This week, Musings welcomes back Mark Buckshon of the Construction Marketing Ideas blog to Guest Post Friday. Mark publishes several regional construction industry newspapers and websites. He can be reached at 888-432-3555 ext 224 or by email at buckshon@cnrgp.com.

Recently, in co-ordination with my business’s primary business consultant Bill Caswell, we coordinated a Webinar, Taking Your Construction Business to the Next Level. The participants enjoyed the event and discovered value in Bill’s insights, but I know I must give myself a large “F” for preparation and testing.  I simply did not allow enough rehearsal time to fully understand the Webinar software, so when our guests were waiting for the program to begin, I fumbled over technical details and we couldn’t use all of the online Webinar software’s functionality.

After the event, Caswell said he didn’t enjoy the lack of face-to-face interaction with participants.  They could communicate by text messaging but, even though DimDim’s advanced software allows a second camera and the ability to switch microphones, the rules of the game are different when people are located in many different locations (and in my rush to overcome the technical problems from lack of preparation, we couldn’t access these useful functions.)

DimDim’s software is free for Web presentations with 20 or fewer participants, and its fees for larger events and greater functionality are truly reasonable.  You can access the service at http://www.dimdim.com.

I made another mistake in the event’s advance marketing.  I tried out various types of event promotion software and went past the stage of reasonableness to overkill in repeated promotional messages.  One reader  sent me his forthright opinion.  “I’m really getting tired of your repeated Caswell promotions,” he wrote.  Following up to my apology, I communicated:  “BTW, I truly appreciate this because it raises a question:  When is there “too much” marketing?”

His response:

In response to your question, as Seth Godin says, “It’s all about me….me, me, me.” Readers are only interested in themselves (myself included). I believe there is a frequency “line” you can cross by marketing too much. Below the line represents value to the consumer (because you are making me aware of the product) and above the line represents meaningless (you’re wasting my time) promotion. Each of us draw the line in a different place, but we do draw a line.

So, it seems I over-marketed the event, while under-preparing the technical aspects, leaving the presenter in a frustrating situation where he had to proceed in a framework of discomfort.  Will Bill Caswell ever want to do this sort of thing again?  Will I want to go forward with other Webinar-type programs in the future?

The answer, in part, is that if we don’t try new things and learn from them, we cannot grow. But you can never prepare too much and if you are using various marketing methods, you should never forget that even if they are readily available and easy to use, you should always respect the frequency and volume of messages you deliver.

Lessons learned . . .

P.S.  After this posting, several readers – including Chris Hill – commented favorably, and the person who sent me the original complaint sent me a courteous email thanking me for accepting responsibility for my mistakes; showing the power of authenticity and humility in marketing. But I hope I don’t make these mistakes again.

Bill Caswell’s website is http://www.caswellccc.com.  It includes a useful free (and extremely quick) resource of answers to some of the most common and challenging business questions.

As always, please join the conversation with a comment below and contact Mark for more.  If you enjoy what you’re reading, please subscribe to keep up with the latest Construction Law Musings and check out the other Guest Post Fridays here at Musings.

© Construction Law Musings- Richmond, VA is licensed under a Creative Commons Attribution-No Derivative Works 3.0 U.S. license.

It used to be that when you bought something (a car, a refrigerator, a television) it came with an owner’s manual that told you how to operate it, take care of it and prolong its usefulness to you. These days most of these manuals have been boiled down to a pdf on a website somewhere that you can access if and when you find the need. I understand that this is mostly in the name of saving cost (and trees) and at least the information is out there if you need it.

The relationship of the construction drawings to the written specifications is much more closely tied and yet most times there isn’t even that lonely little pdf orphaned out in cyberspace for you to hunt down and reference. Drawings, even on their best day, can only hope to tell part of the story. On their worst day they provide a hit or miss collection of thoughts that rely on the contractors good will and honesty to protect your client’s best interests.

Drawings are meant to generically represent the size, dimension, shape and relationship of the many components that make up a project. They also show details that depict the relationship of one product to another and how they join. The specifications actually tell you what those components are, who makes them, how you expect them to perform, how they are to be installed and in what finishes and textures. Without the specifications a wide range of products might satisfy the same overall image that the drawings represent. A drawing will say ‘install spray foam insulation Type 1’. The specifications will tell you it is closed cell polyurethane at 7.6 R per inch, the acceptable manufacturer(s), that a Type 1 is to be 5” thick, that it needs a required wrap to meet fire code and it should cure for a certain number of days before it is enclosed by sheet rock. Imagine putting that on the drawings the several dozen times the product occurs (sections, details, plans, etc.) and you get the actual point of using specifications: to help streamline the process. Not to mention if you want to change Type 1 to 7.5” or to open cell you only have to do it in one location, in the specifications.

