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Lump Sum Contracts

Lump Sum Contracts for Construction Projects

   A construction contract is a legally binding agreement between two or more parties that includes the scope of a project, the pricing structure, and the time schedule to complete the work.  It details the terms and conditions by which each party shall abide from the start of a project to its completion. A traditional agreement for a construction project is a lump sum contract, which provides a global price to complete a project, instead of bidding on individual items. This all-inclusive pricing arrangement includes labor costs, material costs, subcontractor fees, and also covers a contractor’s overhead and profit margin.  It should have a provision for risk contingencies in the event of unforeseen circumstances that may impact on the cost of a project. A lump sum contract has multiple components and can be complicated.  It is best to have an experienced contract attorney to negotiate and draft the agreement. The Boutty Law Firm, P.A., handles construction law matters of all complexities, using strategies and concepts designed to minimize risks to our clients. We can negotiate and draft contracts or resolve disputes, representing any of the parties involved in the construction process.

 Pros and Cons of Lump Sum Contracts

There are advantages and disadvantages for a contractor or property owner to engage in a lump sum contract. For a contractor, there is a greater margin for profit, especially if the project is finished ahead of time and a built-in risk contingency is not utilized. A lump sum contract requires minimal accounting documentation for the property owner, which saves time and reduces overhead costs.  For a property owner, it is easier to obtain financing for a lump sum contract, as there is a high degree of certainty regarding the total cost of the project.  The property owner is not liable for excess expenditures, unless it is addressed in the initial contract or unless the property owner requests a change order. A lump sum contract is considered low risk for a property owner.

There are some disadvantages to having a lump sum contract, especially for a contractor, as there is a high risk for cost overruns, such as increased material costs that were not accounted for in the contract.  The contractor may see the need for a change order during the construction phase, and the owner may reject payment on the change order, causing the contractor to be liable for the cost.  For the property owner, there can be lien waiver issues. If the contractor withholds payment from a subcontractor, there can be a mechanic’s lien file against the property.

The Boutty Law Firm, P.A. Offers Insightful Representation

The Boutty Law Firm, P.A. works diligently to achieve favorable contract terms for their clients. We take into consideration project inflation costs, the economic impact of change orders, and allowances for unforeseen conditions that affect the progress of the project.   We represent clients in residential and commercial disputes and claims through negotiation, mediation, or litigation. Attorney Shane Boutty is well versed in the application of construction law, as he is a state certified contractor and has owned several construction companies. The Boutty Law Firm, P.A. is located in Winter Park, Florida and serves clients in Orange and Seminole Counties.  We can be contacted at 407-537-0543.  Call for an initial consultation to discuss your construction law matter.   

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Contract Documentation

The Importance of Documentation Retention for Construction Projects

   There are many contracts drafted and signed for every major construction project and these documents can provide legal protection in the event of future disputes.  Construction projects generate a vast amount of paperwork and safeguarding these records can be a daunting task.  Implementing a document retention policy can shield a company from liability claims, as a contract, report, log, or record can provide supporting evidence for arbitration or litigation. Retention of documents is an essential practice for the success of a construction business.

 Common construction disputes include breach of contract claims including:

  • Non-compliance with payment, delays, scope of work disputes, defective work due to errors or omissions, and latent defects that can be discovered long after a project is completed. Workplace injuries and accidents, mechanic’s liens, property damage, negligent supervision, and copyright infringements are other types of claims.

    The length of time that construction records should be retained depends on the statute of limitations and the statute of repose. In the State of Florida, a lawsuit for construction defects must be filed within four years from the issuance of a certificate of occupancy or when the owner takes possession of the property.  The statute of repose, for latent defects, is ten years from the date that the owner takes possession. According to Florida and Federal recordkeeping requirements, payroll records are to be kept for a minimum of four years.  The Internal Revenue Service can audit your company as far back as six years, therefore it is recommended that tax records be kept for at least seven years.   

What Types of Documents Should Be Preserved?

   Be diligent about safeguarding your contracts and records, as documentation is the framework of a plaintiff or defendant’s legal dispute. The vast amount of paperwork for  major construction projects can include the initial contracts, insurance certificates, drawings and specs, design and engineering work, change orders, purchase orders, photographs of the construction process, bid documents, invoices, field reports, safety reports, payroll records, and business correspondence. The use of scanning for electronic storage may be a better option for document management than keeping manual records and it allows accessibility to the documents wherever they are needed. Another aspect of a business document retention policy is instituting detailed procedures that are used to destroy contracts and documentation that are no longer needed. However, intentionally destroying documents that are relevant to a pending litigation may suggest that the document contained information that is not favorable to your case.

