Follow by Email

Monday, September 18, 2017

DBPR'S EMERGENCY RULE ALLOWS GENERAL, BUILDING, AND RESIDENTIAL CONTRACTORS TO DO RE-ROOFING



DBPR’S EMERGENCY RULE ALLOWS GENERAL, BUILDING, AND RESIDENTIAL CONTRACTORS TO DO RE-ROOFING


To our clients who are hard at work in repairing the damages of Hurricane Irma, the Department of Business and Professional Regulation has declared an emergency rule permitting general, building, and residential contractors to do re-roofing in FEMA identified disasters zones.

This is an opportunity for your company to gain some additional business while serving your community that’s in need of relief.

The Disaster Contractors Network; register and select the areas in which you are available to provide services: http://www.dcnonline.org/



The DBPR Emergency Order: http://files.constantcontact.com/de700d13601/9dc735f5-4bc6-4c12-8890-d6987b4377b9.pdf

Thursday, September 14, 2017

APPLY FOR ASSISTANCE – www.fema.gov



APPLY FOR ASSISTANCE – www.fema.gov

After Hurricane Irma’s devastation, FEMA is accepting applications for Individual Assistance; you will not be required to pay back FEMA. You may be referred to the Small Business Administration (SBA) for a low interest disaster loan; if you qualify, you will be required to pay back the loan. Stay Safe.


Please visit: https://www.fema.gov/apply-assistance for instructions; https://www.disasterassistance.gov/ for application; https://www.sba.gov/loans-grants/see-what-sba-offers/sba-loan-programs/disaster-loans for SBA loan application

TAX RELIEF FOR VICTIMS OF HURRICANE IRMA IN FLORIDA – www.irs.gov


TAX RELIEF FOR VICTIMS OF HURRICANE IRMA IN FLORIDA – www.irs.gov

To our clients who reside or have a business in the counties affected by Hurricane Irma, the IRS has declared extensions for filing tax returns, paying taxes and for other time-sensitive acts. Certain deadlines on or after September 4, 2017 and before January 31, 2018, are now postponed through January 31, 2018.


Please see link for further details; you may qualify for relief: https://www.irs.gov/newsroom/tax-relief-for-victims-of-hurricane-irma-in-florida

Friday, September 1, 2017

United States Citizenship and Immigration Services - Revision to the I-9


REVISION TO THE I-9

  Last month, the United States Citizenship and Immigration Services (USCIS) released its most recent revised version of the I-9 form, also known as the Employment Eligibility Verification Form. The new I-9 can be found here: https://www.uscis.gov/news/alerts/revised-form-i-9-now-available. Employers can immediately switch over to the revised version or continue using the I-9 with a revision date of 11/14/16 up until September 17, 2017. On September 18, 2017, however, employers must use the revised form with a revision date of 07/17/17 for all new employees. Although the revisions may seem inconsequential, they are designed with the intention of making the form easier to navigate and reduce the number of errors. 

  Employers must continue following existing storage and retention rules for any previously completed Form I-9 and the rules regarding storage and retention have not changed under the newly revised I-9. Current employees do not have to fill out the new forms, even though the acceptable documents list has changed. Be warned, if an employer fails to identify a new worker using the proper I-9 form, violators may face significant fines reaching upwards of $2,156 per employee. 

  As the new changes take place, employers are encouraged to review the Handbook for Employers: Guidance for Completing Form I-9 (M-274) to ensure understanding and compliance with all rules and procedures.





















Monday, August 28, 2017

Contractors and Subcontractors Beware


Contractors and Subcontractors beware of shopping center, retail and out parcel projects. Big box and specialty retailer store closures may impact collectability for ongoing projects.

Fortune 500: The Death of Retail is Greatly Exaggerated | Fortune.com 




TOP TEN CONSTRUCTION CLAUSES - PART IX - PAYMENT TERMS


TOP TEN CONSTRUCTION CLAUSES – PART IX – PAYMENT TERMS

This article is the ninth in a ten-part series analyzing the top ten critical construction clauses.  In this installment, we analyze the “payment terms” provision, which encompasses a discussion on retainage and final payment.  This article will focus primarily on the updated American Institute of Architects’ Agreement between the Owner and Contractor (AIA Document A101-2017) as well as Florida case law. 

                               I.            OVERVIEW

The payment terms provision is perhaps the most palpable of all construction clauses as each party to a construction contract has unique concerns when it comes to payment.  An owner is concerned about overpaying its general contractor before its work is completed and will require some kind of assurance that the work will be completed.  Meanwhile, a general or subcontractor is concerned about receiving prompt payment so not to create financial hardship.  In negotiating the terms of payment, the goal is to reach a balanced resolution of all concerns.

