Is Your Home Improvement Contract Putting You At Risk?
February 10, 2020 —
Hannah Kreuser - Porter Law GroupIf you are like many contractors, odds are that your home improvement contract (HIC) is not compliant with California law, putting you at risk for disciplinary action, voiding of the contract, and even criminal prosecution.
Generally, the laws allow parties to contract how they wish. However, California HICs are an exception and California Business and Professions Code (BPC) requires much in the way of content, form and formatting for a HIC to meet the legal requirements. This is because California has written its laws to provide broad protections to homeowners when it comes to construction work performed at their residence. However, in attempting to promote this goal, the laws surrounding HICs have produced requirements that are confusing and fail to account for the realities of a home improvement project, making it difficult and uncomfortable for contractors to comply.
A HIC is required for home improvement projects that change a residence or property. Specifically, the law defines a “home improvement” as “the repairing, remodeling, altering, converting, or modernizing of, or adding to, residential property and shall include, but not be limited to, the construction, erection, replacement or improvement of driveways, swimming pools, including spas and hot tubs, terraces, patios, awnings, storm windows, landscaping, fences, porches, garages, fallout shelters, basements, and other improvements of the structures or land which is adjacent to a dwelling house.” (BPC section 7151.) A HIC is not required for new residential construction; for work priced at $500 or less; the sale, installation, and service of a fire alarm or burglar system; or a service and repair contract (which has its own requirements).
When a HIC is used, BPC section 7159 specifies certain content, form, and format requirements, all of which must be followed to produce a compliant HIC. While this article will not discuss all of these requirements, it will discuss some of the problems commonly seen in HICs.
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Hannah Kreuser, Porter Law GroupMs. Kreuser may be contacted at
hkreuser@porterlaw.com
Being the Bearer of Bad News (Sounding the Alarm on Construction Issues Early and Often) (Law Note)
October 02, 2023 —
Melissa Dewey Brumback - Construction Law in North CarolinaOur recent look into termination brings up another issue important to architects and engineers– how to sound the alarm about construction or building code violations. Sometimes, a project owner may be so focused on project completion that they want to overlook the sub-par work that may be occurring in an effort to get project open “on time.” In such cases, only if a life safety violation is reported to the authority having jurisdiction will the owner finally terminate a faulty contractor from a construction project.
Even if the work is not a life/safety issue, it is important that when delivering bad news about the quality of work that your notice be early, loud, and frequent. Basically, everyone involved should be aware, through written communications, that there is an issue that needs to be addressed on site, the contractor is messing up the construction, and what needs to be done to fix the issue(s). If the owner is willing to live with the faulty work (and it is not a life/safety matter), then at least you’ve provided notice and warned them of the issue.
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Melissa Dewey Brumback, Ragsdale LiggettMs. Brumback may be contacted at
mbrumback@rl-law.com
Compliance Doesn’t Pay: Compliance Evidence Inadmissible in Strict Liability Actions
February 05, 2024 —
Kyle Rice - The Subrogation StrategistIn Sullivan v. Werner Co., No. 18 EAP 2022, 2023 Pa. LEXIS 1715 (Dec. 22, 2023), the Supreme Court of Pennsylvania (Supreme Court) clarified that in light of its decision in Tincher v. Omega Flex, Inc., 628 Pa. 296 (2014), evidence that a product complied with industry standards is inadmissible in an action involving strict product liability.
In Tincher, the Supreme Court overruled prior case law and reaffirmed that Pennsylvania is a Second Restatement Jurisdiction. As stated in Sullivan, discussing Tincher, under the Restatement (Second) of Torts § 402A, a “seller of a product has a duty to provide a product that is free from ‘a defective condition unreasonably dangerous to the consumer or [the consumer’s] property.’ To prove breach of this duty, a ‘plaintiff must prove that a seller (manufacturer or distributor) placed on the market a product in a “defective condition.””
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Kyle Rice, White and WilliamsMr. Rice may be contacted at
ricek@whiteandwilliams.com
Everyone Wins When a Foreclosure Sale Generates Excess Proceeds
August 07, 2018 —
Ben Reeves - Snell & Wilmer Real Estate Litigation BlogIntroduction
When a foreclosure sale generates more money than needed to pay off the lien, the excess proceeds usually go first to creditors in the order of their priority, and second to the owner after creditors are paid in full. So, in truth, not everyone wins when a foreclosure sale brings in too much money. Amusingly, in Steinmetz v. Everyone Wins, the court awarded excess sale proceeds to….you guessed it…Everyone Wins, despite the owner’s argument that Arizona’s anti-deficiency statutes barred it from recovering anything.
In addition to supplying a clever title for this post, Steinmetz v. Everyone Wins provides an important analysis of how Arizona’s anti-deficiency statutes, homeowner’s assessment lien statutes, and foreclosure statutes apply when determining who “wins” when it comes to excess sale proceeds.
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Ben Reeves, Snell & WilmerMr. Reeves may be contacted at
breeves@swlaw.com
Risk Transfer: The Souffle of Construction Litigation
December 13, 2022 —
Alexa Stephenson & Ivette Kincaid - Kahana FeldWho does not love a good souffle?! Enthusiasts will know that a great souffle is not something you can obtain quickly. Rather, it is common in restaurants to order the souffle as dessert at the beginning of the meal because it takes an hour to bake. Risk transfer – like a good souffle – also requires planning, preparation, and the right ingredients.