Think about the project where the potential contractor has received his bid set only to see a lot of notes like “to be confirmed by the architect the field” or “as directed by the architect once the samples are received” or a generic statement that says “provide wood doors, jambs and hardware to our standards” that don’t mention that the products in question are expected to be hand laid up and lacquered sapelle with hand wrought door handles and hinges (haven’t you seen our brochure – that’s our trademark). The contractor who is familiar with what that architect is expecting has a major dilemma on their hands. Do you provide a price that gives the client what they are expecting (because they did hire this starchitect for a reason) or do you bid it like the drawings say, knowing you will be fighting for change order requests down the road, and alienating both the client and the architect. From the contractors that I have spoken, to this is too often the realty rather than the exception, particularly in residential and small commercial projects.

So why does this happen. One could postulate that it happens for the same reason architects don’t use formal contracts. I’ll let you decide whether it is the belief in the benevolence of mankind, or just sloth. Either way, you can get your butt sued and create all sorts of construction administration nightmares along the way. And given the logical outcome that you will, at some point have to go to the site and make all those decisions that you put off to get the drawings out ‘on time’, why not just do it right in the first place? Particularly since field time is much more expensive and less controllable than office time.

As always, Nick and I welcome your comments below.  Please subscribe to keep up with this and other Guest Post Fridays at Construction Law Musings.

© Construction Law Musings- Richmond, VA is licensed under a Creative Commons Attribution-No Derivative Works 3.0 U.S. license.

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For this week’s Guest Post Friday here at Construction Law Musings, we welcome back Elaine Hirsch.  Elaine describes herself as a kind of a jack-of-all-interests, from education and history to medicine and videogames. This makes it difficult to choose just one life path, so she is currently working as a writer for various education-related sites and writing about all these things instead.

While layoffs and business closings are making the news, there is one sector that is quietly educating and growing a new economy filled with transformation and economic recovery. Leadership in Energy and Environment Design (LEED) initiatives not only consume less energy in the long run, but bring recognition and cost savings for institutions in the short run. MBA Online states that the need for innovation is driven by an exceptionally difficult economic environment, and given today’s stagnant economy, greener energy solutions have become such innovations. According to the Pew Charitable Trust report, between 1998 and 2007 there were two times the amount of job creation in the clean energy sector as any other sector in the nation.

One of the significant differences in LEED driven job positions is that there are levels and opportunities unlike manufacturing or service positions that offer little growth. It is not necessary to spend the rest of your life paying back a student loan when going into a LEED based educational field. To date, there are almost 175,000 LEED professionals throughout the world that have been certified in special areas of green energy and this number is expected to double in the next 2-3 years. According to the US Green Building Council, green construction contributed to 2.4 million jobs between 2000 and 2008, and this number is expected to grow to 7.9 million by 2013.

The government has provided the work available through a Coalition for Better Buildings and affordable training can be easily found. There are 34 states to date that have adopted LEED-based policies for public and private buildings and hundreds of local governments are following suit. Being a veteran offers even better programs with reimbursements available for exams. Many times receiving a LEED Certification in a given area of your interest can open doors just by getting hired by a fine company at the ground level.

The economy is not continuing on a downward slide but simply transitioning into a new direction if you take the time to notice a LEED-based career and where it can lead. Just as electricity, gas-powered vehicles and plastics have changed our way of life, electronics, renewable energy and LEED building is leading us in a new, exciting direction. Take part in the positive side of a changing world and find out how beneficial Sustainability Education and Economic Development (SEED) can guide you to being competitive in the direction of tomorrow.

As always, Elaine and I welcome your comments below.  Please subscribe to keep up with this and other Guest Post Fridays at Construction Law Musings.

© Construction Law Musings- Richmond, VA is licensed under a Creative Commons Attribution-No Derivative Works 3.0 U.S. license.

