Beyond the Flow-Down Clause: Subcontract Provisions That Can Expose General Contractors to Increased Liability and Inconsistent Outcomes
December 10, 2024 —
Phillip L. Parham III - ConsensusDocsFlow-down clauses in construction subcontracts—blanket clauses providing that some or all of the terms and conditions in the prime contract between the general contractor and the property owner apply equally between the subcontractor and general contractor—are an important component to managing risk for a general contractor and reducing the likelihood of disputes with either/both the owner and subcontractor. Put simply, flow-down provisions can provide continuity between the general contractor’s obligations to the owner and the subcontractor’s obligations to the general contractor. Properly drafted, flow-down clauses reduce the general contractor’s risk by ensuring that the subcontractor is legally bound to meet the owner’s objectives for the project in the same way as the general contractor. But relying on blanket flow-down clauses, alone, to protect the general contractor is like a soldier going into battle with nothing but a helmet, leaving significant other areas exposed and unprotected. In other words, a general contractor should look beyond just a singular, blanket flow down of terms to ensure its bases are properly covered.
Accordingly, this article goes beyond the blanket flow-down clause and highlights several key subcontract provisions where inconsistent obligations among the subcontractor, general contractor, and owner expose the general contractor to increased liability and inconsistent outcomes. Specifically, this article will examine disputes resolution clauses, liquidating provisions, notice provisions, and termination provisions. However, this article will not provide a deep examination of these clauses, nor does it highlight every potentially relevant clause. Rather, it focuses on these select clauses to highlight important issues associated with flow-down provisions.
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Phillip L. Parham III, Jones Walker LLPMr. Parham may be contacted at
pparham@joneswalker.com
Real Estate & Construction News Roundup (05/23/23) – Distressed Prices, Carbon Removal and Climate Change
June 05, 2023 —
Pillsbury's Construction & Real Estate Law Team - Gravel2Gavel Construction & Real Estate Law BlogIn this week’s roundup, we consider distressed property bonds and loans, cities that are sinking under their own skyscrapers, efforts to lower carbon emissions, the unexpected potential of dirty diapers as a building material, and so much more.
Globally, more than $190 billion of property bonds and loans are
trading at distressed prices, a result of China’s real estate woes. (
Alice Huang and
Erin Hudson, Bloomberg)
PacWest Bancorp sees a stock market boost as it announces the sale of its
real estate loans, valued at around $2.6 billion. (
Jaiveer Shekhawat and
Chibuike Oguh, Reuters)
New construction home sales
exceeded expectations for April while existing home sales dropped. (
Anna Bahney, CNN)
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Pillsbury's Construction & Real Estate Law Team
White and Williams Earns National "Best Law Firm" Rankings from US News
November 02, 2017 —
White and Williams LLPWhite and Williams has achieved national recognition from US News and World Report as a "Best Law Firm" in the practice areas of Insurance Law and Media Law. Our Philadelphia, Boston, and New York offices have also been recognized in their respective metropolitan regions in several practice areas. Firms included in the “Best Law Firms” list are recognized for professional excellence with persistently impressive ratings from clients and peers. Achieving a tiered ranking signals a unique combination of quality law practice and breadth of legal experience.
National Tier 1
Insurance Law
National Tier 3
Media Law
Metropolitan Tier 1
Boston
Insurance Law
Product Liability Litigation - Defendants
Philadelphia
Personal Injury Litigation - Defendants
Real Estate Law
Tax Law
Metropolitan Tier 2
Philadelphia
Appellate Practice
Commercial Litigation
Construction Law
First Amendment Law
Insurance Law
Legal Malpractice Law- Defendants
Media Law
Trust & Estates Law
Metropolitan Tier 3
New York City
Bankruptcy and Creditor Debtor Rights/ Insolvency and Reorganization Law
Philadelphia
Patent Law
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Boston Water Main Break Floods Trench and Kills Two Workers
October 27, 2016 —
Justin Rice – Engineering News-RecordTwo workers died in Boston on Friday afternoon after a water main break flooded the trench where they were working, according to the Boston Fire Dept.
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Justin Rice, Engineering News-RecordMr. Rice may be contacted at
enrmidatlanticeditor@enr.com
Specific Performance: Equitable Remedy to Enforce Affirmative Obligation
January 18, 2021 —
David Adelstein - Florida Construction Legal UpdatesWhen a party breaches an agreement, particularly when dealing with real estate, there is an equitable remedy known as specific performance that requests the trial judge issue an order to affirmatively force the breaching party to perform, i.e., close on the real estate contract. You are asking the court to require the other party to specifically perform an affirmative obligation. See Melbourne Ocean Club Condominium Ass’n, Inc. v. Elledge, 71 So.3d 144, 146 (Fla. 2011).