The Boutty Law Firm, P.A. is a Multi-Service Business and Construction Law Firm

The Boutty Law Firm can provide counsel on all matters regarding construction and commercial law, from the bidding on a construction project to its completion.  We handle all levels of complexity for our clients, in both state and federal courts. Attorney Shane Boutty is a state certified contractor and his experience and knowledge is invaluable in minimizing risks and finding effective and affordable solutions for his clients.  We represent general contractors, subcontractors, developers, construction companies, homeowners, property owners, material suppliers, architects, and homeowner’s associations. Our law firm is adept at negotiations, arbitration, and court room litigation. Our goal is to protect your interests.  We are located in Winter Park and serve clients in Orange, Seminole, and Volusia counties in Central Florida. Call our office at 407-537-0543 for legal advice and quality representation.

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Residential Construction Defect

Residential and Commercial Construction Defects

The population growth in Central Florida in recent years has had major implications for the real estate market.  There has been a surge of commercial and residential real estate construction for single family housing, multi-family units and commercial businesses, bringing with it a myriad of possibilities for construction defects and subsequent litigation.  Construction defects are deficiencies in the building process which can result in costly damage to the property or can put the inhabitants of the property at risk for personal injury.  A construction defect can be a serious issue or it can be a matter of just not meeting the buyer’s expectations.  Lawsuits for construction defects can be a lengthy and costly process and multiple parties can be held liable for damages.  Restitution may include the costs of repairs, property devaluation, loss of use, court costs and attorney fees. In some cases there can be fines for gross negligence paid to the state and suspension of professional licenses.  A plaintiff can file a negligence claim if there were personal injuries as a direct result of the construction defect.  For negotiation, mediation and litigation of claims, a knowledgeable attorney is invaluable on your path to a successful resolution.  Attorney Benjamin Shane Boutty has been representing clients in construction and business law, for over 20 years.  He is well versed in all aspects of construction defect law, as he is a state certified contractor as well as a construction law attorney, a professor and has owned several construction companies.

What Constitutes a Construction Defect?

   Construction defects can be the result of design deficiencies, workmanship issues or material defects and often, they are a combination of all the following;

  • A design deficiency is the failing of the architects and engineers to follow State of Florida building codes in the design of a project, usually occurring by error or omission. An example may be a poorly designed roof that causes leaks and mold damage.
  • Workmanship issues can be either aesthetic concerns or they can be a structural integrity problems. An aesthetic issue can usually be repaired quite easily, whereas a structural integrity problem may not be easily seen until major damage has occurred, such as cracks in the foundation of the building or unstable load bearing walls.
  • Material deficiencies are defects that arise due to damaged materials or inferior products delivered by the manufacturer or the contractor using improper building materials.  Examples can be inferior dry wall that cracks, roofing shingles that leak or faulty electrical wiring that can result in a fire.

   Patent defects in a building are ones that are obvious upon inspection. Latent defects in construction are those that are not easily seen, which are usually more damaging and problematic. In the State of Florida, the statute of limitations for patent construction defects is four years after the defect is discovered, or ten years for latent construction defects.

Be Proactive in Communication and Documentation to Minimize Liability

   To prevent and mitigate construction defect liability, it is important for those professionals in the construction industry to be proactive by having a quality control measure in place.  This requires frequent and diligent review of plans and site assessments.  Frequently inspecting the project and keeping detailed records of the construction progress is needed evidence in the event of future litigation. Home buyers are entitled to a builder’s warranty with the purchase contract which establishes the buyer’s rights and protections.

   The Boutty Law Firm, in Winter Park, Florida, represents both plaintiffs and defendants in a wide range of construction defect disputes.  Our clients are property owners, material suppliers, architects, home owner associations, general contractors, developers and construction companies. If you are the owner of a property that is claiming damages or a business owner that is being named in a lawsuit, we can negotiate or mediate your dispute for an effective solution or be your advocate in court. Call the Boutty Law Firm for a consultation to discuss your unique situation.

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Home protection against hurricane damages

How to Dispute Insurance Coverage after Hurricane Damages

Hurricane Damages and Insurance Coverage

  During the months of June through November, we are immersed in a media blitz about storms and damages.  The State of Florida, which is surrounded by the Atlantic Ocean and the Gulf of Mexico, has a coastline of 8,436 miles, all of which are at high risk during a hurricane. Even those that don’t live on the coastline suffer heavy wind and water damages.  The report of a tropical storm or a hurricane brewing brings heightened anxiety levels and there can be immeasurable emotional wreckage following the storm. The history of hurricanes, such as hurricane Irma, hurricane Michael and the recent hurricane Dorian, caused devastating damages, for which there is major economic loss that may never be recovered. 