For this mid-week Guest Post Friday post, we welcome Houston Neal.  Houston is the Director of Marketing at Software Advice, a website that presents reviews and comparisons of construction software. Houston joined the company in 2007, just shortly after it was started. He spends most of his day getting the word out about Software Advice’s resources. He enjoys researching and reporting trends in software and technology.

You can’t manage what you don’t measure, let alone improve it. Yes it’s cliche, but this old adage is just as true today as it was when William Edwards Deming first said it.* How do you know if your estimating processes are better than last year–or better than your competition–if you aren’t measuring them?

It’s imperative to set goals, performance indicators and benchmarks for your estimating processes. It allows you to track your own performance internally, and compare yourself to your competitors (or to industry standards). But how do you know what to track and measure?

Construction Estimating Benchmark Survey

Software Advice–an online resource that presents reviews of construction software–is hosting a survey about construction cost estimating. It’s a 20-question poll covering estimating processes and best practices.

The survey will run throughout the month of January and February. When all responses have been collected, Software Advice will publish a benchmark report, allowing contractors to compare their company against their competitors. To participate and sign up to get a free copy of the report, visit:

http://software-advice.polldaddy.com/s/construction-estimating-benchmark-survey.

Benefits of Estimating Software

Construction estimating software helps contractors measure plans, calculate material and labor costs, and produce detailed, professional proposals. It helps contractors win more bids, improve their job profitability, bid on more jobs and more. There are over 50 systems out on the market today. They are designed to support the unique needs of any type and size of company from the small residential remodeling company to the large heavy/highway contractor.

While the Software Advice survey is still underway, figures so far show that ~60% of contractors are currently using estimating software. “Faster estimate creation,” “more accurate estimates” and “rapid creation of project budget” were cited as the top 3 benefits; more than 80% of respondents experienced these benefits. Meanwhile another 75% of respondents–that use estimating software–have experienced “improved project profitability.”

No need for marketing messages here. The data speaks for itself. Contractors using estimating software are realizing benefits that many of their peers and competitors are not. If you’re among the minority still using manual methods, it might be time to evaluate new estimating software. At a minimum, you should see how you stack up against competitors by participating in the Software Advice poll.

Feel free to leave a comment if you have experienced the benefits of setting benchmarks or using construction estimating software.

*There is debate over whether Deming was the first to say this, or if he was misquoted.

Houston and I welcome your comments below.  Also, please subscribe to keep up with this and other Guest Post Friday Musings.

© Construction Law Musings- Richmond, VA is licensed under a Creative Commons Attribution-No Derivative Works 3.0 U.S. license.

For this week’s Guest Post Friday here at Musings, we welcome back a good friend and fellow construction attorney, Scott Wolfe Jr.  Scott is a construction attorney who practices law through his firm Wolfe Law Group in California, Washington, Oregon and Louisiana.  He is also the founder of Zlien, a nationwide preliminary notice and mechanic’s lien filing service. He is the author of blogs Construction Law Monitor and the Construction Lien Blog.

A few years ago I wrote a blog post that is quite popular on our Construction Lien Blog, titled “Filing A Lien Is A Discipline, and Not A Knee Jerk Reaction.”  I love the title to this post, because it expresses a real truth about successfully making a mechanics lien claim.

Regardless of where you are furnishing labor or materials, the act of filing a mechanics lien is more than just shooting off a lien affidavit after you’re already owed money. For most in the construction industry, and in most jurisdictions, mechanic lien claims are something that develop over time. Unfortunately, this development often starts with the moment you begin furnishing to the project.

Since writing that “knee jerk” article, I’ve thought (and written) about the concept even further. Successfully filing a mechanics lien claim actually requires companies to employ some sort of “lien policy,” focusing on compliance with all notice requirements and lien deadlines.  And the start of preparing such a lien policy is an understanding of what I call the mechanics lien ecosystem, or the “life of a mechanics lien claim.”  

I’ve broken it down into three steps: Preserve, Perfect, Enforce.  

Preserve

Every state and the territories (and Canada!) all have mechanics lien statutes, providing to contractors, subcontractors, suppliers and professionals the right to file a lien against the property where materials and/or labor are furnished.

However, to quality for this lien protection, construction participants must take certain actions to preserve these rights.  These preservation requirements will change depending on where you’re furnishing, but they always require some action at the start of providing services or materials. Here are the most common preservation requirements:

Preliminary Notices / Notices to Owner by Those Who Did Not Contract With The Owner

When states are referred to as “notice states,” that is typically because they’ve adopted this very traditional notice requirement, which mandates that all parties who have no contractual privity with the property owner send a “preliminary notice” or “notice to owner” to the property owner within a specific number of days after first furnishing labor or materials.

