QUICK NOTE: PURCHASE-AND-SALE CONTRACTS AND THREE POINTERS

Posted on June 5, 2022June 5, 2022 by Edward Garber

When you enter into a purchase-and-sale contract for real estate, keep in mind that you can modify the contract to include terms particular to the transaction. These modifications can be important if an issue arises such as if closing does not timely occur. In a new case, discussed here, three noteworthy pointers can be found below:

Including an addendum with a drop-dead closing date can be valuable to a buyer and seller because it prevents any excuse to the closing date. For example, if the seller cannot deliver marketable title by this drop-dead date, the buyer has the option to terminate the contract. However, the addendum can include any modification or provision important to you for purposes of the transaction.
The arguments of waiver and estoppel are very difficult arguments to raise when it comes to real estate contracts. This is because: (a) the contract will provide that modifications to it must be in writing and signed by the parties, and (b) the statute of frauds requires contracts relating to real estate transactions to be in writing and signed by the party to be charged. In other words, if the objective is to modify the contract, that modification needs to be in writing and signed otherwise the statute of frauds and the contract itself can bar that argument.
A lis pendens does create a cloud on title. Thus, if you purchase a property with a lis pendens, this prevents the seller from delivering marketable title to you as the buyer. A lis pendens remains a cloud on title until the appellate time period expires as it pertains to any order to discharge the lis pendens.

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

QUICK NOTE: COVID-19 CLAIM – PROVING CAUSATION

Posted on June 21, 2020June 21, 2020 by Edward Garber

In certain jurisdictions, the number of people testing positive for COVID-19 is on the rise. As this occurs, there is the possibility that a construction project will have to deal with one or more workers testing positive. That is the current reality. If the dialogue has not occurred before, now is the time to discuss any enhanced measures—above OSHA guidelines—that could be implemented to address this reality and mitigate the risk. Part of the reality, though, is that regardless of the enhanced measures and mitigation, it is impossible to truly prevent this risk.

No one disputes COVID-19. There may be a dispute as to whether COVID-19 constitutes a force majeure event or some other event, however, before you start labeling it, you still NEED TO PROVE the impact caused by COVID-19. There needs to be a cause-and-effect relationship so you can address (i) how this impacted the critical path of your schedule and/or (ii) how this impacted labor productivity. In other words, you need to prove causation. Stating there was a delay or loss of productivity without establishing the cause-and-effect relationship (i.e, causation) provides no value because it does not support the production impact or time extension and, without either, there is no basis for additional compensation (even if you establish it should be deemed an excusable, compensable delay).

We have all read articles about how COVID-19 can impact a project. This does not mean that all or any of these issues impacted your project. If they did, and you are seeking a time extension and/or additional compensation, remember, it is your burden of proof to support the entitlement, both as to time and money. This is not an easy task and, in many situations, the impact may be very difficult to actually prove. But again, stating you have a COVID-19 impact without truly demonstrating causation will be, and should be, a claim that is denied. If you need assistance putting together or evaluating a COVID-19 claim, make sure you work with experienced counsel and consultants to best package and present the claim.

QUICK NOTE: “EFFECTIVE” NOTICE OF COMMENCEMENT

Posted on August 5, 2019August 5, 2019 by Edward Garber

As a contractor (or subcontractor or supplier if an unconditional payment bond is not furnished by the contractor) you always want to make sure (1) there is a notice of commencement that was recorded for the job and (2) you are working under an EFFECTIVE notice of commencement or amended notice of commencement. An effective notice of commencement is a notice of commencement (or amended notice of commencement that amends an original notice of commencement prior to its expiration) that has not expired and allows your lien to relate back to the date the notice of commencement was originally recorded.

In the event you are not paid, you will want to record a construction lien to secure your nonpayment against the property and you will want your lien to relate back in time to the original notice of commencement. When it comes to liens, a lien is typically only as good as the equity in the property oftentimes dictated by the priority of the lien. (For example, if the property is worth $1 Million, but there is a $1.1 Million mortgage on the property, there is no equity in the property because the mortgage would have priority over the construction lien.)

As an owner, there may be times you want to terminate an EFFECTIVE notice of commencement. Maybe the job is completed and the notice of commencement is still in effect and you want to cut off lien priority rights. Maybe you want to convert your construction loan into a permanent loan. Maybe you want to re-finance. Maybe you want to secure a construction loan after construction commenced. Any one of these factors will support recording a notice of termination of the notice of commencement. When you borrow money from a lender, a lender will typically want their mortgage to be first priority. This means the mortgage cannot be recorded after an effective notice of commencement otherwise potential liens can take priority over the mortgage. No lender will want this to occur.

It is always advisable to work with counsel when it comes to notices commencement, amended notices of commencement, notices of termination of a notice of commencement, and, of course, construction liens.

QUICK NOTE: PERFECTING & PRESERVING CONSTRUCTION LIEN & PAYMENT BOND RIGHTS

Posted on June 20, 2016June 20, 2016 by Edward Garber

You are a subcontractor, sub-subcontractor, or supplier on a construction project. What steps can you take to maximize your ability to collect payment?

Read this chart to understand what steps you need to undertake to preserve and perfect construction lien or payment bond rights. This chart will assist you with what notices you may need to serve to preserve your lien or payment bond rights and the timing to do so.
Read this article that has tidbits to maximize payment on a private construction project. This article will be beneficial for any subcontractor, sub-subcontractor, or supplier that performs work on a private construction project.
Take a look at the below presentation. This is a presentation I put on with a notice company that summarizes steps you can implement to preserve your rights and increase your chances to timely collect payment.
Please consult a construction attorney so that you can be proactive and not necessarily reactive when it comes to perfecting and preserving your rights.