   The standard preparation for responsible homeowners and business owners, when a storm is approaching, is to do their best to secure loose items and trim or remove weak tree branches, especially around electric lines.  Creating a home inventory and reviewing your insurance coverage is imperative, if you need to claim damages.  Taking photos of your property prior to the storm, will adequately document the condition of your possessions.  When torrential rain, high tides or wind causes significant damages to your property, the results can be devastating.  Property owners are left to deal with roof and shingle damages, broken windows, flooding, moisture damages, destroyed porches, fallen trees and destruction of boats and other property.  Homes can be completely destroyed and become inhabitable.

   Insurance policies give us a false sense of security but insurance companies have an incentive to pay out as little as possible.  Your insurance policy is a contract between the insurer and the policyholder, in exchange for premiums.  This document determines the claims which the insurer is legally required to pay.  Following an event, an insurance adjuster will write a report of his subjective assessment of the damages.  This can result in a low estimate or a denial of the claim in total.  Some reasons that an insurance company will deny a claim or they may not pay for the damages in their entirety can be; policy exclusions, a missed payment can lapse your policy, coverage limit is reached but it’s not enough to cover damages, no documentation of damages, flood insurance needs to be a separate policy and/or pre-existing damage,   

   In addition to legitimate disputes between property owners and insurance companies, there are also a large number of questionable claims that need to be investigated and oftentimes, litigated in a civil court of law. While trying to deal with the trauma of your losses, insurance companies and property owners need to be aware of unscrupulous contractors that exploit customers during the confusion of a disaster.  Be wary of Assignment of Benefits fraud, which happens when you sign a deal that gives your contractor the right to bill your insurance company directly.

   The Boutty law firm will look out for your best interest and advocate on your behalf in a breach of contract dispute. You may be the property owner that feels your insurance company is unlawfully refusing to pay or you may be the insurance company that is disputing what appears to be a fraudulent claim. Or perhaps it is necessary to file for civil litigation regarding an untrustworthy contractor.  To learn more about how we can help you during this stressful time, schedule an appointment to discuss the details of your case.

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construction defect

Hidden Defects in Buildings

            Shelter is a fundamental human need.  Construction defects can render a shelter unsafe or outright collapse it, displacing families and bankrupting businesses.  Some defects are obvious: you wouldn’t buy a house with a collapsed roof.  But others, like wooden supports inside a wall, are invisible when purchasing or renting a building.  These latent (hidden) defects typically provide a stronger and longer basis for the purchaser to claim damages from the construction company.

            Florida law sets limits on how long purchasers have to file lawsuits regarding construction defects.  For most cases, purchasers have four years after occupying the building to take legal action.  This time limit is known as the statute of limitations.  But for latent defects, the four-year statute of limitations doesn’t start ticking until the time you discover, or could have reasonably discovered, the defect.  However, a ten-year statute of repose, starting from the time of occupancy, applies to all construction defects — even latent ones.  That means a family discovering a roof leak in their seven-year-old house only has three years to file against the construction company.  Since there is a grey area regarding what’s a discoverable defect and what’s a latent defect, it is best to contact an experienced construction law firm, like The Boutty Law Firm, as soon as the defect is discovered.

            When a construction company builds a building, it usually has prospective tenants or owners sign a contract to buy the building on completion.  This contract often contains clauses that specify how responsible the construction contractor is for defects.  The Levitz Furniture Company signed such a contract with Continental Equities, a construction company.  A year after Levitz moved into the new warehouse, the roof and a supporting wall collapsed, costing Levitz well over a million dollars in damages considering repair contact costs plus profits lost while waiting for repairs.

            Understandably, Levitz was ticked off when Continental tried to charge it $1.2 million for rent during the period of repair.  Levitz sued Continental for the damages and to get rid of the rent charge.  The case hinged over the contract Levitz signed, which said “Tenant, by taking possession thereof, will be deemed to have acknowledged that the demised premises, with all appurtenances, were in good order and condition when received by Tenant, latent defects excepted. [emphasis supplied]”  Since Levitz could not have reasonably discovered the hidden construction errors that led to the building’s eventual collapse, Florida’s Third District Court of Appeal ruled in Levitz’s favor.  In some cases, the contract will contradict Florida law, requiring an experienced construction law attorney to convince the court as to which should take precedence.

Purchasers of poorly constructed buildings require well-constructed legal arguments to recover thousands or millions of dollars in damages from repair costs, displacement costs, property loss, and resulting injuries.  For more information, contact The Boutty Law Firm at (407) 537-0543.

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