These prelim notices are usually required within 10-45 days from first furnishing of materials or labor (check your state’s rules), and must contain certain information within the notice and be sent by a certain method (usually certified mail with return receipt requested).  Those who fail to send their notice on time will forfeit their lien rights, with limited exceptions.

Notices Required by General Contractors

While most states’ notice requirements focus on those who did not contract with the owner, there are some laws out there that require notices from only those who contracted with the owner.

Some examples include:

1. Louisiana requires general contractors to file a Notice of Contract before commencing work to qualify for lien rights.
2. On certain residential and commercial projects, Washington requires the delivery of a Model Disclosure Statement.
3. On Residential projects in Idaho, Iowa, Louisiana & Oregon, a Notice of Lien Rights must be provided to the owner.
4. In Utah, general contractors must file a “Notice of Commencement” at the start of work.

Failure to send these notices will also result in a forfeiture of lien rights.

Perfect

Preserving your mechanic lien rights requires compliance with certain notice prerequisites that apply when starting to furnish labor and/or materials. These notices must be delivered before any accounts are ever overdue, and indeed, before anyone is even owed money.  

The perfection requirements, however, come on the other side, when the contractor, supplier or professional has performed its work and is now due payment.

If lien rights were preserved, a contractor, supplier or professional can “perfect” it’s lien claim by filing the same with the county recorder or clerks office. Depending on your state, the filing can go by a number of names: Notice of Claim, Claim of Lien, Construction Lien Claim, Mechanics Lien Claim, Statement of Claim and Privilege, etc.  It’s all the same.  These are all documents that outline what work you performed, where, for who and the amount owed to you.

When filing your mechanics lien claim, it’s important to be very careful. Since these claims encumber real property, courts typically require strict compliance with the lien statutes, which means you better have all the required information in your claim.  There are lots of traps for the inexperienced, with the most common mistakes being a failure to identify the property with the legal property description and not including all of the statutorily required data.

Properly preparing and recording your mechanic lien claim, and then serving a copy of the same on the property owner and all other required parties within the statutory required time frame, will act to perfect your mechanic lien rights, and a mechanics lien claim will then encumber the property…until your deadline to enforce it.

Enforce

The third and final step in the life of a mechanics lien is the enforcement of the same.  One common misconception about liens is that they will encumber the property until paid.  That’s not true. After a mechanics lien claim is perfected by recording, it only remains enforceable for a specific period of time.

Therefore, if the mechanics lien doesn’t produce payment after filing, then you will be required to file a lawsuit to foreclose upon or enforce the claim.

Again, each state is different as to when this foreclosure action is necessary.  California, for example, is on the short end requiring a foreclosure lawsuit within 90 days from when the mechanics lien is filed. Ohio is on the long end, giving lien claimants 6 years from filing to have the lien enforced.  If there’s an average out there, it’s probably between 8 and 12 months.

While the timing is different, the general requirement is the same: After a certain period of time, you’re required to file a lawsuit to foreclose on the lien. Therein, you’ll need to prove your case and demonstrate you are owed the money you claim.  If you win, the court will order the property sold to pay your debt.

Scott and I welcome your comments below.  Also, please subscribe to keep up with this and other Guest Post Friday Musings.

© Construction Law Musings- Richmond, VA is licensed under a Creative Commons Attribution-No Derivative Works 3.0 U.S. license.

For this week’s Guest Post Friday at Construction Law Musings I welcome Matthew Evans.  Matt is the owner of Law Offices of Matthew S. Evans, III, LLC located in Annapolis, Maryland.  He has practiced construction, real estate and land use law in Maryland and D.C. for thirteen years.  Prior to opening his own firm in May 2011, Mr. Evans was a partner at a mid-sized firm in Anne Arundel County, Maryland. Mr. Evans lives in Historic Annapolis (only three short blocks from his office) with his wife Margaret, and three children, Matthew (5), Bo (4) and Peyton (2). 

Some of the most common calls I get are from irate contractor or subcontractor clients who have not been paid demanding that I “lien the property”.  Many times after calming the client down, I determine, to their dismay, that they are not entitled to a mechanic’s lien. In Maryland, the mechanic’s lien law is driven by statute, which contains specific requirements which must be met before the client is entitled to a lien.