                            II.            PAYMENT PROCEDURES

The American Institute of Architects’ Agreement between the Owner and Contractor (AIA Document A101-2017) attempts to find this balance by incorporating monthly progress payments based upon applications for payment submitted to the owner after being reviewed and approved by the architect.  The AIA form provides that prior to any application for payment being submitted, the contractor must first submit an itemized schedule of values for the architect’s approval.  The schedule of values allocates a line item value for various items of work.  An application for payment will typically list each item on the schedule of value and provide the percentage complete along with the value of the completed work.  The architect is tasked with reviewing the payment application and signing off on it.  The owner is then responsible for making the determined payment minus any retainage.  The owner’s failure to make payment in accordance with the contractual requirements constitutes a material breach of contract.  See J.M. Beeson Co. v. Sartori, 553 So. 2d 180 (Fla. 4th DCA 1989); see also Newkirk Construction Corp. v. Gulf County, 366 So. 2d 813 (Fla. 1st DCA 1979). 

                         III.            TIMING OF PAYMENT

Under Florida’s Construction Contract Prompt Payment Law, any party with an obligation to make payments under a written construction contract must make the payments promptly once certain conditions have been met.  Fla. Stat. §715.12(4) (2017).  The law generally provides that, unless some exception exists, the obligor has 14 days to make payment to the obligee otherwise the payment due will bear interest at the statutory rate.  Fla. Stat.  §715.12(5)(a) (2017).

With this in mind, AIA Document A101-2017 provides a form provision that leaves it to the contracting parties to set their own deadlines for payment.  The relevant provision reads as follows:

§ 5.1.3 Provided that an Application for Payment is received by the Architect not later than the ______ day of a month, the Owner shall make payment of the amount certified to the Contractor not later than the _____ day of the month.  If an Application for Payment is received by the Architect after the application date fixed above, payment of the amount certified shall be made by the Owner not later than _____ (     ) days after the Architect received the Application for Payment.”

                         IV.            RETAINAGE & FINAL PAYMENT

As previously mentioned, the owner has an interest in ensuring there are sufficient funds to complete the contractor’s scope of work in the event the contractor fails to do so.  Hence, it is common for contracts to provide for retainage, commonly 10% of the contract amount, of each payment application.  The retainage is held by the owner until the contractor reaches some pre-defined stage of construction and all other conditions have been met. 


The American Institute of Architects’ General Conditions of the Contract for Construction is incorporated into AIA A101-2017 by reference.  Section 9.10.2 of the General Conditions contains contractual conditions that the contractor must satisfy in order to receive final payment of the retainage.  Specifically, the contractor is required to submit to the architect 1) proof that all payrolls, bills for materials and equipment, and other indebtedness connected with the work for which the owner or the owner’s property might in any way be responsible have been paid or satisfied, 2) written proof that all insurance required by the contract is in effect and will remain in effect unless written notice is provided 30 days in advance, 3) a written statement that the contractor knows of no reason why the insurance will not be renewable to cover the period required by the contract, 4) written proof of any surety’s consent to final payment, and 5) any additional data that the owner requires to establish the contractor’s payment or satisfaction of all contractual obligations.

Under the AIA, contractors must be conscience of the General Conditions § 9.10.5 which provides that once the contractor accepts final payment it is deemed to have waived all claims not previously made in writing and identified by the contractor as unsettled at the time of the final payment application.

It is important to note that you may encounter non-AIA form contracts.  Regardless of the form used in drafting any construction contract, the payment terms provision should be concisely drafted and touch on all the basics discussed above to reduce ambiguity.  Whether you are an owner, contractor or subcontractor, it is advisable to consult with an attorney knowledgeable in construction contracts to assist you in deciding what payment terms are best suited for your business.




TOP TEN CONSTRUCTION CLAUSES - PART VIII - INCORPORATION BY REFERENCE



TOP TEN CONSTRUCTION CLAUSES
PART VIII—INCORPORATION BY REFERENCE

This is the eighth installment in a ten-part series analyzing critical construction clauses.  This installment analyzes the “Incorporation by Reference” provision. The first seven articles can be found on our blog at http://sotolawgroup.blogspot.com/.

The incorporation by reference clause, sometimes called a flow-down or pour-over clause is the basis by which parties to a contract include upstream contract requirements without specifically attaching them. Typically, this occurs between the contactor and subcontractors. Below is the pertinent section of the incorporation clause taken from AIA form A401.