A decree of specific performance is an equitable remedy ‘not granted as a matter of right or grace but as a matter of sound judicial discretion’ governed by legal and equitable principles. Specific performance shall only be granted when 1) the plaintiff is clearly entitled to it, 2) there is no adequate remedy at law, and 3) the judge believes that justice requires it.
Castigliano v. O’Connor, 911 So.2d 145, 148 (Fla. 3d DCA 2005) (internal citations omitted).
An example of specific performance may play out, as mentioned, in a real estate contract where a seller refuses to close on the transaction.
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David Adelstein, Kirwin Norris, P.A.Mr. Adelstein may be contacted at
dma@kirwinnorris.com
Defeating the Ten-Year Statute of Repose For Latent Construction Defects
January 28, 2015 —
The Porter Law GroupIt is an all-too-common scenario in California construction: Nine and a half years after completion of a major California construction project, immediately before the 10-year “statute of repose” for suing on “latent” construction defects expires, a lawsuit claiming damages for “recently discovered” latent construction defects is filed. The property owner sues the contractor for the alleged defects. The direct contractor sues all its subcontractors for indemnity and defense. The attorneys spontaneously generate. Experts proliferate. Claimed defects are extrapolated. Four or five years later, after a few dozen attorneys earn a small fortune in fees, the insurance companies make payments. Attorneys collect more fees. The owners take what remains. They repair nothing... and buy vacation homes.
Perhaps a cynical view, but there are many in the construction defect world who would reach a similar conclusion. The question is: How can you defeat this seemingly inevitable chain of events? Under a case known as Brisbane Lodging L.P. v. Webcor Builders, Inc. 216 Cal.App 4th 1249 (2013) there may be hope. California Code of Civil Procedure sections 337.1 and 337.15 grant a 10-year “statute of repose” for bringing claims for “latent” construction defects. These statutes allow a lawsuit for such claimed defects to be filed in court up until ten years after the project has been completed. Latent defects are generally defined as those which are “not apparent by reasonable inspection” (CCP §337.15(b)). It is extremely common for such claims to be filed immediately before this 10-year deadline expires. When the lawsuit is brought, the cash register begins to ring.
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The Porter Law Group
The Sounds of Silence: Pennsylvania’s Sutton Rule
January 29, 2024 —
William L. Doerler - The Subrogation StrategistIn Westminster Am. Ins. Co. a/s/o Androulla M. Toffalli v. Bond, No. 538 EDA 2023, 2023 Pa. Super. LEXIS 626, 2023 PA Super 272, the Superior Court of Pennsylvania (Appellate Court) recently discussed the impact of silence on the Sutton Rule with respect to the landlord, Androulla M. Toffalli (Landlord), securing insurance. After holding that the tenant, Amy S. Bond (Bond) t/a Blondie’s Salon – who leased both commercial and residential space in the building pursuant to written leases – was not an implied “co-insured” on Landlord’s insurance policy, the Appellate Court reversed the decision of the trial court.
In this case, Bond rented the ground floor of a property located in Monroe County pursuant to a written commercial lease (Commercial Lease) and operated Blondie’s salon out of the leased location. In addition, Bond rented and lived in a second-floor apartment pursuant to a residential lease (Residential Lease). Both leases required the tenants (Tenants) to obtain insurance for personal items. The leases, however, did not require Landlord to obtain fire insurance for the property.
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William L. Doerler, White and Williams LLPMr. Doerler may be contacted at
doerlerw@whiteandwilliams.com
Look Out! Texas Building Shedding Marble Panels
November 13, 2013 —
CDJ STAFFThe streets around the Omni Building in Lubbock, Texas have been barricaded for an indefinite period, since the marble panels have been falling off the building. The panels weight about 300 pounds each.
The building’s owners attempted to remedy the problem by replacing the marble with stucco, but that too came loose in the wind and fell to the ground. The city issued a stop work order preventing the installation of any more stucco. The city “told them that all needed to come down, both the old and the new,” according to Steve O’Neil, the city’s chief building official.
The city has filed a lawsuit to compel the owners to fix the building. Glen Robertson, Lubbock’s mayor, sees another possible solution, “or demolish it because, as it stands right now, it is truly a health and safety hazard to our citizens.
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