Author Archives: Melissa Dewey Brumback

For Engineers & Architects: Top 10 Construction Law in NC Blog Posts

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top10Since I have so many newer readers here at Construction Law NC, I thought a brief summary of some of the most popular posts might be helpful.  (I have also added this list to the About Me & Contact Info page, in case you want to refer to it later).

Presented below are the top 10 posts by popularity (although the list does fluctuate some):

  1. “Substantial Completion” on the Construction Project: How is it defined?  (always a popular post; owners want every last paint scratch fixed before they are willing to consider the project complete)
  2. The Sticky Statute of Limitations in NC  (the general rule: 3 years from date of service; however, there are many exceptions)
  3. Statute of Repose: Putting your Risk to Bed  (after 6 years, in North Carolina, even the exceptions to statutes of limitations don’t help)
  4. Planning Ahead for Additional Compensation  (money; cause, we all need to get paid!)
  5. Spring Cleaning: 6 Contract law tips for limiting risk on construction projects  (contracts are the first step in limiting your risk- read here to learn how to make them effective)
  6. How to Smartly Handle Project Documents  (your policies and procedures with documents can make or break a lawsuit)
  7. The Architect’s and Engineer’s “Standard of Care”  (note: perfection is NOT the standard!)
  8. Design Error and the Spearin Doctrine (why your designs must actually, you know, work!)
  9. Active vs. Passive Negligence (sharing the blame, unequally, when something goes wrong)
  10. Adding an “Additional Insured” in the Professional Services Agreement: an exercise in futility!  (for those times when you have an obtuse owner- show them this!)

Are there other posts that you think should be added to this “Best of” collection?  Wish I had written a post on your pet topic?  Share below.

Photo (c) Independent Association of Businesses.

Setting the Right Expectations for your Owner Client– Craft your Scope of Work well (law note)

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belt & suspendersRegular readers of this blog know that you absolutely should have a written contract, and not rely on “gentlemen’s agreements.”  But what is the most important part of your agreement to provide professional services?  The dispute resolution provision? Payment terms? Change Order requirements?  All of those are important.  I’d argue, however, that the Scope of Work provision is, if not the most important term, one of the key terms.  Face it– once you  have a good set of standard contract terms, they rarely need to be drastically rewritten for each individual project.  But each and every time you start a new project, whether for a long-time client or a new owner, you are defining the Scope of Work.

This is where paying attention up front can save you headaches down the road.  I often refer to the belt & suspenders approach— you want to both be very clear in describing the scope of work, and equally clear in describing exclusions to your services.  That way, everyone knows what is expected up front, and you can hopefully avoid litigation pitfalls down the road.

Bill Beardslee of Davis Martin Powell has coined a nice mnemonic for Scope that is very apt:

S C O P E

Sufficiently

Control

Other

Peoples

Expectations

 

Your turn. Do you carefully craft your Scope of Work for each new Project?  You should.  If you need help in crafting your Scopes of Work, drop me a line. 

 

 

Even a text can make a contract! (law note)

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text message bubblesI’ve written many times about how you should–indeed, must–document your construction project in case there are problems or disputes later on.  Of course, you need to update the plans and specs.  But equally important, you need to document agreements to do things outside of the contract documents and also all verbal directives from the owner.

Tennessee lawyer Matt Devries recently wrote a nice blog post entitled:  LOL! OMG. HUH? Court Finds That Text Message Can Form Binding Contract, discussing  how even text messages can be legally binding.  Something to remember, and learn from.  I always tell clients I’d like to see any deviations signed by all parties, but failing that, a fax or email will do.  Just don’t rely on a conversation alone.  Texts are *not* the preferred method of documenting something for the court, but they are better than nothing.

Read Matt’s post and drop him a line.  And comment below if you’ve ever considered using text messages to establish a written record of agreements.

Photo courtesy Pixabay.

Betterment on Construction Projects, part 2 (more cowbell) (law note)

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more cowbell sign

Another question about betterment, and about A/E insurance policies:

I am confused on why the A/E even carries error and omission insurance.  I must re-read one of the policies.  And if betterment protects the designer, why not the construction contractor who omits a work activity from his bid?