The first question is whether the contractor or subcontractor is entitled to a lien for the work performed.  Under Maryland law, “every building erected and every building repaired, rebuilt, or improved to the extent of 15 percent of its value is subject to establishment of a lien…for the payment of all debts.”  It’s easy when dealing with new construction.  No matter how small your portion of the work, the property is subject to the establishment of a lien. It is more difficult to determine entitlement when there is either a total or partial renovation or other work.  The question becomes how do you determine the value of the building, and whether it has been improved “to the extent of 15 percent of its value.”  Believe me, I have seen creative and some not so creative methods of calculation used by counsel to prove that certain work does or does not meet the requirment.

The second determination that needs to be made is who is the “owner” of the property.  It is imperative to determine the correct owner or your lien claim may fail.  Sometimes the name of the “owner” in the contract documents is not the legal title owner of the  property.  Typically this is easily ascertained  through a title search.  However, even a title search can be deceiving.

In a case I tried many years ago, I represented a subcontractor who had performed about a million dollars’ worth of work on a new commercial distribution facility.  After there was a dispute over payment, I filed the requisite papers against the owner of the real property to establish a lien against the property.  The defense answered that I had no right to claim a lien because I had not proceeded against the proper owner.  As it turned out, the general contractor had contracted to build the facility for a tenant of the property who had executed a 99 year lease with the title owner of the property.  Turns out, in that instance, the “owner” is the tenant and my client was only entitled to a lien to the extent of the tenant’s interest. The owner is not always the owner.

Another question is whether or not your lien opportunity is barred by time.  In Maryland, a subcontractor (any contractor or material supplier who has not contracted directly with the owner) must serve a “Notice of Intention to Claim a Lien” on the owner of the property “within 120 days after doing work or furnishing materials”.    Whether a contractor or subcontractor, the petition for mechanic’s lien must be filed “within 180 days after the work has been finished or the materials furnished”.  One would be surprised at the number of issues that arise over when the last date of work occurred.  Does doing work or finishing work include going back 2 months later to fix a minor “punch list” item?  Calculating the real last date of work can be complex and is extremely important.

Finally, the required contents of the both the Notice of Intention to Claim a Lien and the Petition for Mechanic’s Lien are set forth specifically in the Maryland Code.  If certain information is omitted, a lien claim will fail.  The Maryland Code also requires that “copies of material papers or parts thereof, if any, which constitute the basis of the lien claim” be attached to the Petition when filed.  I have made many arguments in court on both sides regarding whether the attachments are sufficient to comply with the law.

This article only touches the tip of the iceberg so to speak on potential pitfalls in the mechanic’s lien process in Maryland. The mechanic’s lien in Maryland can be an effective tool to collect outstanding debts for your construction clients.  However, contractors must hire competent construction counsel who have experience in obtaining mechanic’s liens.  Some of the most experienced and knowledgeable attorneys I know (in other areas of the law)  contact me with questions about the mechanic’s lien process.  My advice to them is refer it to experienced construction counsel.  There are simply too many mistakes that can be made. The bottom line is don’t try this at home.

As always, Matt and I welcome your comments below.  Also, please subscribe to keep up with this and all of the Guest Post Fridays here at Musings.

© Construction Law Musings- Richmond, VA is licensed under a Creative Commons Attribution-No Derivative Works 3.0 U.S. license.

For this week’s Guest Post Friday here at Musings, we welcome Alex Levin. Alex is a writer for several surety organizations. Although much is unknown about them, surety bonds are a necessary requirement for many small businesses to open and are required on almost all major construction projects.

With an unemployment rates holding steady around 9%, the effects of the recession are still surrounding us. The construction industry, one of the hardest hit, still struggles to recover. But, what many want to know is if the worst is behind us. Has the construction industry hit the bottom, and as we ring in a New Year can we look forward to more job opportunities and projects for contractors?

Some fear we’ve only just begun to dig ourselves out from the rubble and more struggles are imminent. In fact, the Engineering News Record reports the level of unemployment for construction is at a record high of 16% compared to 7% in 2007.

