Construction Law Archives

Understanding Construction Liens: A Comprehensive Guide

What is a Construction Lien?

A construction lien, also known as a mechanic’s lien or materialman’s lien, is a legal claim placed on a property by a party who has provided labor, materials, or services for a construction project but has not received full payment for their contributions. This legal tool allows contractors, subcontractors, suppliers, and other parties involved in the construction process to secure their financial interests and ensure they receive payment for their work.

Purpose and Significance of Construction Liens:

Construction liens serve several crucial purposes in the construction industry:

1. Payment Protection: Construction liens provide a mechanism for parties to secure payment for their work, materials, or services. They prevent non-payment issues by giving claimants a legal right to the property’s value.

2. Encourage Payment: The existence of a construction lien encourages property owners and general contractors to ensure timely and proper payment to all parties involved, preventing disputes and legal action.

3. Priority in Payment: In case of financial distress or bankruptcy, construction liens may have priority over other types of creditors, ensuring that contractors and suppliers are more likely to receive payment.

4. Legal Recourse: If payment issues arise, the party holding the lien can take legal action to enforce the lien and potentially force the sale of the property to satisfy the outstanding debt.

5. Project Completion: Construction liens help maintain a level of financial security for contractors and suppliers, facilitating project completion by ensuring a consistent flow of funds.

Navigating Construction Liens:

Understanding the process of construction liens involves several steps:

1. Preliminary Notice: Some jurisdictions require parties to provide preliminary notice to the property owner, notifying them of their involvement in the project. This step is essential for preserving lien rights.

2. Filing the Lien: If payment issues arise, the party owed money can file a construction lien against the property. The lien typically includes details of the debt, description of work or materials provided, and other relevant information.

3. Notice of Intent: In some cases, a "Notice of Intent to Lien" is filed before the actual lien, giving parties a last chance to settle the payment dispute before legal action is taken.

4. Enforcing the Lien: If payment is not resolved, the party holding the lien can initiate legal proceedings to enforce the lien. This may involve filing a lawsuit to have the property sold to satisfy the debt.

Construction LawAugust 19, 20230 comments

by Admin

How is a Commercial Real Estate Building Classified?

In the United States of America, commercial real estate buildings are categorized into different groups. Generally, commercial real estate buildings are categorized by age, amenities, aesthetics, and general infrastructure. Usually, these classes help commercial real estate brokers prepare market data and justify the cost of leases and rents.

So, how is a commercial real estate building classified? There are three main classes of commercial real estate buildings. They are Class A, Class B, and Class C. However, these classifications are subjective. This is because the real estate quality in one place is never the same as that in another place. A Class B building in a large, urban market might be a Class A building in a mid-size city.

The following is more on these three classes of commercial real estate buildings.

Class A Commercial Real Estate Buildings
Commercial real estate buildings that fall under this class are usually new in the area. Class A commercial real estate buildings are those that have state-of-the-art facilities.

A Class A commercial real estate building will usually be in a great location and have high-quality construction, the best security and communication systems, and top-notch management. These buildings have a high visual appeal and ample parking space.

Additionally, the spaces inside a commercial real estate building that falls into Class A will usually have high ceilings.

Because of all these qualities, Class A commercial real estate buildings occupy the highest-price range in the area.

Class B Commercial Real Estate Buildings
These are older than buildings under the Class A category. Usually, a Class B commercial real estate building is a building that is between 10 and 20 years old. Buildings in this category typically do not have the same architectural details and high-quality fixtures as the buildings that fall into Class A. However, these buildings generally have nice structures with functional facilities. Class B commercial real estate buildings have fair to good visual appeal, decent quality management, a fair amount of parking space, and are somewhat well located.

If a Class B commercial real estate building is well renovated and attended to, it can recover its original splendor and almost look like a Class A building.

Class C Commercial Real Estate Buildings
Class C buildings are the oldest, generally over 20 years old. These buildings are the poorest in quality and tend to be located in the least desirable places. Class C commercial real estate buildings have little to no parking space and outdated infrastructure and technology. Usually, these buildings are occupied by new companies that lack sufficient funding and small family-run businesses. Because these buildings occupy the lowest price point in the area, they usually offer below-market rents.

Indeed, it is possible to renovate a Class C commercial real estate building to become a Class B building. However, it is quite unlikely that a Class C building can be renovated to become a Class A building.