Betterment is a legal concept that covers anyone involved.   Usually, though, the situation arises when the contractor submits a change order request for a missing item, and then the owner wants to get reimbursed by the designer for the cost.  So, the contractor is getting his payment in the form of a change which, sometimes, is something he may have previously considered in his bid anyhow.  So in that sense, the contractor doesn’t really need the protection of the betterment, as he is getting paid for the change.

But, regardless of betterment, there are many other types of claims that can be made against the A/E such as errors (as opposed to omissions) for which insurance is a good idea.

Your turn:  Have you ever omitted something on your plans, that the owner then wanted you to compensate him for, despite the fact that he had no actual damages? Share below.

 

PS:  Wondering about the picture in this post?  Saturday Night Live fans will remember the classic More Cowbell skit with Christopher Walken and Will Ferrell.  Since this is my 2nd post on betterment, it seemed appropriate.  Photo credit:  Danielle Scott.

Surety Bond Now a Valid Performance Guarantee for NC Developers (guest post)

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subdivision

Welcome summer days!  Today we have a guest post by Todd Bryant, president and founder of Bryant Surety Bonds. He is a surety bonds expert with years of experience in helping contractors get bonded and start their business.  While design professionals generally don’t have to deal with performance bonds directly, they are often at the front lines of advising owners as to various Requests for Proposals submitted by hopeful contractors.  In that spirit, be sure to read how the new law changes security requirements.

 Take it away, Todd!

Last year wrapped up with some good news for North Carolina subdivision developers: House Bill 721 confirmed that construction bonds are, in fact, a viable form of performance guarantee. Previous legislation was ambiguous on this point, but the new bill– which took effect last October– sought to clear up the confusion.  Although the new rules have been in effect for eight months, there’s been scant coverage of the changes, and what they mean for developers.

City Ordinances for Subdivisions

HB 721 is a revision to a section of North Carolina General Statutes, which authorizes cities to regulate land development with their own subdivision control ordinances. Ordinances are meant to ensure that land is developed in an organized fashion, to avoid overcrowding and congestion.

Cities have the discretion to set their own requirements for developers. Usually, cities ask developers to include certain features in new subdivisions, to fit in the city’s infrastructure. These might include recreational space for residents of the development, or building easements for existing roads and utilities. Some cities will allow developers to furnish funds for these public improvements, instead of building them themselves. Often, ordinances ask for detailed, up-to-date plans throughout project construction, so any changes can be approved by the city in advance.

To prove that they will follow local ordinances, subdivision developers must usually furnish the city with some kind of performance guarantee. According to the new bill, a surety bond officially meets the criteria for this guarantee.

The Facts on Surety Bonds

If you’re a design professional or developer in North Carolina, you’re probably familiar with these bonds already. Construction bonds, also known as contract bonds, are usually required of contractors who take on public construction projects. More and more, large private projects are requiring these bonds as well. There are a few different types of contract bonds, including bid bonds, payment bonds, and performance bonds, but they all serve a similar function. Contract bonds work like a line of credit for the developer, to ensure the project is completed on time, and according to the stipulations of the contract.

North Carolina HB 721 relates primarily to performance bonds, which are the type of contract bonds that cities will most often require from subdivision developers. With this new law, construction bonds are officially recognized as a valid form of performance guarantee that North Carolina subdivision developers can submit to demonstrate that they will follow all city ordinances.

HB 721 also includes some guidelines about how big this surety bond must be. Although cities will have the authority to set the bond amount on a case-by-case basis, it can’t exceed 125% of the estimated project cost.

Of course, surety bonds aren’t the only kind of performance guarantee that’s acceptable. Developers will still have the option to submit a letter of credit instead, or some equivalent security. However, the amount of credit that’s needed to satisfy this requirement is usually out of reach of some smaller developers.

Posting a bond requires much less capital than submitting a letter of credit, since the bond cost is only a small percentage of the total bond amount. The clarifications in HB 721 could be a boon for North Carolina developers who want to grow their business, as it could enable them to take on bigger projects. City officials in North Carolina are pleased with the new law, as well, as they believe this will make compliance and accountability easier, for government officials and subdivision developers.

If you’re a developer with questions about local ordinances, make sure to check with zoning officials in your subdivision’s city or county.

Thanks Todd for your article!  Readers, if you have questions or comments about how HB 721 affects your projects, feel free to share in the comments.

 Image source: https://flic.kr/p/9KpZH