Within the last two years bankruptcies have overwhelmed the industry and there is evidence that there could be many more closures for the New Year. One warning sign? Much of the work currently being completed by contractors are only backlog projects from the construction industry’s busiest years of 2005 to 2007. This means new work isn’t coming in and many are struggling to complete work from years prior. Due to this, several companies are most likely headed for voluntary closure or, in the worst case bankruptcy.

In North Carolina alone, Carolinas AGC reported a 40 percent total monetary loss in contract awards from 2010 to 2011. As companies aren’t bringing in income, many financial construction supporters, such as surety agents, will be expected to finish work that their bonded principals simply cannot complete. Banks providing construction loans, project owners and subcontractors expecting payment are others also subject to face losses in this declining industry.

But, some are optimistic. The Associated General Contractors of Las Vegas reports the average hours worked and hourly wages for construction workers have spiked in recent months. Although major projects may not be awarded, this small increase in prosperity gives hope to one of the areas most affected by the recession. In 2006, 92,000 construction jobs were cut. While the projects contractors are focusing efforts on are unlike the typical megaresorts that once were the main source of employment for Vegas contractors, an increase in small buildings has allowed many to continue working.

Another source demanding workers is in refurbishing and remodeling. In fact, MGM Resorts International reported spending $78 million within the third quarter and expects to spend $275 million for the year. Their projects include remodeling the Bellagio and MGM Grand and unveiling eight new food outlets within their properties.

Some also feel the bottoming out of the industry means opportunity for new businesses and partnerships.  Contracting companies that are profitable during times of a weakened economy are in prime position to create smart mergers. Bonding companies and banks can also help prompt an upswing within the industry by financially supporting these new acquisitions. As the debate between the optimists and pessimists wages on, it appears that time will be our indicator of what lies ahead for the future of construction.

As always, Alex and I welcome your comments below.  Also, please subscribe to keep up with this and all of the Guest Post Fridays here at Musings.

© Construction Law Musings- Richmond, VA is licensed under a Creative Commons Attribution-No Derivative Works 3.0 U.S. license.

For this week’s Guest Post Friday here at Musings, I welcome a friend. John Tarley is an attorney with the Williamsburg law firm of Tarley Robinson, PLC. John is the managing partner for the firm and leads the firm’s business and litigation practices. A large part of the firm’s practice involves homeowners’ associations, as the firm represents nearly 100 associations throughout southeastern Virginia. In his spare time, John teaches two classes a semester as an adjunct at the William & Mary Law School, serves as the 9^th Judicial Circuit’s representative on the Virginia State Bar Council where he serves as Vice-Chair of the Budget and Finance Committee, and is the editor of the Tarley Robinson blog and the @TarleyRobinson twitter account.

In our practice, we represent numerous common interest communities, more commonly referred to as homeowners associations. When the building industry flourished, we also represented a fair number of builders/developers of common interest communities. Obviously, the building market has taken a big hit, and at least in our area, few, if any townhouse or condominium communities are being built. In this blog, we will address the issues faced by developers of common interest communities facing the uncertainty of liability claims for damages for defective construction.

As if the residential construction business did not have enough obstacles to recovery, the litigation pertaining to the use of defective Chinese drywall threatens the viability of these remaining builders. These builders constructed our neighborhoods of single-family homes, townhouses, and condominiums, but many remain “on the hook” for defective construction claims, including claims regarding the use of Chinese drywall.

What could these builders have done differently? Unfortunately, the answer may be “Nothing,” leaving us to struggle to find lessons from this morass. Chris has written at length about Dragas Management Corporation’s efforts to remedy its Chinese drywall issues, but has found no relief from the courts.

Chinese drywall is just the latest problem faced by Virginia builders in the past twenty years from product failures for which they had little control such as Polybutylene Pipes; Defective fire-retardant plywood used for roofing; and EIFS. Builders struggle to learn what they can do differently to shield themselves from large liability claims, but the options are few.

In condominium construction, for example, a developer provides a warranty by statute, Va. Code Ann. § 55-79.79. Although the developer’s attorney drafted the Condominium Instruments for the condominium project, this warranty cannot be disclaimed. Furthermore, although the developer will maintain control of the condominium’s board of directors for up to five years, the members of the board have a fiduciary duty to exercise their duties in good faith and in the best interests of the association. Therefore, if a known problem arises while the developer controls the condominium board, the developer members are faced with an uncomfortable dilemna: file an action on behalf of the board against its builder entity, or breach fiduciary duties by taking no action.

