When is a “Notice of Completion” on a California Private Works Construction Project Valid? Why Does It Matter for My Collection Rights?
January 27, 2020 —
William L. Porter - Porter Law GroupWhat is a Notice of Completion?
A “notice of completion” is a document recorded by the owner of property where construction work was performed. Specifically, it is recorded at the Office of the County Recorder in the County where the work was performed. The notice of completion tells the world at large that the construction project is complete. It also triggers the deadlines for those who have not been paid to make their claims for payment.
Is an Owner of a California Private Works Project Required to Record a Notice of Completion?
No, there is no requirement that an owner of a California private works construction project record a Notice of Completion. However, there are consequences which depend on whether an Owner elects to record the notice or not.
For My Collection Rights, Why Does it Matter Whether a Notice of Completion Has Been Recorded?
The date of recording of a valid notice of completion sets the deadline for those who have not been paid for work performed and materials supplied to a California construction project to pursue such important collection remedies as the “mechanics lien”, the “stop payment notice” and the “payment bond claim.” These are very powerful collection remedies for those who have not been paid. If the deadline to pursue these remedies is missed by a claimant, then the claimant’s right to pursue these remedies is also missed. One of these remedies, the mechanics lien, will enable the claimant to sell the owner’s property where the work was performed in order to get paid.
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William L. Porter, Porter Law GroupMr. Porter may be contacted at
bporter@porterlaw.com
Reduce Suicide Risk Among Employees in Remote Work Areas
November 24, 2019 —
Sandra Moran - Construction ExecutiveIn the construction industry, a disturbing and unnerving trend has been developing over the past few decades. Construction and resource extraction have the highest rate of deaths by suicide compared to any other industry. This phenomenon is not limited to a single country. The statistics from three developed countries with strong construction and resource extraction industries (United States, United Kingdom and Australia), reflect the same pattern.
A major risk factor that has not been given much attention and scrutiny is the requirement for many workers to be away from their homes for long periods of time, based in remote locations and basecamps. This isolation contributes to loneliness and disconnectedness that increases the vulnerability to employees at risk due to underlying mental health disorders, such as depression and anxiety, or those with suicidal ideations or prior attempts. Basecamps or remote work locations remove workers from the support networks of family, friends, and even medical and psychological caregivers.
Employers placing employees in remote work locations should be mindful that simply wanting to work in a remote location does not necessarily equate to being able to cope well in such an environment—unless appropriate supports are provided. Companies need to become proactive to lead employees to become true teams to help reduce the risk of suicide among their workers.
Reprinted courtesy of
Sandra Moran, Construction Executive, a publication of Associated Builders and Contractors. All rights reserved.
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History and Gentrification Clash in a Gilded Age Resort
October 05, 2020 —
Alex Ulam - BloombergNewport, Rhode Island, is a small New England beachfront town with a permanent population of 26,000 and an amazing collection of historic homes. Billed as “America’s First Resort,” the 350-year-old city on Aquidneck Island hosts more than 3 million tourists every year. They come for the boating, the famous folk and jazz festivals (both canceled this summer), and the architecture.
The narrow streets of the Point along the waterfront are lined with hundreds of modest homes from the early 1700s, one of the largest ensembles of colonial architecture in the country. On Historic Hill sits an assortment of grander antebellum, classical and Gothic Revival structures from the latter part of the 18th and early to mid-19th century, many built by Southern plantation owners. Newport also boasts what is probably the most opulent thoroughfare in the country, a several-mile stretch of Bellevue Avenue lined with shade trees and palatial limestone mansions built by Gilded Age robber barons and industrialists.
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Alex Ulam, Bloomberg
Defense Owed to Directors and Officers Despite Insured vs. Insured Exclusion
May 13, 2014 —
Tred R. Eyerly – Insurance Law HawaiiThe court found there the duty to defend a suit filed by the FDIC against officers and directors was not excluded by the insured versus insured provision in the policy. W Holding Co., Inc. v. AIG Ins. Co. - Puerto Rico, 2014 U.S. App. LEXIS 5943 (1st Cir. March 31, 2014).
