Seattle Washington Building Expert Directory

Retainage: What Contractors Need to Know and Helpful Strategies

June 04, 2024 — Gerard J. Onorata - ConsensusDocs
Introduction Most, if not all, construction contracts contain a provision for “retainage.” The origin and concept of retainage dates back to the railroad boom that embraced Great Britain in the 1840s. In its simplest terms, retainage is a mechanism by which an owner or general contractor withholds disbursement of funds from the payment of a requisition in order to secure future performance of a contract and/or to pay for repair of defectively performed work. Retainage typically ranges from five to ten percent, with the amount being reduced as the project progresses to substantial and final completion. One of the reasons for withholding retainage is to incentivize a contractor to complete its work in accordance with the contract terms and conditions. While this may be well-intentioned in concept, it all too often leads to abuse that impacts project cash flow and raises tension between the parties. This typically happens on projects that have delay issues, deficient drawings, and/or claims of defective work. When a project has “gone bad,” the withholding of retainage is one of the first things that an owner will latch onto in order to leverage its position against a contractor. In order for a contractor to put itself in the best position possible, the following negotiation techniques and protective measures should be kept in mind. Know Your Applicable Statute Every state except West Virginia has statutes in place that govern the payment of retainage on public projects. On federal projects, the amount of retainage withheld shall not exceed ten percent as set forth in the Federal Acquisition Regulations (“FAR”). The common thread running through these statutes is the payment of interest as a remedy when the retainage is not timely paid. Historically, most retainage statutes were applicable only to publicly funded projects. This has recently changed with a substantial number of state legislatures recognizing that the payment of retainage on private projects was a serious enough problem to warrant regulation. These include Alabama, Arizona, California, Colorado, Connecticut, Idaho, Illinois, Kansas, Louisiana, Maine, Maryland, Massachusetts, Minnesota, Missouri, Montana, Nebraska, Nevada, New Mexico, New York, North Carolina, North Dakota, Ohio, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, and Vermont. New York’s retainage laws relating to private projects were enacted only this past November. Read the court decision
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Reprinted courtesy of Gerard J. Onorata, Peckar & Abramson
Mr. Onorata may be contacted at gonorata@pecklaw.com

Texas res judicata and co-insurer defense costs contribution

March 23, 2011 — CDCoverage.com

In Truck Ins. Exchange v. Mid-Continent Casualty Co., No. 03-08-00526-CV (Tex. App. 3d Aug. 27, 2010), insured contractor DCI was sued by the project owner seeking damages for defective construction. DCI tendered its defense to its CGL insurers Truck and Mid-Continent. Truck agreed to defend while Mid-Continent denied a defense. While the underlying suit was pending, Mid-Continent sued DCI, but not Truck, and obtained a judicial declaration of no duty to defend or indemnify DCI in the underlying suit. After settling the underlying suit, Truck sued Mid-Continent seeking contribution towards defense costs and indemnity payments. The state trial court entered summary judgment for Mid-Continent. The intermediate appellate court affirmed.

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Reprinted courtesy of CDCoverage.com

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The Miller Act Explained

May 21, 2014 — Beverley BevenFlorez-CDJ STAFF
Garret Murai, on his California Construction Law Blog, goes over the nuances of the Federal Miller Act. Murai explained, “Named after John E. Miller, former Arkansas Congressman, later U.S. Senator and still later federal judge, the Miller Act was enacted in 1935 in the middle of the Great Depression, to help ensure that subcontractors and material suppliers working on federal projects get paid, by requiring contractors who contract directly with the federal government on federal construction projects furnish payment and performance bonds.” Murai answered questions such as what is required under the act, who is protected, how a general contractor could protect itself from a Miller Act claim, as well as others. Read the court decision
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Fifth Circuit Confirms: Insurer Must Defend Despite Your Work/Your Product Exclusion

February 14, 2022 — Nathan A. Cazier & Scott S. Thomas - Payne & Fears
The United States Court of Appeals for the Fifth Circuit recently confirmed that liability insurers have a duty to defend their insureds in construction defect cases when the underlying complaint alleges damage to property beyond the product and work of the insured – even if the complaint merely implies that the insured seeks such damage, without explicitly alleging so. Siplast, Incorporated v. Employers Mutual Casualty Company, No. 20-11076, 2022 WL 99303 (5th Cir. Jan. 11, 2022). The Archdiocese of New York replaced the roof over Cardinal Spellman High School in the Bronx, using a roofing membrane manufactured by Siplast, Inc. (“Siplast”). After a rainstorm a few years later, school officials reported water damage to the ceiling tiles throughout the school, and repair attempts only made the leaking worse. Siplast disputed that the leaks were its fault and refused to replace the roof, so the Archdiocese sued. Reprinted courtesy of Nathan A. Cazier, Payne & Fears and Scott S. Thomas, Payne & Fears Mr. Cazier may be contacted at nac@paynefears.com Mr. Thomas may be contacted at sst@paynefears.com Read the court decision
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Walking the Tightrope of SB 35

