The post titled “The Landscape of US Immigration Laws and How It Affects The Construction Industry,” reviews the states that have and are considering immigration law reform, and discusses how these new laws can possible effect your construction business.

We’ve talked about these immigration laws a good bit on this blog in our discussion of the E-Verify system.  You can more of these posts under the tag: E-Verify.

Big thanks to Chris Hill for the opportunity to do another guest post on his blog.

The update comes just a little over three years since the launch of the ConsensusDOCS program, which is a collaboration of organizations who publish a set of construction documents to rival the industry-leading AIA forms. These updates are actually two years early. They weren’t due until 2013, but were updated early according to the group because “the economics of the construction industry today looks nothing like it did [in 2007]”

So, what’s new?

According to an analysis by ENR.com, here are some of the changes:

• A change in terminology. “Constructor” replaces “contractor” and “design professional” replaces “architect.”
• An objective “standard of care” is added to the documents.
• Greater flexibility to provide documents in electronic format. For a great discussion about going paperless on a construction project, take a look at this article by Matthew DeVries on his Best Practices Construction Law Blog: Paper to Paperless on the Modern Construction Project.
• Contract documents are better defined.
• Property owner can audit construction books, and subcontractor can get finanical information from the owner.
• Erroneous constructor termination for cause changes to a “termination for convenience.”

1)    Define Things: Terms like ‘sustainability,’ ‘green certification’ and ‘high performance building’ do not have any universal meanings.   Clearly define the goals of the building and project.   Consider adopting a rating system, and specify the system and the version.

2)    Designate a responsible party for certification:  A green/LEED coordinator can go a long way, designating someone who will be responsible for coordinating all parties, analyzing the work to ensure compatibility with the rating system, and put together all the paperwork required on the project.

3)    Responsibility Matrix: Create a “matrix” of who will be responsible for what.   This will at least mitigate the finger-pointing if or when something goes arwy.

4)    Payment Issues.   An especially important consideration for contractors:  Be cautious about tying certification with substantial or final completion.   Certification may never come, but in all cases, it could take between 6-18 months after substantial completion to get certified.   That’s a long time to have money withheld – and this will create payment problems with subs and suppliers.   If nothing else, make sure your contracts up and down the chain have the same payment timeframes and expectations.

5)    Know Vendors and Products.   These technologies are new and can be complex.   Don’t subscribe to a technology without investigating.   Get to know the products and manage the expectations of the owner.   For a discussion of how these new green technologies can present problems, see Paul Beers’ guest post on Chris Hill’s Construction Law Musings.

6)    Consequential or Specific Damage Waivers (LDs).   Damages for failure to certify or for failure to meet certain benchmarks may be murky.   Consider waiving consequential damages, and call out these specific expectations and considering waiving those damages or presenting LDs for them.  For a discussion about whether a consequential damage waiver is effective for green building damages, see this blog post: Is Failure To Achieve LEED Certification Consequential Damages?

7)    Flow Down.  Make sure your obligations up the chain, go down the chain.

Related articles

• Is Failure To Achieve LEED Certification Consequential Damages? (constructionlawmonitor.com)
• Examples of Things That Can Go Wrong on a Green Building Project (constructionlawmonitor.com)
• Think Green Building Is Irrelevant? Think Again (constructionlawmonitor.com)

The post discussed how to “Prepare For and Avoid Residential Construction Disputes,” and looked at the issue from the perspective of both the homeowner and the residential contractor.  Here is a tease:

Residential construction disputes come in all shapes and sizes, but very typically have one thing in common: they can get very nasty.

This is understandable, especially in today’s economy. The homeowner is spending hard-earned money on something very personal to them, their home. They want it done right. The contractor is working on really tight margins, and with a diligent client.

These disputes can become frustrating legal battles that costs thousands of dollars. And since it’s such a hot topic politically (there is lots of pressure for legislatures to protect against construction fraud), many states have layers of consumer protection laws that are consequential to both the residential contractor and the homeowner.

Read the full post at Chris’ blog, Construction Law Musings.

Tim Hughes’ really got me thinking about this topic when he posted “Do You Really Want A Construction Dispute?”   His post, referencing Dovetail Construction’s “Sometimes Things Go Wrong” post, points out the obvious:  sometimes, things go wrong.   In construction, it’s just a casualty of the business.

Tim’s blog post discusses a lot of the things builders can do to avoid or resolve conflict before the dispute escalates into a litigation experience.

Chris Hill of Construction Law Musing‘s  published something that addresses a possible next step:  Construction Mediation is Exhausting, but Worth It!

Even after a dispute escalations into litigation, there’s still the chance to reach a compromise.    The mediation process is confidential, it’s not binding, and if its a complete flop in getting the case settled it at least gets the parties together and helps them prepare their claims for trial.

Here’s my take on why in mediation, the juice is worth the squeeze.

In Litigation, Even Winners Are Losers

I said it.   In most cases, even winners in litigation turn out to be losers.   Why?   Because litigation is really, really expensive.