Regulators ordered the closure of the insured bank and the Federal Deposit Insurance Corporation (FDIC) was appointed as receiver. FDIC concluded certain bank directors and officers had breached their fiduciary duty by jeopardizing the bank's financial soundness. The FDIC concluded these breaches had caused more than $367 million in losses and demanded reimbursement by the directors and officers.
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Tred R. Eyerly, Insurance Law HawaiiMr. Eyerly may be contacted at
te@hawaiilawyer.com
Bad News for Buyers: U.S. Mortgage Rates Hit Highest Since 2014
February 22, 2018 —
Prashant Gopal – BloombergShanne Sleder, a San Diego mortgage banker, recently had to break the bad news to some would-be homebuyers: Borrowing costs jumped about 6 percent since he pre-approved them a couple months ago.
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Prashant Gopal, Bloomberg
Update Regarding New York’s New Registration Requirement for Contractors and Subcontractors Performing Public Works and Covered Private Projects
February 06, 2023 —
Christopher B. Kinzel, K. Greer Kuras, Aaron C. Schlesinger - Peckar & Abramson, P.C.Some significant changes are being made by chapter amendments (S.838 and A.984) to Section 220-i of New York’s Labor Law. Contractors and subcontractors bidding on public contracts and performing work on covered private projects will have two years (by December 30, 2024) to register with the Department of Labor, Bureau of Public Works, rather than one year. The amendments also remove the requirement that a contractor submit registration certificates for all its subcontractors at the time its bid is submitted; amend language with respect to notice and hearing requirements; require re-registration to occur not less than 90 days before expiration; and add language to require a monitor to oversee ongoing work if a contractor or subcontractor is found unfit.
The stated purpose of the law is to help enforce New York’s prevailing wage and other worker protection laws. The DOL will create an online system through which contractors and subcontractors will have to answer questions and submit documents about:
- the business entity and its owners and officers
- unemployment and workers’ compensation insurance
- any outstanding wage assessments
- debarment under New York or federal law, or any other state’s laws
- final determinations of a violation of any labor laws, employment tax laws, or workplace safety standards (including OSHA)
- association or signatory to an apprenticeship program
Reprinted courtesy of
Christopher B. Kinzel, Peckar & Abramson, P.C.,
K. Greer Kuras, Peckar & Abramson, P.C. and
Aaron C. Schlesinger, Peckar & Abramson, P.C.
Mr. Kinzel may be contacted at ckinzel@pecklaw.com
Ms. Kuras may be contacted at gkuras@pecklaw.com
Mr. Schlesinger may be contacted at aschlesinger@pecklaw.com
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Uneven Code Enforcement Seen in Earthquake-Damaged Buildings in Turkey
February 14, 2023 —
Jeff Rubenstone & Neelam Matthews - Engineering News-RecordThe aftermath of the Feb. 6 earthquakes and aftershocks in central Turkey has begun to shift from immediate search-and-rescue efforts to a grim cataloguing of the extent of the destruction, with emergency response teams in Turkey and Syria beginning the work of evaluating the condition of thousands of buildings and infrastructure impacted by the temblors.
Reprinted courtesy of
Jeff Rubenstone, Engineering News-Record and
Neelam Matthews, Engineering News-Record
Mr. Rubenstone may be contacted at rubenstonej@enr.com
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Were Condos a Bad Idea?
June 13, 2022 —
Tyler P. Berding - Berding & Weil LLPIntroduction
Condominiums are a nice idea, but their execution has been less than perfect. Long before the fatal Berkeley, California balcony failure in 2015 or the 2021 Champlain Towers South collapse that killed 98 people in Surfside, Florida, we suspected that all was not right with the basic condo concept. Years ago, there were already signs this "cooperative" housing model was anything but. Whether due to owner apathy, internal disputes, or failure to fund future repairs, sustaining these projects for the long-term has been difficult, leaving their future in doubt. Can this be fixed, or is the concept inherently flawed?