In addition, as Chris has written, courts in Virginia have held that the builder’s and supplier’s liability insurance policies do not cover the damages caused by Chinese drywall. Of course these decisions forced suppliers and subcontractors out of business, making it less likely that a builder can seek indemnity from other parties.

The building industry will recover, as it has from other real estate crashes. In due time, builders will once again start constructing common interest communities, including condominiums. What good business practices can a builder/developer use to minimize risk? There are no easy answers, but these suggestions can help:

• At the outset, have an experienced HOA attorney draft your governing documents. The world of common interest community law has changed dramatically. Your real estate attorney may not keep current in the ever-changing laws relating to community associations. Understand the importance of the governing documents and how you can protect your project, your company, and the association from the traps for the unwary.
• Be selective in your use of subcontractors and material suppliers. Your written indemnity agreement is worthless if there is no entity left for you to claim indemnity against.
• Establish best practices in your construction projects, including quality control and inspections during construction. All the major problems discussed earlier related to products that promised more than they could deliver. Make sure your subcontractors are using quality products that have sufficient history with stable manufacturers. Finding problems after dozens of units are fully constructed dramatically increases your exposure.
• Address warranty and punchlist items promptly and completely. You may catch a serious problem early, helping you to minimize your potential liability exposure.

It bears repeating that when the “perfect storm” hits, there may be little that you can do. That is why it is important for you to take great care when setting up your common interest community project. Those steps may help you survive the next construction industry tsunami.

As always, John and I welcome your comments below.  Please subscribe to keep up with this and other Guest Post Fridays at Construction Law Musings.

© Construction Law Musings- Richmond, VA is licensed under a Creative Commons Attribution-No Derivative Works 3.0 U.S. license.

In the meantime, I encourage you to peruse the various pages of Musings and catch up on all of the great Guest Post Friday posts from the past.

Happy holidays to you all.

As always, I welcome your comments below.  Please subscribe to keep up with this and other Construction Law Musings.

© Construction Law Musings- Richmond, VA is licensed under a Creative Commons Attribution-No Derivative Works 3.0 U.S. license.

For this weeks Guest Post Friday, Musings welcomes Matthew DeVries. Matt is the author of www.bestpracticesconstructionlaw.com, is a construction attorney in Nashville, Tennessee. He is a father of five energetic children and he often uses his family experiences to shed light on the green building, sustainable design, technology and project management issues discussed in his blog. You can reach him at (615) 742-8577, mdevries@smithcashion.com, or on Twitter: @matthewdevries.

You’ve already met my eleven year old Princess. Many months ago, I was teaching my kids about grace … undeserved merit or favor. Well, my daughter was stalling and delaying on eating her meal … by almost an hour. So, naturally, I saw this as a teachable moment.

“Honey, do you remember when we were talking about grace this week? Although you should eat all your food, I am going to show you some grace tonight. Even though you don’t deserve it, I am going to eat the rest of your chili for you.” How nice of me. I proceeded to spoon the rest of her chili into my bowl. Happy tummy!

Without skipping a beat, my inquisitive daughter asked, “Dad . . . You got any grace for my broccoli?” Nice.

While we continue to joke about that evening, I am reminded that too many times we fail to get something because we fail to “ask” for it. And when we ask for it, we sometimes fail to ask for it properly. Having litigated construction disputes for many years, the issue of entitlement often turns on whether the contractor properly submitted its claims in accordance with the terms of the parties’ contract. Whether the dispute involves a change order, delay damages, or time extension, I have litigated too many claims for additional compensation or time where: (a) the request was never made; (b) the request was not timely made; or (c) the request was not properly made.

As an attorney, I try to teach all my clients that proper documentation primarily serves as a claim preservation method—whether to provide notice of the claim or to document the claim impact. No matter the size of the project, proper documentation will eliminate a number of disputes. For example, consider the following claim provision: “Any claim for additional time must be given within seven days of the event given rise to the delay.” Best Practices would teach you to outline and highlight these types of provisions in your contract documents before you start contract performance. Make a spreadsheet with key provisions. And when one of those “events” arise, you should immediately send your letter “asking” for additional time or, at a minimum, “preserving” your right to later seek additional time and money. Don’t wait until the lawsuit or demand for arbitration before giving notice of your claim.

In other words, if you want someone else to eat your broccoli … you have to ask for it!

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