The high cost of litigation is precisely why a majority of cases settle out of court, and if you’re going to settle out of court, you might as well settle at the very beginning of the case and its expenses, rather than the middle or the very end.

The problem with getting “young” cases to settle is that the parties are still emotional about their positions, and they haven’t spent enough in attorneys fees and litigation expenses to consider cutting bait.    The mediation process is a gift to this type of circumstance.  If the parties are willing to participate in a mediation, the process is designed to keep the party’s emotions out of their decisions and to reach a compromise if possible.

They’re very successful, and they do a good job of relying to both sides that if they go forward and spend tons of money litigating the claim, even winning will be losing.

Your Attorney’s Fees Is Usually Spent Money

So what if you’re spending a lot of money on attorney’s fees, if you can just collect them after winning, right?

Wrong.

There are two reasons why this is largely an incorrect sentiment.

First, remember that a majority of cases settle before trial, and you can be sure that the case doesn’t settle for a “best day in court figure.”   In other words, the party “winning” in the settlement isn’t going to get a pie in the sky deal.  It is called, after all, a “compromise.”   One of the first things to get stripped from the deal?   Attorneys Fees.

Second, attorneys fees aren’t available to most litigants.    This is called the American Rule, and even wikipedia has a page about it stating:

The American rule provides that each party is responsible for paying its own attorneys fees, unless specific authority granted by statute or contract allows the assessment of those fees against the other party.  Under the American rule every party – even the party prevailing – must pay its own attorney’s fees.

In the case of construction disputes, this means that litigants are usually not entitled to attorney’s fees.   As such, every dollar you spend in the litigation, is a dollar less that you’ll ever have.

Mediation gets the parties to the table and does a great job of communicating the American rule to both parties, so they can analyze their risks and make a level-headed decision about whether to proceed.

Litigation Isn’t Always Bad

Litigation isn’t always a bad thing.   Sometimes, the gap between the parties is too great to bridge.   Sometimes, you do have the right to recover attorneys fees, or penalties, or some other type of damages.   Sometimes, the other party’s non-cooperation gives you no other choice.

I guess we can say this in a nutshell:  Litigation isn’t bad when litigation is necessary.

It’s all those times that litigation isn’t necessary that cause problems.  Jumping into an expensive litigation shouldn’t be a reaction.   There are ways to reach a settlement and avoid the legal complications, and if there are ways, you should explore them.   You really don’t want a construction dispute.

Before the lien page, Musings was already a great source of  information on Virginia lien laws.   The new page really organizes that data.

Here are a few of the articles you can find within the new section:

A Lien By Any Other Name Can Sound Just As Sweet (written by yours truly)

Q:  What can you lien?  A: What did you bring to the project?

Contracts, Liens and Notices

Enjoy.

(P.S. If you’re looking for information on Virginia’s lien scheme you can just check out the Virginia tag at the Construction Lien Blog.    It even includes a post by Chris Hill).

This article was originally posted on Express Lien’s topic-specific Construction Lien Blog.

In researching liens in the Commonwealth of Virginia, I ran across a question that should be on the minds of construction professionals in Virginia, particularly suppliers of materials.  The question is simply “On an open account (based on a credit agreement or other arrangement), is each delivery to a particular contractor its own “work” such that the 90 day clock runs from the completion of each delivery, or do all deliveries to a particular project constitute the “work” on that project such that the 90 day clock only runs from the last delivery to the job site?” (How’s that for simple!)

The answer to this question is (drum roll please!)- “It depends.” (I know, you are shocked at such a “lawyerly” answer.)

The Virginia Supreme Court weighed in on this question in United Savings Association of Texas, F. S. B. v. Jim Carpenter Company, Record No. 951470 (2006).  The Jim Carpenter case involved three different cases of liens that were filed by material men pursuant to various forms of open account contracts.  You can read the case to see the particular facts of the case but in essence the owners/general contractors on the project argued that the material men could not lien for any materials delivered to a particular project outside of the 90 day lien window and the material men argued that all of the materials were delivered to the same projects and therefore all constituted one continuous contract.

The Virginia Supreme Court held that the intent of the parties controls.  On the one hand, general deliveries to a contractor for general use (i. e. warehousing for use at some time in the future) each constitute a separate contract, each with its own 90 day clock.  On the other, if the material deliveries upon which the lien is based are all delivered for the benefit of a particular project then they all constitute one continuous contract and the 90 day clock does not start to run until the last delivery is completed.

What do you, as a construction professional, take from this case?  Be careful with your open accounts.  Make sure that when delivering materials to a job site based upon an open account you are exceedingly clear with your purchase order or takeoff language that certain materials are to be delivered to a certain project.  Failure to do so may lead a court to decide that the materials were a general delivery and cut off much or all of your recovery.

As with everything else to do with the picky issues with mechanic’s liens, all of the other requirements (150 day look back, notice, etc.) apply and good legal assistance is a must.

If you are interested in more thoughts on Virginia construction law, please check out my Construction Law Musings blog and join the conversation.