Every enterprise has an organizational "model" to run the business. For-profit corporations obtain revenue from the sale of products or services. The revenue of non-profit condominium corporations are the assessments paid by the owners of the individual units. While these assessments are “mandatory” in the sense they must be paid, they are also “voluntary” since the amount is left to the board of directors to determine. Condos are cheaper to buy, but the sales price may not reflect the real cost of ownership. They are "cooperative" because costs and space are shared, but internal disputes and funding shortfalls operate to shorten the life of these buildings in ways few owners understand.
Internal Disputes
Why is condominium life frequently not “cooperative?” Disputes. Disputes between condominium owners and their associations; among board members; and between individual owners and their neighbors. There are arguments over the right to put a flag on the balcony. There are arguments over swimming pool hours. The right to paint their front door some color other than everyone else's. The right to be free of noise, smoke, or view-blocking plants. And sometimes, the claimed right not to pay assessments needed to maintain the project—all notwithstanding the governing documents to the contrary. The right to use one's property as the owner sees fit is a concept imported from the single-family home experience but not replicated in condominiums where common ownership requires rules to avoid chaos.
But a condominium association's most important concern should not be the color of someone's front door or when they can swim but sustaining the building and keeping owners safe. Maybe we care someone has painted their front door bright green, but should that concern have priority over finding rot that may cause a balcony to collapse with someone on it? Resolving conflicts and enforcing the governing documents have a reasonable success rate. Still, the effort required to do that often distracts the board from more critical issues—damage that can sink the ship. Directors can waste a lot of time re-arranging the deck chairs on the Titanic when, if they look closely, the iceberg is coming.
Maintenance Lacks Priority
Why can't we enforce the rules and do what’s necessary to sustain the building and keep occupants safe? Unfortunately, juggling both behavioral and sustainability issues has proven difficult for many volunteer boards of directors. Rule disputes are always in their face, crowding their agenda, while the damage that could lead to structural failure often remains unknown. Also, enforcing—or resisting—rules can involve a clash of egos that keep those matters front and center. Or, and I suspect this is a primary culprit, the cost of adequate inspections, maintenance, and repair is so high that boards cannot overcome owner resistance to that expense.
While boards and management must sustain the project and protect people, raising the funds to do that is another matter. Directors must leap hurdles to increase regular assessments. Imposing large, unexpected, special assessments for major repairs can be political suicide. Unfortunately, few owners realize how deadly serious proper maintenance is until there is a Berkeley or a Surfside, and everyone is stunned by the loss of life and property. While those are extreme cases of faulty construction, inadequate maintenance, natural causes, or all the above, they will not be the last. We know that because experts have seen precursors to those same conditions in other projects.
Our concern for sustainability arises from examining newer projects during construction defect litigation when forensic experts open walls to inspect waterproofing and structural components. It also comes from helping our clients with the re-construction of older buildings and dealing with many years or decades of neglect for which little or no reserves have been allocated.
The economic impact of repairing long-term damage is huge. Rot lying hidden within walls slowly damages the structural framing. Moisture seeping into balcony supports weakens them sometimes to the point of collapse. The cost to repair this damage is frequently out of reach of most condominium associations. In newer projects, when experts find problems early, claims are possible. The Berkeley balcony failure occurred in an eight-year-old building[1], and there was recourse available from the builder. But with older projects, it is often difficult to hold anyone responsible other than the owners themselves.
Is The Condo Model Flawed?
Suppose this is true—and our experience representing condominium projects for over forty years tells us it is—then we are not dealing only with the inexperience of some volunteer directors but rather with a flawed organization model. Board members want to succeed but are constrained by an income stream that depends almost entirely on the will of the individual owners—essentially voluntary funding.