AIA "Standard Form of Contract Between Contractor and Subcontractor" (A401)

Article 1

The Subcontract Documents 

1.The Subcontract Documents consist of (1) this Agreement; (2) the Prime Contract, consisting of the Agreement between the Owner and Contractor and the other Contract Documents enumerated therein, including Conditions of the Contract (General, Supplementary and other Conditions), Drawings, Specifications, Addenda issued prior to the execution of the Agreement between the Owner and Contractor and Modifications issued subsequent to the execution of the Agreement between the Owner and Contractor, whether before or after the execution of this Agreement, and other Contract Documents, if any, listed in the Owner-Contractor Agreement;... These form the Subcontract, and are as fully a part of the Subcontract as if attached to this Agreement or repeated herein ...

Careless treatment of these clauses can be detrimental to a contractor, subcontractor or supplier's expectations and understandings of what exactly is being agreed to in a contract. From a project Owner or developer's standpoint, incorporation clauses can create unintended conflicts and ambiguities which negatively impact the rights, obligations and liabilities of the parties.

The case of Katner v. Boutin, 624 So. 2d 779 (Fla. 4th DCA 1993) deals with a settlement agreement between two parties, where one party believed that they were receiving a piece of property free of encumbrances. The settlement agreement referenced a lease agreement and a purchase agreement that were executed simultaneously without knowledge of one of the parties. The purchase agreement that was referenced by the lease gave the purchaser the continuing right of first refusal on the sale of the piece of property and created an encumbrance on the property. The court found that there was no intent to be bound by what was in the collateral documents (ie the lease agreement and purchase agreement) because it was not referenced to in the settlement agreement.

So what is required to incorporate a document correctly? The document pretending to incorporate an extrinsic document must state specifically that it is subject to the document to be incorporated and the document incorporated must be specifically described and or referred to in the incorporating document in such a way to make clear that the parties intended to incorporate it.

In the case of Temple Emanu-El of Greater Fort Lauderdale v. Tremarco Indus., Inc., 705 So. 2d 983 (Fla. 4th DCA 1998) there was a contract between the owner and the contractor to install a roof system. One of the provisions of the contract provided that contractor would provide a performance warranty on the roof. The owner later sued the contractor and the contractor tried to use a warranty that was referenced in the document to govern the whole contract. The court found that the contract and warranty were not incorporated merely because the warranty was merely referenced. There was no intent found by the court for the parties to be bound by the warranty.

Incorporating extrinsic documents can create unintended consequences. A recent example of this comes from Int'l Eng'g Servs. v. Scherer Constr. & Eng'g of Cent. Fla., LLC, 74 So. 3d 531, 532-34 (Fla. 4th DCA 2011). IES, a subcontractor appealed the entry of a final summary judgment in favor of its general contractor, Scherer, on a breach of contract claim.

According to the subcontract, IES agreed to perform certain structural steel work on a project in Maitland, Florida. IES performed its work under the contract but was not paid by Scherer. When IES then brought suit against Scherer, Scherer raised the affirmative defense that the subcontract contained a pay-when-paid clause, which provided that payment by the project owner to Scherer was an express condition precedent to paying IES. Scherer argued that because it had not been paid by the project owner, it did not have to pay IES. The lower court entered the summary judgment in favor of Scherer based on the pay-when-paid clause in the subcontract.

The appellate court held that an ambiguity in the contract was created when the subcontract incorporated the prime contract between Scherer and the owner. Article 2 in the subcontract states:

The "Contract Documents" for this Subcontract consist of this Agreement, the terms, conditions or instructions contained in the transmittal letter from the Contractor to the Subcontractor delivering this subcontract for execution by the Subcontractor, any exhibits attached hereto, the Agreement between the Owner and Contractor dated (prime contract), the conditions of the Architect, all approved drawings and architectural plans and specifications, all modifications issued prior to execution of the Agreement between the Owner and Contractor, and all modifications issued subsequent thereto.

The appellate court found that the prime contract, which was incorporated by reference, provided that the owner was not required to pay the contractor until it had paid its subcontractors. The court explained that this created an ambiguity which had to be resolved against the contractor and further interpreted to require the contractor to pay IES within a reasonable time, not when actual payment was received by the owner. Int'l Eng'g Servs. v. Scherer Constr. & Eng'g of Cent. Fla., LLC, 74 So. 3d at 532-34.

Practice Points:

Key contracts clauses typically incorporated by reference:
Venue of dispute
Arbitration or Litigation Option


Waiver of certain damages including consequential damages
Liquidated damages
Pay when paid

Affected party needs to specifically review the upstream incorporated documents and establish at inception the carved out flow down items, which are not accepted!