Certification Rebates and tax incentives. Green materials and supplies Installation Warranties Performance
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Starbucks and LEED Certification

Before I continue with my legal issues in green construction series. I have to report about two of my main interests in life these days: Starbucks and LEED certification. Starbucks is my favorite coffee. In fact, if I must admit it, I am a little obsessed. They are using their market influence to adopt a practice for LEED certification for all of their new stores. They are also using LED lights. That helps justify my spending $3.50 on a cappuccino. After all, it's for a good cause. Here's the article: http://www.reuters.com/article/mnGreenBuildings/idUS32581121620091113
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Green Building Addendum from Consensus Docs

Thank you Matthew DeVries for this post on the new green provisions available from Consensus Docs. This goes well with my series on green building: http://www.bestpracticesconstructionlaw.com/2009/11/articles/green-building/hot-off-the-press-consensusdocs-releases-green-building-addendum/
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Legal Issues to Consider in Green Construction

I recently participated in a webinar for Professional Builder Magazine called Legally Green: Deliver the Green You Promise. In that presentation, I discussed the additional risks for liability in green construction and how builders can protect themselves. I am going to publish a series of posts that summarize the areas that I have identified that may cause disputes as time goes on. First some statistics from around the Internet regarding the current status of green construction on the residential side: Green building is up even though construction is down. The National Association of Home Builders recently released figures from a survey of multi-family builders and developers. 74 percent of respondents said that their buyers and renters are willing to pay more for green amenities. However, the median additional amount that they’re willing to pay is just 2 percent. 89 percent of respondents (again, multi-family builders and developers, nationwide) said they are currently insta
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How Construction Clients Can Help Themselves

Here's to Timothy Hughes, who wrote this post: http://www.stumbleupon.com/s/#1j5Fqr/www.valanduseconstructionlaw.com/2009/10/articles/litigation/how-construction-and-other-clients-can-help-themselves// I will add one: I try to respond to clients as quickly as possible when they contact me. Please afford me the same courtesy.
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Stimulus Dollars and Massachusetts Construction

Here's an exciting piece of information. Finally some goods news from Chris Thorman, who blogs about construction estimating software . MA is the top job generator with stimulus dollars for construction. http://www.softwareadvice.com/articles/construction/state-by-state-is-the-stimulus-bill-creating-construction-jobs/
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Hotel Goes Green, but Forgoes LEED Certification

As you may know, I am taking a class in LEED 2009, and am considering taking one of the exams. One of the questions that keeps plaguing me is why bother? The documentation process is incredibly detailed, the requirements are extensive and one has to hire a commissioning agent for some of the credits. I keep wondering how much expense is added when one tries to attain LEED certification and whether it's just an option for the elite. This blog post speaks to that issue and actually spells out the numbers. http://www.hotelinteractive.com/article.aspx?articleid=15282 As the article states, " Doing the government documents alone cost $50,000. " This does not make me happy. On the one hand, we are told that LEED certification is the goal. It is an achievement of which to be proud. It shows a dedication to preserving and improving our environment. However, a consultant and/or commissioning agent is usually required, and now further regulations have come into effect requir
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LEED to Become More Stringent

http://southeast.construction.com/features/2009/1101_GreenDesignAndConstruction-1.asp# This post is a good follow-up to my recent webinar for Professional Builder Magazine, "Legally Green: Deliver the Green You Promise." It discusses the latest requirement for LEED, which includes providing water and energy-usage data for five years after the building is complete. It means that a building could face de-certification. From a legal standpoint, this could be a nightmare. Who would be liable? What sort of guarantees are now going to be required from contractors and construction companies? What about those who provide subsequent repairs and maintenance? The issues regarding causation alone could result in years of litigation. I am going to be publishing a series of blog posts from my presentation that will elaborate on these issues, but I can't help wondering whether the powers that be should be planning more carefully before imposing these restrictions. This kind of stri
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On a Federal Construction Project? Remember the Miller Act

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A New Guest Post from Christopher Hill Chris Hill is a construction lawyer at DurretteBradshaw, PLC in Richmond, Virginia, LEED AP, author of the Construction Law Musings Blog and member of Virginia's Legal Elite in Construction Law . He specializes in mechanic's liens, occupational safety issues, contract consulting and review and general risk management for all levels of construction professionals from contractors to subcontractors to material men. Federal and State government work are a growth area in construction these days. With the economy in a downturn (though possibly turning around according to ENR ), government projects are even more desirable for commercial contractors. With this trend toward government contracting, becoming the lowest bidder and squeezing your margins is a big temptation, or even necessity. Along with this lower margin comes higher risk . However, one saving grace for contractors on Federal projects is the Miller Act .
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Why Builders Shouldn't Cut Their Prices