If you are looking to build a commercial property, talk with an experienced real estate attorney to help you figure out what goes into the potential classification of the property and how best to proceed. A lawyer specializing in commercial real estate law can guide you through the varying processes for the different property types and provide you with the knowledge you need to make a well-informed decision about how best to approach your construction process.

Construction LawMay 28, 20220 comments

by Admin

Three Ways a Lawyer Can Help You With Construction Law Services

Construction lawyers help a variety of clients. Any individual or entity involved in the construction process may need a construction lawyer at some point. Usually, whether or not you need a construction lawyer will depend entirely on the specific factual circumstances. With that said, overall, a construction lawyer is someone you will want to turn to for any issue that may arise during your construction project. Construction lawyers understand the rules and regulations that govern the design, planning, and construction of buildings and other structures. The following are three ways a construction lawyer can help you with construction law services.

Drafting and Negotiating Contracts
If you are writing a contract, it is best that you allow a construction lawyer to help you. For instance, if you are a business owner entering into a contract with a contractor, you should work with a construction lawyer. A construction lawyer can help you create a contract that;

Is lawfully binding
Details insurance details
Takes into account proper notice requirements
Takes into account site conditions
Takes into account delays and other unforeseen circumstances
Includes reasonable expectations

Reviewing a Contract
After writing a construction contract, it is wise to have it reviewed by a skilled construction lawyer. A construction lawyer can help you assess the strengths and weaknesses of an agreement and identify problematic clauses that cause you to carry unnecessary liability or risk. A lawyer can also help you negotiate a more favorable agreement. In summary, construction lawyers are experts at deciphering contracts and can help individuals and companies avoid potential pitfalls.

Protecting Payments
Payment issues are quite common with construction projects. Indeed, not all construction payment issues will require the intervention of a lawyer. For example, there are mechanics liens statutes that can be leveraged without the help of a lawyer. In fact, a claimant can even make a lien claim without the use of a lawyer. However, when it comes to enforcing such a claim, a construction lawyer will almost always be necessary. It is always good to have a skilled construction lawyer by your side when proceeding with an enforcement action. A construction lawyer can ensure that you get the full payment promised.

On the other hand, a construction lawyer can defend you if you have had a claim for payment brought against you.

How Much Does a Construction Lawyer Cost?
Different construction lawyers have different methods of billing. Therefore, what one lawyer charges is not what another lawyer charges. Also, the amount you pay a construction lawyer is dependent on the specifics of your case. Usually, the more complex a matter is, the more money involved. However, the losing side pays the winning side’s attorney fees in most construction cases.

What to Expect When Working With a Construction Lawyer
If, for example, you need a lawyer to help you with a claim or lawsuit, the result will depend on the matter at hand. However, even though there are no guarantees that hiring a construction lawyer will translate to you winning your case, having a lawyer by your side means you get to work with someone with expert knowledge of construction laws.

Here at Stryker Slev, we can help you draft or review a construction contract. We can also help you deal with payment issues, including mechanic liens. Contact us here or call us at 866-531-5705.

Construction LawApril 26, 20220 comments

by Admin

Five Essential Things You Should Know About Commercial Real Estate Law in California

If you think you know everything there is to know about commercial real estate law, you should know that commercial real estate law is not an easy thing to understand. There are different federal laws and state laws to understand. For example, you might think knowing about property law is enough, but the reality is that you need to know other things, such as contract laws and insurance laws. It is always best to speak to a qualified attorney, so you do not find yourself on the wrong side of the law. Below are five essential things you should know regarding commercial real estate law in California.

Disclosure Laws
As a commercial real estate seller, there are several disclosure laws you need to know about. In simple words, disclosure laws deal with the location, conditions, and restrictions placed on a property. In general, these laws exist so that buyers understand what they are getting into. If, as a seller, you fail to make a disclosure to a buyer, the buyer has a right to take legal action.

In California, real estate disclosures for commercial property include;

Whether it is advisable for a buyer to seek title insurance
The presence of toxic substances, such as asbestos and radioactive materials
Whether the property is at any risk of flooding or earthquake damage
The condition of utility systems and other structures on the property

Zoning and Land Use Laws
In addition to determining taxation, state laws determine how commercial property can be used. Sometimes, state laws even dictate which kind of retail operations can take place. For example, as a commercial real estate property owner, you need to understand zoning and land use laws to avoid renting a property to a business only for you to find out that the business cannot operate there without getting the property rezoned.

