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Real Estate & Construction News Round-Up (05/11/22)

May 30, 2022 — Pillsbury's Construction & Real Estate Law Team - Gravel2Gavel Construction & Real Estate Law Blog
The supply of homes for sale is on the uptick, the White House releases a plan to improve the permitting process for infrastructure projects, cryptocurrency opens the door to a new class of property owners, and more.

• Though the number of active listings is still down 67% from pre-pandemic levels, the supply of homes for sale is finally showing signs of improvement. (Diana Olick, CNBC)
• Large corporations and institutional investors are flocking to buy digital real estate, with parcels being bought faster than they can be created. (Dan Patterson, CBS News)
• London-based company, Admix, has been purchasing real estate in various Metaverse platforms and leasing them to companies interested in becoming involved in the online virtual space. (Nate Berg, Fast Company)

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Reprinted courtesy of Pillsbury's Construction & Real Estate Law Team

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Back Posting with Thoughts on Lien Waivers

May 20, 2015 — Christopher G. Hill – Construction Law Musings
After a week of being unable to post due to the rigors of my solo construction practice, I’m back on the blogging train. For those of you that missed my new musings this past week, I hope that you had a chance to look through some of the past Guest Post Friday posts for some good stuff to read. During the course of my busy week last week, a question came up regarding the mechanic’s lien waivers that commercial construction companies routinely execute as part of the payment process. The waiver forms vary, but each essentially states that in exchange for payment the payee, whether a subcontractor or supplier (or even general contractor) waives its future rights to record a mechanic’s lien for the work that is covered by the payment received. Most if not all of these forms further require a certification that the funds paid will either be used to pay suppliers or that suppliers have already been paid. This general description is not the reason for this post. As is always the case in the Commonwealth of Virginia where the contract is king and a court is unlikely to reinterpret any written contractual document, the devil is in how that waiver is worded. Some waivers are worded in such a way that they essentially require a payee to certify receipt of the funds prior to payment being received. These same forms require the same pre-payment certification that all suppliers and subcontractors of the payee have already been paid. In short they require a payee to both place complete trust in the payor that the check will be paid and that the check will not bounce while in many cases (often with an unstated “wink and nod”) claiming payment was already made when all know the likelihood is that it has not. Read the court decision
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Reprinted courtesy of Christopher G. Hill, Law Office of Christopher G. Hill, PC
Mr. Hill may be contacted at chrisghill@constructionlawva.com

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Homebuilders Go Green in Response to Homebuyer Demand

May 10, 2012 — CDJ STAFF

McGrawHill Construction reports that 17 percent of new homes and remodels in 2011 were done with green building practices. Their report estimates that by 2016, this will rise to 29 to 38 percent of the market for home construction and remodeling.



Consumers see the green buildings as more desirable, particularly where they are more energy efficient. Two thirds of builders noted their customers were interested in features that would lower the energy use of their homes. Consumers also feel that green building materials are more durable and see green homes as higher quality.



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Subcontractor Strength Will Drive Industry’s Ability to Meet Demand, Overcome Challenges

October 10, 2022 — Anwar Ghauche - Construction Executive
Owners, developers and general contractors get a lot of notoriety for construction projects, especially in these infrastructure-focused times. However, the subcontractor is truly the one under the microscope, as this group requires the most care and attention to ensure the owners and operators are able to meet accelerating demand and public expectations. The challenges in the current environment are many. Inflation and supply chain disruptions are highly detrimental to specialty trades in the mechanical, electrical, plumbing, drywall and other areas. Reports show that the construction industry, in particular, has seen an increase of over 20% in the cost of supplies and building materials in the last year alone and, in some cases, over 90% since the start of the pandemic. While these costs are passed along to the owner, the subcontractor still retains significant cash flow risk. This truth is amplified in a volatile market. As if the cost was not enough, equipment and material shortages coupled with rising interest rates only compound the problem—and tenfold for small businesses. Subcontractors are likely to feel the greatest pressure from supply-related issues. Inflation combined with supply chain shortages require subcontractors to prepare earlier for projects and, when possible, purchase materials upfront. However, the consequence of this preliminary preparation equates to further strains on cash flow. In an effort to remain aligned on schedules and budgets, subcontractors frequently buy all of a project’s materials as soon as a contract is signed—if not before. Reprinted courtesy of Anwar Ghauche, Construction Executive, a publication of Associated Builders and Contractors. All rights reserved. Read the court decision
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Breaking The Ice: A Policyholder's Guide to Insurance Coverage for Texas Winter Storm Uri Claims