In a previous post, I discussed why now is a good time to renovate. I pointed out that builders are not as busy and can devote more time to their projects, the economy has weeded out a number of "fly by night" contractors who were not truly dedicated to the profession and there have been sales on supplies and materials. One advantage that I did not mention, however, was the opportunity to ask builders to cut their prices. That's because I do not believe it's reasonable for owners to try to negotiate lower prices, and it's not good for the profession for builders to do so. Professional builders are usually quite realistic when preparing proposals for projects. I have met many contractors who proudly tell me that their jobs do not go over budget (barring unforeseen circumstances). They are usually quite clear about their markups and profit margins and accurate when determining allowances. They exemplify the adage that "you get what you pay for." Consi
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Time and Materials Contracts-Are They Illegal in Massachusetts?

I must admit, this question has been plaguing me as it pertains to Massachusetts. This issue applies to residential renovation only, but I know of many high-end contractors who use this method for their projects . Massachusetts law provides: Chapter 142A: Section 2. Residential contracting agreements; requirements Section 2. (a) Every agreement to perform residential contracting services in an amount in excess of one thousand dollars shall be in writing and shall include the following documents and information: (1) the complete agreement between the owner and the contractor and a clear description of any other documents which are or shall be incorporated into said agreement;... (4) a detailed description of the work to be done and the materials to be used in the performance of said contract; (5) the total amount agreed to be paid for the work to be performed under said contract; Given that a Time and Materials Contract does not have a price, I would argue that it violates t
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Protecting & Preserving Fine Wine

Here's a great guest post from Paul G. Cox, the Business Development Manager at Vigilant Woodworks on wine c ellars: If you have a growing collection of wine, it may be time to think about building a wine cellar or tasting/entertainment area in your home. Some time ago the custom wine room was unusual; today more and more wine lovers are learning about wine cellar construction or contracting the work out to those who know how to do the job properly. Wine cellars are more than a dark, cool place to stock a collection of wine bottles. Today’s custom wine cellar is a controlled environment where humidity and temperature are regulated to allow wine to correctly age without damage to corks, labels or the wine itself. There are two styles of wine cellars . One is an area that has been particularly made to store wine in the correct environment and the other is a stand-alone system that duplicates those conditions. A stand-alone wine cellar is not
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General Contractors: Beware of Your Subcontractors!

In a certain sense, I hate writing this blog post. It suggests a lack of trust and confidence between parties who are working side by side, and who may have worked together for years. However, in this economy, many are caught by surprise when a business goes awry. There are ways a general contractor can prevent nasty surprises from subcontractors, and vice-versa. 1. Make sure your subcontractors are in good financial shape. You might even want to go as far as doing a credit check on them. You need to know that they can pay their workers, provide proper equipment and have enough manpower to handle the job. 2. Check subcontractors' insurance policies and make sure they are current with high enough limits to protect you. If they have employees, be absolutely sure that they carry worker's compensation insurance. 2. Find out what else they're working on. If subcontractors are over-extended they can cause delays and throw off the whole project. 3. Insist on lien waivers
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Energy, Post-Occupancy and Codes-Where is LEED Going?

This post at the Virginia Real Estate, Land Use & Construction Law Blog raises a number of the issues about LEED that I have been speaking about for a while. Is LEED going to win out, or will other green regulations take precedence? What is going to happen when buildings start getting decertified? What about evaluation of building performance? Finally, you may ask why I post so much about green construction. The reason is it is not only the wave of the future, it is now. Even the White House is moving towards LEED certification. Builders who ignore developments in green building are keeping their heads in the sand. http://www.stumbleupon.com/s/#6phPGm/www.valanduseconstructionlaw.com/2009/09/articles/green/leed-1/energy-postoccupancy-codes-the-ghosts-of-leed-present//
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Lienholder Beware:Suing to Enforce a Mechanic's Lien

Scott Wolfe does a fabulous job of keeping up with mechanic's lien issues. In this post, he discusses how easy it is to lose one's ability to enforce a lien by not following the proper steps to perfect it: http://www.constructionlawmonitor.com/2009/09/articles/mechanics-liens/how-not-to-recover-on-a-mechanics-lien/
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Green Roof Fire