Landlord/Tenant Laws
California landlord/tenant laws are designed to protect the rights of both parties in any leasing or rental agreement. These laws are a crafted definition of the relationship between the property owner and the person or entity habituating the space. Often,

clauses in these laws govern things like;

Taxation
Duration of tenancy
Payment of rental fees
Rights to termination of tenancy

As a commercial property owner in California, you need to understand landlord/tenant laws to avoid violating your tenant’s rights. You also need to know about these laws in case your tenants violate your rights.

Contract Laws
Binding agreements in commercial real estate include lease and rental agreements. One of the crucial things you need to know about such documents is that they need to be specifically structured and contain rigid wording to ensure they can stand up to any challenge.

Insurance Laws
You will need your investment covered as a commercial real estate owner, meaning you will need insurance. Therefore, it is crucial for you to contact a qualified attorney to answer your questions on commercial insurance law.

It would be best if you avoided trying to understand commercial real estate laws on your own. These laws are far too complex to understand without the help of a professional. To avoid legal loopholes, you should speak to an attorney. Here at Stryker Slev, we can help you understand all there is to know about commercial real estate laws in California. Contact us today to schedule a consultation.

Construction LawApril 26, 20220 comments

by Admin

No Damage for Delay Clause – Include it in Your Construction Contract

It’s a must in today’s construction and building environment. A No Damage For Delay clause (NDFD) is an important protection for you as a builder, developer, or construction company. Here’s a useful backgrounder on exactly what an NDFD is, and how having one, or lacking one, can impact your important project.

Your lawyer should be thoroughly searching for ways to minimize risk to you and your company. A well-written contract will be your best protection, in the event of some unexpected occurrence during the execution of the work. An NFFD is an excellent inclusion in just about any construction contract.

What a No Damage For Delay Clause Does
An NDFD clause makes it very difficult — though not impossible — for contractors to submit claims for delays they encounter while on your project. You’re probably well acquainted with project delays — they can occur on either side of the fence — yours or your contractor’s. No matter what the source of delay, having the NDFD in place will protect you — the risk is turned over to the contractor and whatever subcontractors they may employ.

Wording of an NDFD Clause is Important
The language of your NDFD clause will determine its effectiveness should the need arise:

Specificity – the NDFD has to outline specific delay types – if a case goes to court, the wording of your NDFD will be examined closely.

The type of damage – time, money or both will be considered before any ruling on the matter in court.

It’s important to note that delays not anticipated by either the owner or the contractor are not covered by an NDFD.

How NDFDs are Judged in Court
Generally, including an NDFD is a move in your favor, should a dispute arise over construction delays. It’s not the whole story, however. There are instances where NDFD clauses do not apply and therefore do not offer protection — they have limits and these have been tested in California courts.

Make sure any work you plan to execute has contracts that offer you the maximum amount of protection. If you have any specific questions regarding a No Damage For Delay clause in your documents, contact us. We’d be happy to help.

Construction LawApril 14, 20220 comments

by Admin

How to Settle a Dispute with a Contractor

As a construction business owner or developer, you rely on your contractors and trades to get projects complete. Everything can grind to a halt, should a dispute arise. There is no question – it happens all too often, between builders/developers, and contractors hired to do work for them.

Let’s take a look at how disputes like these arise, what can be done to avoid them, and what you can do, should you find yourself in a dispute with a contractor.

Avoiding Contractor Disputes

The best first step for any construction company owner, or land developer, is preventive – do everything you can upfront to minimize the potential for disputes. This is best achieved by being really, really clear on what the expectations are. All contracts, documents, and specifications should leave nothing open to interpretation. Having the exact deal, in words, is the best way to eliminate the chance of something going awry during the course of a project.

Knowledge of the law is also important at this stage. Having all your legal obligations and expectations covered in all contracts and paperwork is the best way to avoid trouble down the road.

How Disputes with Contractors Arise

There are a number of reasons why contractors will challenge you or worse, renege on a deal. In many instances, it’s related to what we just mentioned above – ambiguity in the contract, or a misinterpretation of the specs.

Your choice of contractor can also become a problem, ask any business owner who has dealt with a bad one. Issues can include:

Lack competence
Lack of integrity
Lack of honesty
Labour shortages

Any one of these, as well as other issues, can have a direct impact on how your project goes. Evaluate all prospective contractors thoroughly.

Settling a Dispute with a Contractor
There are several approaches you can take to settle the problem you are experiencing with a contractor.