August 30, 2021 — Kelly A. Johnson - Saxe Doernberger & Vita, P.C.
The devastating extreme cold weather event in Texas often referred to as Winter Storm Uri, which lasted from February 14 to February 18, 2021, caused significant damages to homes and businesses in the region. Temperatures during the winter storm were the coldest on record since 1883, with some areas reaching as low as negative 6 degrees.4 Millions of Texans were impacted and many lives were lost. Insurance analysts predict that Uri will lead to the largest number of insurance claims in the state, totaling $20 billion in claimed losses.5 In fact, Uri is set to surpass Hurricane Harvey as the most devastating natural disaster in Texas, which resulted in $19 billion in insured losses. Further, Uri will be the largest insured loss from a United States winter storm in the industry’s history.6 The catastrophic Uri losses range from damage to property caused by the bursting of frozen pipes, collapsed roofs, weakened structures, loss of power, lack of public utility services, and the expenses incurred in the disruption of normal business operations. In addition, some commercial businesses were unable to operate due to bad weather conditions on the roads, while others were forced to halt operations due to power outages. Read the court decision
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Reprinted courtesy of Kelly A. Johnson, Saxe Doernberger & Vita, P.C.
Ms. Johnson may be contacted at KJohnson@sdvlaw.com

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Don’t Overlook Leading Edge Hazards

May 20, 2019 — Baxter Byrd - Construction Executive
Leading edge hazards are often misunderstood and overlooked on today’s highly visible jobsites. Evidence is readily available via images shared on construction-related social media accounts. In the context of people showing pride for the hard work they do or the extreme conditions under which they work, posts offer glimpses into the methods employed to mitigate fall hazards. Alarmingly, many of these methods do not adhere to industry-accepted standards, especially in the case of leading edge applications. Mincing Words The definition of “leading edge” itself has undergone somewhat of a transformation since its introduction by OSHA to its current use by ANSI in the Z359.14-2014 “Safety Requirements for Self-Retracting Devices for Personal Fall Arrest and Rescue Systems” standard. OSHA defines a leading edge as an “unprotected side or edge during periods when it is actively or continuously under construction,” giving many the impression that a leading edge was a temporary condition found only during the construction of a structure. Reprinted courtesy of Baxter Byrd, Construction Executive, a publication of Associated Builders and Contractors. All rights reserved. Read the court decision
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Mr. Byrd may be contacted at info@puresafetygroup.com

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Recommendations and Drafting Considerations for Construction Contingency Clauses Part III

December 27, 2021 — Samantha Schacht & Josh Levy - Construction Executive
The best contracts provide the parties with a clear allocation of risks and responsibilities, and a process for handling inevitable project challenges. Contract negotiations can enable parties to have the difficult conversations allocating risks before the start of a project. An effective negotiation, in turn, aligns the parties’ expectations and helps avoid costly disputes born out of misunderstandings of the parties’ respective rights and responsibilities on the project. This final installment of a three-part series on contingencies in construction contracts addresses factors that should be discussed and considered when drafting a contingency clause in a construction contract with the goal of helping to set clear expectations and avoid disputes. Part I The Best Laid Plans: Contingency in a Construction Contract explained what a construction contingency is and Part II The Best Laid Plans: Contingency in a Construction Contract discussed the two primary schools of thought on how a construction contingency fund should be used and managed. Reprinted courtesy of Samantha Schacht, Construction Executive and Josh Levy, Construction Executive, a publication of Associated Builders and Contractors. All rights reserved. Ms. Schacht may be contacted at samantha.schacht@huschblackwell.com Read the court decision
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New York State Legislature Reintroduces Bills to Extend Mortgage Recording Tax to Mezzanine Debt and Preferred Equity

March 15, 2021 — Steven E. Coury & Marissa Levy - White and Williams
Companion bills in the New York State Legislature, Assembly Bill No. A3139 and Senate Bill No. S3074, if enacted, would subject mezzanine loans and preferred equity investments to the same recording and taxation requirements placed on mortgages. The bills were reintroduced last month after similar bills (S7231/A9041) were introduced in the 2019-2020 legislative session. The prior bills died in committee when last year’s legislative session adjourned. As discussed in our prior alert, the proposed bills would require: (1) a financing statement evidencing any mezzanine debt and/or preferred equity investments related to real property to be filed in the county in which the real property is located and (2) a recording tax, at the same rate as the applicable mortgage recording tax rate (2.80% for commercial mortgages over $500,000 in New York City), to be imposed on the amount of the debt and/or investment at the time the financing statement is filed. The bills contain a limited carve-out for owner-occupied residential cooperatives. Reprinted courtesy of Steven E. Coury, White and Williams and Marissa Levy, White and Williams Mr. Coury may be contacted at courys@whiteandwilliams.com Ms. Levy may be contacted at levmp@whiteandwilliams.com Read the court decision
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