This video shows that green roofing responds properly to fire and does not spread to the building itself. My question is, does this affect the viability of the plants if they have to be chosen for resistance to fire? This video came via Chris Cheatham's blog. http://www.stumbleupon.com/s/#AO2zvz/www.greenbuildinglawupdate.com/2009/09/articles/legal-developments/insurance/have-you-ever-wanted-to-see-a-green-roof-fire//
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The Importance of Signs at Your Construction Site

I certainly notice when I see one of my client's signs at a site, but it turns out that other people do as well: http://constructionmarketingideas.blogspot.com/2009/09/signs-signs-signs.html
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Stylish Solar Roof Panels-A New Product

Check out these solar roof panels that look like traditional roofing tiles: http://www.solarfeeds.com/energy-boom/8756-stylish-roof-solar-panels-are-coming.html
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Why You Need a Contract

I was at a NARI (National Association of the Remodeling Industry) meeting last night and was speaking with a contractor. He said, "I don't even use contracts," and appeared troubled by the notion of doing so. I am sympathetic. I have spoken with so many contractors who reminisce about the days when everything was done on a handshake. Unfortunately, those days are long past. It is possible to view contracts in a positive light, however. In law, the definition of a contract is a "meeting of the minds." When one considers the meaning behind these words, a written agreement is really a wonderful document. It ensures that the communication between the parties has been clear, and that each has given careful thought to his or her priorities and understanding of the job. Disputes are prevented because possible issues have been anticipated and addressed. A good contract includes so many provisions that are important, such as scope of the work, allowances, payment
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13 Top Bathroom Remodel Trends

http://realestate.msn.com/article.aspx?cp-documentid=13108041 This is a great article for contractors and homeowners alike.
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Home-Energy Plan Spreads Out Costs

Why can't Massachusetts do this? http://online.wsj.com/article/SB125064722656442071.html I know a contractor who has started a business doing energy audits and I am going to ask him to guest blog. Now we just need local loan programs to defray the costs of doing energy-saving retrofits. At the end of the day, the homeowner is saving money by improving the environment, the contractors are getting much-needed work, and everybody benefits.
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Five Misconceptions About Home Energy Performance

I really like this post about the latest options in green products, because it points out that one should educate oneself before "jumping on the bandwagon" when choosing green materials. http://earth2tech.com/2009/08/13/top-5-misconceptions-about-home-energy-performance/#more-38989
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Two Articles on the Pros and Cons of LEED Certification

This is the last post on LEED for the day. I like the way these articles address both sides of the debate on LEED: http://www.triplepundit.com/2009/08/leed-follow-or-blaze-your-own-green-trail/ http://www.triplepundit.com/2009/08/usgbc-true-green-leedership/
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5 Ways To Protect Your Company From Green Litigation

Another colleague, Chris Cheatham, provides some great advice on ways to avoid legal issues in green construction: http://www.housingzone.com/proremodeler/article/CA6675951.html
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Preserving Your Delay Claim

This is a good post about delay claims in construction projects. http://www.constructionlawnews.com/BlogEntry.aspx?_entry=bbfe04e2-2bcb-40ab-ae71-00e6dd4418ef&RSS=true Delay claims are very real, and unfortunately, in my experience, contractors sign contracts that prohibit delay claims without even realizing what they are signing. I had a client who claimed that the foreman on his project was causing delays, and as a result, his men were forced to stay idle. He became so frustrated, he pulled his men and equipment from the site. Delay claims were forbidden in the contract. Disaster ensued. So, first make sure you can even bring a claim for damages for delay. Second, document the delay as it is happening and try to work things out with the General Contractor or Owner in order to limit the effects of the delay as much as possible. Be sure to negotiate a new schedule for completion if delays occur. Third. Document your damages as a result of the delay, including extra overhead and
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Leed versus Other Options

Stephen Del Percio, one of the attorneys I follow on Twitter, posted this article on possible alternatives to LEED certification, " Contractor Leads Attack Against Nashville’s LEED Legislation ." I found this quote quite thought-provoking: “This would allow an alternative that focuses on the performance of the building, not on the process of how you got to that performance,” Dominy told the Tennessean . http://www.greenrealestatelaw.com/2009/08/contractor-leads-attack-against-nashvill-leed-legislation/ As I struggle with the constantly evolving world of green construction, that question keeps nagging at me. Will LEED be the only game in town five years from now? Should we all be jumping on the bandwagon to obtain our LEED credentials as new alternatives appear to be arising? How "green" is green enough? At the end of the day, isn't performance really the most important issue? What about cost? In any construction project, there is always a cost-benefit analysis
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