The first thing is to go back to the contract and check to see all your expectations are in writing. If they aren’t (or if something is ambiguous) you may have difficulty.

You can threaten to withhold payment. Hopefully your contract gives you some leverage, within, for example, the payment schedule. There may also be an arbitration clause within the contract, should a dispute arise.

As a last resort, depending on the size and dollar amount of the issue, you can pursue your claim through small claims court.

When all the simplest options seem ineffective, your next step is to engage legal counsel.

Here at Stryker Slev, we can help you draft an initial contractor agreement that will cover your business should any problems arise, resolve construction defect disputes if they do come along, address delay claims, deal with mechanics liens, or go after vendors who haven’t fulfilled their obligations. Contact us here or give us a call at 866-531-5705

Construction LawApril 5, 20220 comments

by Admin

Getting into the Construction Business – Know the Risks

You may be visionary, talented and skilled. You may know what makes buildings stand solid and have an understanding of contracts and contractors. You may be an excellent negotiator and planner. But getting into the construction business brings with it one risk you need to be clear-eyed about from the very outset.

Professional Liability Risk
As you start out, you’ll likely learn how difficult it is to get the business afloat. Finding the right partners, the right market niche, the right designs and specifications, keeping ahead of the competition — all of these need entrepreneurial skill and vision. It takes a special kind of tenacity to jump through all these hoops, and start to get projects.

Professional liability once the work starts coming, however, takes your business, potentially, into even more choppy waters. The risk of liability can sink the whole ship.

Getting the Contract Wording Right to Manage Risk
One of your best possible risk mitigation tools is the content of any written contract you put your signature to. Its wording can ensure your exposure is minimized, specifically by ensuring any liability is distributed equitably among the other stakeholders — general contractor, sub-contractors, suppliers, design professionals, and even the building owner — should issues arise on a project.

In-depth knowledge and understanding of insurance coverage, especially, can minimize your risk, so that you are never in a position where liabilities on a project become difficult, or even impossible to insure. The worst-case scenario is when you, the contractor, become the de facto “insurer”, because of the way liabilities were distributed within a contract.

Qualified Legal Counsel Can Help With Your Professional Liability Risk
The best way to avoid a really bad situation, and minimize your professional liability risk, is to seek out a qualified construction law firm, right out of the gate. Here at Stryker Slev, we’ll use our deep understanding of contract law and complex insurance programs to ensure the proper wording and clauses are included in any agreement. You and your company will be protected. Contact us to schedule a consultation.

Construction LawMarch 26, 20220 comments

by Admin

The Importance of Land Surveys

A land survey is an essential piece of documentation for anyone intending to buy or develop a piece of land. There is no way around it. Any land developer or land purchaser should have a current survey of any piece of land they own or are considering buying. Let’s delve a little further into the importance of land surveys.

What a Land Survey Should Contain at a Minimum

A land survey is a detailed description of any piece of property. It is a requirement for:

Obtaining the title
Land development purposes

At a minimum, a land survey must include:

The measurements indicating the property boundaries
Details of any features on the property – this might include:
- Buildings
- Driveways
- Fences
- Trees, stumps
- Encroachments of any kind
- Legal appurtenances, such as
  - Easements
  - Adverse possession
  - Rights of way

The surveyor, as part of their work, also evaluates local regulations which may apply to the property in question, zoning, the presence of wetlands, and the placement of corner markers for future reference or evaluation.

You can see how valuable and necessary a proper survey becomes when evaluating a property. Here are definitions of some of the terms we’ve just mentioned:

Encroachment – this term refers to the building on or use of the land adjacent to one’s own property. The survey will help determine if any encroachments are present on the land you are looking at purchasing, for example. It’s actually a type of trespassing, and a proper survey will confirm whether or not an encroachment exists.

Adverse possession – this is the term given to a property that has been taken over by someone other than the rightful owner, without any payment or permission. You want to stay away from, or at the very least, be very aware of situations like this; the survey will help identify if any exist.

Easement – allows for someone to enter onto a piece of real estate, which they don’t own, for a specific purpose. A very common use of easements is for municipalities to gain access to infrastructure, such as telephone poles, etc.

Right-of-way – this is actually a type of easement. A right-of-way allows for travel across a property, to get from one location to another. Different types of right of way include:

Public easement
Private easement
Easement by necessity

It’s good to know if any of these exist on a property you are considering – a survey will identify them and the exact details about them.

