The Problem with One Year Warranties
June 10, 2015 —
Craig Martin – Construction Contractor AdvisorContractors often ask if they should include a one year warranty in their subcontracts. I tell them that they can, but it may be more effective to include a one-year correction period. If a contractor does include a warranty in the contract, it may actually extend the time in which a contractor may be sued. I recommend instead a Correction Period.
Typical Construction Warranties
Form construction contracts, like the AIA forms, often times contain warranty language. The AIA A201, General Conditions, contains a warranty section that covers materials, but it does not address how long the work is warranted:
“3.5 WARRANTY
The Contractor warrants to the Owner and Architect that materials and equipment furnished under the Contract will be of good quality and new unless the Contract Documents require or permit otherwise. The Contractor further warrants that the Work will conform to the requirements of the Contract Documents and will be free from defects, except for those inherent in the quality of the Work the Contract Documents require or permit.”
Instead, the AIA A201, section 13.7, limits the time by which claims must be brought to 10 years or the applicable statute of limitations.
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Craig Martin, Lamson, Dugan and Murray, LLPMr. Martin may be contacted at
cmartin@ldmlaw.com
Eye on Housing Examines Costs of Green Features
July 09, 2014 —
Beverley BevenFlorez-CDJ STAFFThe National Association of Home Builders’ Eye on Housing reported that it costs more to build a green home, however, builder’s experience with green techniques reduces costs.
According to McGraw Hill Construction survey data (as quoted by Eye on Housing), “the incremental cost for builders to construct green homes was 8% in 2013. For remodelers, green projects raised costs by 9% on average.” Furthermore, “McGraw Hill’s analysis found that the cost to build green varied to some degree by the amount of green construction undertaken.”
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Construction Defects in Home a Breach of Contract
September 09, 2011 —
CDJ STAFFThe Supreme Court of North Dakota has ruled in Leno v. K & L Homes, affirming the verdict of the lower court. K & L Homes argued that district court had erred in several ways, including by refusing to instruct the jury on comparative fault, denying a request for inspection, and not allowing a defendant to testify on his observations during jury viewing.
The Lenos purchased a home constructed by K & L Homes, after which they alleged they found cracks, unevenness, and shifting, which they attributed to improper construction. They claimed negligence on the part of K & L Homes. K & L Homes responded that the Lenos were responsible for damage to the home. The Lenos dropped their negligence claim, arguing breach of contract and implied warranties.
Before the trial, after the discovery period had passed, K & L Homes requested to inspect the home. This was rejected by the court. Kelly Moldenhauer, the owner of K & L Homes sought to testify about his observations during the jury’s viewing of the house. The court denied this too. The jury found that K & L was in breach of contract and awarded damages to the Lenos.
The North Dakota Supreme Court noted that K & L Homes gave “warranties that the home had been built according to local building codes and laws, and that the house was fit for its particular purpose as a residence.” The court found that a defective home breached this warranty. Further, the home violated an implied warranty of fitness.
The district court had denied K & L’s request to inspect the home, as the discovery period had ended and it would not give the Lenos time to do further discovery of their own. At the time of the request, there was only twenty-two days before the trial. The Supreme Court ruled that this was not an abuse of discretion of the part of the district court.
The Lenos had requested that Moldenhauer’s testimony not be permitted, as it would “have the same effect as if the court had granted K & L Homes’ pretrial request for inspection.” K & L Homes agreed to this in court, replying, “okay.”
The decision affirms the judgment of the district court and the damages awarded to the Lenos by the jury.
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Corps, State Agencies Prep for Flood Risks From California Snowmelt Runoff
May 29, 2023 —
Michael Powell - Engineering News-RecordIn the wake of record-setting snowfalls in the Sierra Nevada Mountains over the past six months, California and federal officials are preparing to handle the flooding threat posed by imminent meltwater runoff. The efforts include releasing water from the state's key dams to allow for the expected capacity, preparing emergency responses for imperiled area's in the state's Central Valley and launching groundwater recharge projects.
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Michael Powell, Engineering News-Record
ENR may be contacted at enr@enr.com
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Meet Your Future Team Members: AI Agents
December 10, 2024 —
Aarni Heiskanen - AEC BusinessIf you’ve been following the discussion around AI, you’re familiar with the concept of AI agents.
AI agents can be understood as intelligent automation that operates independently, monitoring its environment and taking action without constant human input. Unlike traditional software requiring specific inputs to produce predictable outputs, AI agents can adapt to varying conditions and user needs.
AI agents can be based on various technologies, including Large Language Models. They can also be constructed using other AI technologies, such as rule-based systems, machine learning algorithms, and specialized models tailored to specific tasks.
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Aarni Heiskanen, AEC BusinessMr. Heiskanen may be contacted at
aec-business@aepartners.fi
Rooftop Owners Sue Cubs Consultant for Alleged False Statements
January 24, 2014 —
Beverley BevenFlorez-CDJ STAFFA disagreement over signage potentially blocking rooftop owner’s views has stalled Wrigley Field’s proposed $300 million renovation, reported the Chicago Tribune. However, a recently lawsuit filed between the two entities regarded allegedly false statements made by Marc Ganic, a Chicago sports business consultant, published in the Chicago Sun-Times: “In the story, Ganis is quoted as saying the rooftop clubs were ‘stealing’ the Cubs product for their own profit,” according to the Chicago Tribune.