December 22, 2019 — Robert Howard, Alexander Walker and Matt Olhausen - Gravel2Gavel Construction & Real Estate Law Blog
Developers in California know that getting approval to build new housing projects can be extremely difficult, time-consuming, and expensive. But a new policy is finally coming into full effect which could help developers cut through those barriers. SB 35, enacted in 2017, streamlines the approval process for housing developments in areas with inadequate housing supply, so long as the developments meet certain criteria. We have written elsewhere about the initial impacts of SB 35. SB 35 has successfully allowed some developers to obtain their entitlements quickly and easily through a streamlined process, but some local governments have resisted the use of SB 35. For example, the City of Los Altos denied an application that attempted to obtain streamlining through SB 35, prompting a nonprofit housing organization to sue. In Cupertino, the Planning Commission Chairman advocated in April 2019 for rescinding the SB 35 approval of the redevelopment of the Vallco Mall, which would include over 2,400 units of housing, while some residents have sued to block the development. As a result, it is crucial for developers to understand the details of SB 35 and make sure to meet all of its requirements. Any misstep may allow a recalcitrant local government to deny that a development project qualifies for SB 35 treatment and attempt to block it. In November 2018, the state Department of Housing and Community Development (HCD) released Guidelines to clarify the criteria for SB 35 and assist cities in determining whether projects qualify for streamlining. Reprinted courtesy of Pillsbury attorneys Robert Howard, Alexander Walker and Matt Olhausen Mr. Howard may be contacted at robert.howard@pillsburylaw.com Mr. Walker may be contacted at alexander.walker@pillsburylaw.com Mr. Olhausen may be contacted at matt.olhausen@pillsburylaw.com Read the court decision
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Happenings in and around the West Coast Casualty Seminar

April 02, 2014 — Beverley BevenFlorez-CDJ STAFF
For those who are attending the West Coast Casualty Construction Defect Seminar May 15th-16th, the Construction Defect Journal has compiled a list of concerts, sporting events, and museum exhibitions taking place in and around Anaheim that week. Whether you like to spend your personal time checking out a new band, or watching your favorite Angel slide into home, or perusing the local art museum, there is something to spark your interest. CONCERT VENUES THE HOUSE OF BLUES IN ANAHEIM Blessthefall with Silverstein, The Amity Affliction, SECRETS and Heartist Tuesday, May 13th, 2014 Doors Open at 6pm / Show Begins at 7pm For More Information and to Purchase Tickets... THE HOUSE OF BLUES IN ANAHEIM Stephen "Ragga" Marley Saturday, May 17th, 2014 Doors Open at 8pm / Show Begins at 9pm For More Information and to Purchase Tickets... THE GROVE OF ANAHEIM Lindsey Stirling plus special guest Dia Frampton Wednesday, May 14, 2014 Doors Open at 7pm / Show Begins at 8pm For More Information and to Purchase Tickets... THE GROVE OF ANAHEIM Primal Fear Thursday, May 15, 2014 Doors Open at 6:30pm / Show Begins at 7pm For More Information and to Purchase Tickets... THE GROVE OF ANAHEIM Jillian Michaels 'Maximize Your Life' Tour Friday, May 16, 2014 Doors Open at 6pm / Show begins at 8pm For More Information and to Purchase Tickets... SPORTING EVENTS ANGEL’S STADIUM - BASEBALL The Los Angeles Angels of Anaheim v. Tampa Bay Rays Thursday, May 15th at 7:05pm Friday, May 16th at 7:05pm Saturday, May 17th at 6:05pm Sunday, May 18th at 12:35pm For More Information and to Purchase Tickets... MUSEUM EXHIBITIONS MUZEO Transcending Trash: The Art of Upcycling Sat Apr 26 – Sun Aug 31, 2014 Museum Days/Hours: Tuesday – Sunday (Closed Mondays) / 10 am to 5 pm For More Information and to Purchase Tickets... BOWERS MUSEUM (Santa Ana) BEETHOVEN: THE LATE GREAT February 8, 2014 - May 18, 2014 Museum Days/Hours: Tuesday – Sunday (Closed Mondays) / 10 am to 4 pm For More Information and to Purchase Tickets... Read the court decision
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Building Permits Hit Five-Year High

October 01, 2013 — CDJ STAFF
The New York Times reports that building permits in August were at their highest since May 2008, even despite a recent rise in mortgage rates. Construction starts on single-family homes were at their highest in six months as well. On the other hand, construction starts for condominiums and apartments fell slightly more than 11 percent. Read the court decision
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From the Ashes: Reconstructing After the Maui Wildfire

November 27, 2023 — Grace Calengor - Construction Executive
On Tuesday, Aug. 8, a wildfire on the Hawaiian island of Maui ravaged the town of Lahaina, killing nearly 100 people and stranding thousands of survivors, many of whom remain displaced today. The loss of life makes this the deadliest American wildfire on record, while the material cost in property damage has been estimated at upwards of $5 billion. The response to the disaster has involved firefighters and other emergency personnel—and also engineering and construction professionals. One of them is Tam Kim, director of operations for West Maui Construction Inc., a civil contractor on the island. Originally from Oregon, Kim fell in love with Hawaii when he visited on a surfing vacation; eventually he took his technology background and helped found a startup company on Maui in 2008. Eight years later, the startup relocated to Oahu, but Kim stayed on Maui to forge a different path, one that would lead him somewhere he never imagined. Reprinted courtesy of Grace Calengor, Construction Executive, a publication of Associated Builders and Contractors. All rights reserved. Read the court decision
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SEATTLE WASHINGTON BUILDING EXPERT DIRECTORY AND CAPABILITIES