Land Surveys Will Tell You a Lot About a Property

It’s more than just about the boundaries and edges of a property – although it is in your best interest to have that information verified via a land survey. In addition, a survey will detail the property’s topography, which becomes vital if you intend on building on it.

You will need a land survey if you are looking at a project that requires a planning permit. It will be used by whatever regulating agency is involved in evaluating zoning requirements, the intended land use, and other planning documents.

We’d be happy to discuss any questions you may have regarding land surveys. Contact our team today.

Construction LawFebruary 24, 20220 comments

by Admin

Easement, License, Variance, Permit – What the Terms Mean

Dealing in land has its own lexicon of terminologies and definitions and they can be confusing. It’s important to have a clear and accurate understanding of what all the different terms mean, and how they are used. Let’s have a look at four of the most common terms in land use dealings: Easement, License, Variance, and Permit.

Easement
An easement is, in its simplest terms, a right to cross or otherwise use someone else’s land, for a specific purpose. One of the most common examples is a walkway or path which is actually located on someone’s property. The easement allows for use of the land for pedestrian use. It’s known as a nonpossessory interest in the land of the owner. Easement rights are permanent; they go with the land, regardless of its ownership changing hands.

License
A license, as it pertains to land use, is an agreement that allows a party to use the licensor’s land for a specific use. In no way does it infer that the land is assigned, or that the land use is permanent, or that it can be bequeathed to an heir or given to some third party. A simple example is a licensor granting parking on their property to a licensee holding some event on an adjacent property. The license is issued for that event only – it is not permanent.

Variance
A variance is an exception made to a local zoning law. There are different types of variances including:

Area variance – a request to change not how the property is to be used, but rather some physical aspect of it. A very common example is requesting a variance to put up a fence over a stretch of land.

Use variance – here, you are looking to actually change the use of the land. Very frequently, investors or developers will request use variances, for example, to build a multi-story structure on land zoned for single-story structures only.

Permit
A land use permit, as the word implies, is official permission from the municipality to use or develop a piece of land. Common types include:

Zoning Certificate
Administrative Use Permit
Use Permit after Public Hearing

We hope this brief overview gives you a better understanding of the different ways land can be used. If you need help figuring out what legal avenues to pursue for your building project or resolving land use issues, contact us with your specific inquiries! Our experience throughout California’s business and real estate industries puts our firm in a strong position when representing your interests.

Construction LawJanuary 7, 20220 comments

by Admin

5 Things that You Should Include in Your Contract with a General Contractor

The best way to get the job done right when it comes to working with a General Contractor (GC), is to have every part of the deal visible and out in the open. Following is a list of important items you should include in your contract with a GC.

Clear Description of the Scope of Work
The more detail, the better. The scope of work is critical to any specification. It should outline what the exact expectation for the work is. If you want a specific type of wood trim, put it right in the scope of work. A specific brand of lighting — name it in the scope of work. Anything less, and you’re leaving it up to the GC to decide for you.

Payment Schedule
You should include the payment schedule for the job right in the contract with your GC. This could include an upfront deposit, progress payments throughout the work, a holdback pending a final inspection/approval of the work, and the final payment due date — i.e. number of days after completion of the work. Don’t leave to chance anything to do with payments.

How Change Orders are to be Addressed
The best scope of work and specification leaves no opportunity for change orders to arise. In the real world, however, unforeseen circumstances sometimes reveal the need for some change to the work, often at additional cost to you. Your contract should specify how change orders are to be handled — including notification, additional charges, and anything else pertaining to a change in the scope of work.

Protect Yourself from Liens
There are various ways to avoid a GC putting a lien on your house. You can, for example:

Ask for proof all subcontractors have been paid before making your final payment to the GC
Ask for a Relief of Lien and Affidavit before making your final payment
Make sure your written contract includes all provisions for payments to the GC and subcontractors

Your GC’s Specific General Liability Insurance Policy
Avoid any issues down the road by insisting your contractor’s insurance information is right in the contract, current, and valid. Don’t just take their word for it.

If you’re negotiating contracts with a General Contractor, you should get legal assistance while crafting the agreement. At Stryker Slev Law Group, our lawyers have an in-depth understanding of all facets and phases of construction, from contract negotiation to close-out. With experience on almost every type of project, we provide counsel and guidance designed to advance the interests of your business while protecting them in the event a dispute arises. Schedule a consultation today!

Construction LawDecember 28, 20210 comments