The rooftop owners claimed in the suit that “they have a contractual arrangement with the team that allows them to sell tickets to people who want bird’s-eye views of the game.” The Chicago Tribune attempted to contact Ganis for comment, but he “did not return several messages.”
The rooftop owners and the Cubs entered into a “20-year agreement in 2004 in which the rooftop owners pay the Cubs 17 percent of the team's yearly profits in exchange for unobstructed views into the ballpark,” according to ESPN. “The Cubs dispute that notion, however, contending the unobstructed views were guaranteed through the landmarking of the bleachers not with the agreement they have with the rooftop owners.”
Business president Crane Kenney explained to ESPN that the city council amended the landmarking rule for the field: “[The council has] now recognized the outfield is not a historic feature. And above a 10-foot level we can have signage. That was the big win last summer, among many. That's what the rooftops would contest.”
According to ESPN the Cubs will not start the renovation project until they have an agreement with the rooftop owners “that includes a guarantee not to sue the Cubs for breach of contract, which would delay construction.”
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Can a Receiver Prime and Strip Liens Against Real Property?
September 20, 2021 —
Ben Reeves - Snell & Wilmer Real Estate Litigation BlogCourts overseeing receivers generally enjoy broad discretion in directing and approving a receiver’s proposed actions. But does that authority extend to a receiver not only granting a super-priority lien ahead of existing liens, but also selling the real property free and clear of all liens? In County of Sonoma v. Quail, 56 Cal.App.5th 657 (Ct. App. 2020), the California Court of Appeals answered that question in the affirmative.
Quail involved a 47,480 square-foot lot with two houses, a few garages, several outbuildings, and numerous trailers surrounded by a veritable junk yard. Despite many of these structures being uninhabitable, unsanitary, and dangerous, multiple families resided on the lot. Although Sonoma County (the “County”) ordered the owner to remediate the property several times, he failed and refused to do so. After several years of these violations going unabated, the County ultimately sought and obtained the appointment of a receiver over the real property.
To obtain funds necessary to repair the property, the receiver asked the court for permission to borrow money through the issuance of a receivership certificate to be secured by a super-priority lien—i.e., a lien ahead of all other liens—against the real property. Although the trial court initially declined to prime existing liens, when the receiver could find no one to lend money (since the land lacked equity), the trial court relented and approved a super-priority lien despite the senior secured lender’s objection (the “lender”).
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Ben Reeves, Snell & WilmerMr. Reeves may be contacted at
breeves@swlaw.com
M&A Representation and Warranty Insurance Considerations in the Wake of the Coronavirus Pandemic
April 06, 2020 —
Lori Smith & Patrick Devine - White and Williams Taking Care of Business BlogIncreasingly, M&A transactions are using representation and warranty insurance (RWI) to bridge the gap between a buyer’s desire for adequate recourse to recover damages arising out of breach of representations in the purchase agreement and a seller’s desire to minimize post-closing risk and holdbacks or purchase price escrows traditionally used as the means to satisfy such obligations. When it works, RWI provides a significant benefit to both parties: it mitigates the buyer’s risk in the event that the seller’s representations and warranties prove untrue, and it permits the seller to reduce the portion of the purchase price that it would otherwise have to leave in escrow to cover future claims for breach of those representations and warranties. However, as the coronavirus pandemic ravages the global economy, insurers are now expressly adding COVID-19 exclusions to their RWI policies. If RWI insurers decline coverage for these losses, the allocation of risk in the representations and warranties (and related indemnity provisions) will be more critical than the parties contemplated when they negotiated the transaction documents.
Unlike in the case of a natural disaster, insurers cannot quantify the economic fallout that may result from the coronavirus pandemic. This uncertainty breeds systemic concern about the number of insurance claims that covered parties of all varieties will bring, which in turn creates an industry-wide reluctance to cover the claims. Based on discussions with market participants, we understand that, at the present time, 70% to 80% of RWI insurers are broadly excluding losses resulting from COVID-19 and similar viruses, epidemics, and pandemics (including government actions in response thereto), 5% to 10% are narrowly excluding specific coronavirus-related losses that are more likely to be implicated in a particular transaction (e.g., losses caused by business interruption), and 10% to 15% may be willing to narrow their exclusions upon completion of the underwriting process, depending on their comfort level after conducting rigorous and heightened diligence. Insurers’ concerns are wide-ranging, but the representations and warranties causing the greatest distress appear to be those regarding customer retention, supply chain matters, undisclosed liabilities, and the absence of changes between the date of the seller’s most recent financial statements and the transaction closing date.
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Lori Smith, White and Williams and
Patrick Devine, White and Williams
Ms. Smith may be contacted at smithl@whiteandwilliams.com
Mr. Devine may be contacted at devinep@whiteandwilliams.com
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