[gview file=”https://floridaconstru.wpengine.com/wp-content/uploads/2016/06/FL-Mechanics-Liens-Roofers-DMA.pptx”]

QUICK NOTE: FILING THE “SHOW CAUSE” COMPLAINT REGARDING A CONSTRUCTION LIEN

Posted on May 11, 2016May 11, 2016 by Edward Garber

I have talked about your options when there is a construction lien on your property. One option discussed is the “show cause” complaint pursuant to Florida Statute s. 713.21(4) where you sue the construction lienor giving them 20 days to show cause why its lien should not be enforced or vacated and cancelled. If the lienor fails to show cause within the 20 days by filing its construction lien foreclosure lawsuit within this time frame, the court must order cancellation of the lien. See Ruffolo v. Parish & Bowman, Inc., 966 So.2d 434, 436 (Fla. 1st DCA 2007) (“When a property owner invokes section 713.21(4), a lienor must strictly comply with section 713.21(4) in order to preserve its lien, and a trial court is without discretion to deviate from the statutorily specified time limits.”); Dracon Const. Inc. v. Facility Const. Management, Inc., 828 So.2d 1069 (Fla. 4th DCA 2002) (filing a motion for an extension of time to assert lien foreclosure lawsuit is not good cause warranting the court’s cancellation of the subcontractor’s lien.)

QUICK NOTE: PERFECT PRIVATE PROJECT PAYMENT BOND RIGHTS IF NOT IN PRIVITY WITH GENERAL CONTRACTOR

Posted on April 13, 2016April 13, 2016 by Edward Garber

Remember, if you are not in privity of contract with the general contractor on a private project where the general contractor furnished the owner with a payment bond (e.g., sub-subcontractor or supplier), you NEED to perfect your payment bond rights by initially serving a notice of intent to look to the bond on the general contractor. (Or, serve a notice to owner but make sure you serve a copy on the general contractor). Not serving the general contractor with this initial notice can deprive you of payment bond rights. How do you know if there is a payment bond in place? Pull up the notice of commencement recorded in the official records where the property is located which should identify if there is a payment bond and will attach a copy of the payment bond.

For more information on payment bond rights, check out this chart.

QUICK NOTE: LIABILITY INSURER’S BAD-FAITH BASED ON TOTALITY OF THE CIRCUMSTANCES

Posted on April 3, 2016April 3, 2016 by Edward Garber

Generally, whether a liability insurer engaged in bad-faith is a question of fact to be determined based on the totality of factual circumstances. In other words, there is more to it then the insured being exposed to a verdict / judgment in excess of the insured’s liability policy’s limits since it is based on a totality of circumstances and reasonablness standard. As explained by the Eleventh Circuit quoting the Florida Supreme Court: “The insurer must investigate the facts, give fair consideration to a settlement offer that is not unreasonable under the facts, and settle, if possible, where a reasonably prudent person, faced with the prospect of paying the total recovery, would do so.” Moore v. Geico Ins. Co., 2016 WL 736824, *2 (11th Cir. 2016) quoting Berges v. Infinity Ins. Co., 896 So.2d 665, 668-69 (Fla. 2004). For more on a general understanding of bad-faith claims in Florida, check out this article.

QUICK NOTE: CGL INSURER LIABLE FOR ATTORNEY’S FEES IF IT UNJUSTIFIABLY REFUSED TO PROVIDE YOU DEFENSE

Posted on March 20, 2016March 20, 2016 by Edward Garber

If your CGL (or liability) insurer unjustifiably refuses to provide you a defense in a lawsuit, the insurer is liable for the reasonable attorney’s fees and costs you incur in defending that lawsuit. The operative word is “unjustifiably.” For instance, if you get sued and your CGL insurer refuses to provide you a defense and you retain private counsel to defend you, the CGL insurer will be liable for your attorney’s fees and costs if it should have provided you a duty defend in connection with that suit. Of course, on the other hand, if the CGL insurer justifiably refused to defend you (based on the allegations in the lawsuit / claim and coverage under the policy) then it will not be liable for your reasonable attorney’s fees and costs.

QUICK NOTE: SUIT AGAINST MILLER ACT PAYMENT BOND MAY NOT BE BROUGHT UNTIL 90 DAYS AFTER FINAL FURNISHING

Posted on March 18, 2016March 18, 2016 by Edward Garber

If you have a claim against a Miller act payment bond, a lawsuit cannot be brought until 90 days after your final furnishing date. This is set forth in 40 USC s. 3133(b)(1) that provides if you “have not been paid in full within 90 days after the day on which…[you]…performed the last of the labor or furnished or supplied the material for which the claim is made [you] may bring a civil action on the payment bond.” In other words, your claim is ripe 90 days after your final furnishing date. With that said, even if you prematurely filed suit before this 90-day period, there is authority that the lawsuit should not be dismissed, but rather, you can cure this by filing a supplemental pleading (relating back to the original pleading). Otherwise, if the lawsuit was dismissed, you could potentially be facing a statute of limitations argument barring your right to seek a Miller Act payment bond claim.

QUICK NOTE: DON’T NEGLECT CONDITIONS PRECEDENT TO PAYMENT IN YOUR CONTRACT

Posted on February 29, 2016February 29, 2016 by Edward Garber

There is a good chance your contract contains conditions precedent to payment. Such conditions precedent to payment include waivers and releases of lien (and, perhaps, claims) and contractually required warranties. Make sure to comply with conditions precedent to payment!

In a case where a subcontractor sued a payment bond surety, the court held the subcontractor’s lawsuit was premature because the subcontractor did not comply with a condition precedent to payment, that being the submission of a release in satisfactory form. Until such condition precedent was satisfied, payment was not due and owing the subcontractor.