In construction litigation, attorneys are often not retained until after the project has been completed for several years as the dispute between the homeowner and the general contractor or developer took time to escalate to formal litigation. A significant part of defense counsel’s legal analysis involves assessing and evaluating risk transfer opportunities. For example, in the case of a general contractor or developer who did not self-perform the construction work but instead retained subcontractors to do so, counsel will assess if risk can be transferred from the general contractor or developer to the subcontractors who performed the work which the homeowners allege is defective. In other words, a developer or general contractor can reduce their risk (i.e. liability and money owed) by transferring said risk (i.e. pointing the finger at) to a third party.
Sounds easy, right? Unfortunately, just like the souffle making process, it is easier said than done. This task can be exceedingly difficult in the absence of contracts that contain strong indemnity and insurance provisions – the essential ingredients to effect risk transfer. Worry not! We have provided “baking” instructions for you below to help you get a great risk transfer souffle time and again.
Reprinted courtesy of
Alexa Stephenson, Kahana Feld and
Ivette Kincaid, Kahana Feld
Ms. Stephenson may be contacted at astephenson@kahanafeld.com
Ms. Kincaid may be contacted at ikincaid@kahanafeld.com
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Lenders and Post-Foreclosure Purchasers Have Standing to Make Construction Defect Claims for After-Discovered Conditions
October 10, 2013 —
W. Berkeley Mann, Jr. — Higgins, Hopkins, McLain & Roswell, LLCThe Colorado Court of Appeals has decided a case which answers a question long in need of an answer: do banks/lenders have standing to assert construction defect claims when they receive title to a newly-constructed home following a foreclosure sale or deed-in-lieu of foreclosure? The decision was released on August 1, 2013, in the case of Mid Valley Real Estate Solutions V, LLC v. Hepworth-Pawlack Geotechnical, Inc., Steve Pawlak, Daniel Hadin, and S K Peightal Engineers, Ltd. (Colorado Court of Appeals No. 13CA0519).
The background facts of the case are typical of a Colorado residential construction defect case generally. A developer contracted for an analytical soil engineering report from a geotechnical engineering firm (H-P) which made a foundation recommendation. The developer’s general contractor then retained an engineering firm (SPKE) to provide engineering services, including a foundation design. The general contractor built the foundation in accordance with the H-P and SPKE criteria and plans.
The house was not sold by the developer and went into default on the construction loan. These events resulted in a deed-in-lieu of foreclosure to a bank-controlled entity which purchased the house for re-sale. Shortly after receiving the developer’s deed, the bank-related entity discovered defects in the foundation that resulted in a construction defect suit against the two design firms and related individuals.
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W. Berkeley Mann, Jr.W. Berkeley Mann, Jr. can be contacted at
mann@hhmrlaw.com
Pennsylvania Supreme Court Dismisses Appeal of Attorney Fee Award Under the Contractor and Subcontractor Payment Act
February 16, 2016 —
William J. Taylor – White and Williams LLPIn late December, the Supreme Court of Pennsylvania dismissed, as improvidently granted, the appeal in Waller Corporation v. Warren Plaza, Inc., No. 6 WAP 2015 (December 21, 2015). As a result, the Superior Court’s holding in that case that there is no good faith exception to the attorney fee provision of the Pennsylvania Contractor and Subcontractor Payment Act (CASPA), 73 P.S. §§ 501-516, remains intact.
In its decision in Waller, 95 A.3d 313 (Pa. Super. 2014), the Superior Court considered if there was a “good faith” exception to the interest and penalties provision of CASPA, 73 P.S. § 512(a), and whether there was a similar good faith exception to the attorney fee provision of the statute, 73 P.S. § 512(b). The court held that while an award of interest and penalties under § 512(a) could be denied if a party had a good faith basis for withholding payments due under a construction contract, no such exception exists for an award of attorney fees under § 512(b). Rather, an award of attorney fees is appropriate for the “substantially prevailing party” under a CASPA claim, and a claimant can be the substantially prevailing party even if the other party withheld payments in good faith.
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William J. Taylor, White and Williams LLPMr. Taylor may be contacted at
taylorw@whiteandwilliams.com
MTA Implements Revised Contractors Debarment Regulations
July 06, 2020 —
Steven M. Charney, Gregory H. Chertoff & Paul Monte - Peckar & Abramson, P.C.On June 3, 2020, the Metropolitan Transit Authority (“MTA”) published and implemented revised regulations pertaining to the debarment of contractors. The revised regulations address many of the deep concerns raised by the contracting community.
Under relevant administrative procedure, the MTA publication of the revised regulations starts a 45 day notice period before the regulations can be adopted as final.
The prior regulations essentially required that debarment occur upon a purely formulaic calculation establishing that a contractor: 1) was more than 10% late, or 2) had submitted invalid claims that exceeded the adjusted contract price by a measure of 10%.
The revised regulations represent improvements over the prior regulations.
Critically, the revised regulations address the primary concern raised by the contracting community, that being the mandate of purely formulaic debarment. Instead, the revised regulations establish a process that includes greater flexibility and discretion before debarment may ensue.
Reprinted courtesy of Peckar & Abramson, P.C. attorneys
Steven M. Charney,
Gregory H. Chertoff and
Paul Monte
Mr. Charney may be contacted at scharney@pecklaw.com
Mr. Chertoff may be contacted at gchertoff@pecklaw.com
Mr. Monte may be contacted at pmonte@pecklaw.com
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