Under most state laws, funding for condominium operations and maintenance is not mandatory[2], and relies instead on the willingness of the directors to assess owners for whatever is needed, and on the willingness of owners to accept the board’s decisions. When a board of directors can set assessments at whatever level is politically comfortable, without adequate consideration, or even knowledge, of long-term maintenance needs, systemic underfunding can result[3]. What the members want are the lowest assessments possible, and directors often accede to those demands. When these factors conspire to underfund maintenance, they will drastically shorten the service life of a building. They also make it potentially unsafe.
Commercial buildings incentivize their owners for good maintenance with increased rents and market value. That incentive is not relevant to a condominium owner because the accumulating deficit is rarely understood at the time of sale and not reflected in the unit’s sales price. With a single-family home, deferred maintenance is more easily identified and is reflected in the purchase price. But condo home inspections are usually confined to the interior of a unit, and do not assess the overall condition of the entire building or project or review any deficit in the funding needed to attend to deficiencies. Thus, market value is not affected by reality.
In most states that require that reserves be maintained for future maintenance and repairs, the statutes require nothing other than cursory surface inspections. Damage beneath the skin of a building is not investigated, and no reserves are recommended for what is not known. California recently enacted legislation that will require condominium associations inspect specific elevated structures for safety, including intrusive testing where indicated. But no other state requires this level of inspection, and few even require a reserve study to determine how much money to save for the obvious problems, never mind those no one knows about[4].
This situation leads to unfair consequences for those owners who find themselves unlucky enough to own a unit when the damage and deficits are finally realized. Damage discovered, say, in year 35 didn’t just happen in year 35. That deterioration likely began earlier in the building's life and lay hidden for decades. It is costly to repair when it finally becomes obvious or dangerous. No prior owner, those who owned and sold their units years ago, will pay any part of the cost of the eventual rehabilitation of that building due to past lack of adequate inspections and years of artificially low assessments. Instead, the present owners will be handed the entire tab for the shortfall from several decades of deferred maintenance or hidden damage—the last people standing when the music stops.
Can this trend be reversed? As condominium buildings age and deterioration continues, the funding deficit increases dramatically. But to reverse that trend and reduce the deficit, someone must know it exists and be willing to address it. That requires more robust inspections early in the building's life and potentially higher assessments to stay even with any decay.
Conclusion
It would not be wrong to blame this on the failure of the basic condominium model. Volunteers rarely have sufficient training or expertise to oversee complex infrastructure maintenance, especially without mandatory funding to pay for it. The model also does not insist that board members have a talent for resolving conflicts. While condominium boards can leverage fines or legal action to enforce the rules, that lacks finesse and can create greater antagonism—a distraction from the more critical job of raising funds to inspect and maintain the building.
Unit owner-managed, voluntarily funded, multi-million-dollar condominium projects were probably a bad idea from the beginning. But sadly, it is way too late to reverse course on the millions of such projects built in the past sixty years. Many are already reaching the end of their service lives, with no plan to deal with that. Robust inspection standards on new and existing projects and enforceable minimum funding for maintenance and repairs should be considered by state legislatures. But whatever the approach, the present system is not staying even with the deterioration of many buildings, and that is just not safe anymore.
- The collapse of the balcony in Berkeley occurred on an apartment building. But the construction of that building is similar or identical to the construction of most multi-story wood-frame condominiums.
- Boards of directors are empowered by statute or contract to assess members for operation and maintenance costs. However, there are few statutes that set minimum funding or otherwise require boards to exercise that authority.
- Even in states that require reserve studies, the physical inspections are inadequate to uncover some of the costliest damage. California’s reserve study statute—Civil Code Section 5550—only requires inspection of those components that are visible and accessible, leaving damage within walls and other structural components undiscovered and funding for the eventual repairs, unaddressed.
- In May 2022, in response to the Champlain Towers South collapse, Florida enacted mandatory structural inspections for buildings 30 years and older, repeating every 10 years thereafter. The law also includes mandatory reserve funding for structural components.
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Tyler P. Berding, Berding & Weil LLPMr. Berding may be contacted at
tberding@berdingweil.com
