After the Storm: Issues in the Construction Process

by Buchanan Ingersoll & Rooney PC
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Buchanan Ingersoll & Rooney PC

We previously discussed several post-storm employment issues to be mindful of, but what about important considerations for the rebuilding process? Once floodwaters have receded, power has returned and cleanup has begun, the natural inclination is for people and businesses left in the path of a hurricane to get back to life as it once was. That process begins with the rebuilding of homes and places of business. It is crucial to walk through this process with eyes wide open to the pitfalls that may lie ahead.

  1. Check your Insurance Coverage
    You will want to review your insurance policy to determine the extent of your coverage and then file a claim for all damages caused by the storm. Before you can start to rebuild, you must understand how much money will be available to you. Remember that the insurance company’s estimate of your damages is oftentimes only an opening offer. Secure alternate bids to show that the actual cost of labor and materials is greater than the adjuster’s initial estimate. Those costs will inevitably rise when the demand is high.
  2. Use Due Diligence in Selecting a Contractor
    The temptation is to hire the contractor who can start the earliest and/or complete the work in the shortest amount of time. While it is only natural to want to restore your home or reopen your business’ doors as soon as possible, you must take the long view. Do you trust that this builder will deliver the best product and that you will receive the most bang for your buck?

    To that end, use online tools, such as myflorida.com, to conduct due diligence to verify that a contractor holds the necessary license(s), and whether complaints have been filed against them. Natural disasters unfortunately draw out unsavory characters as well as well-intentioned companies who cut administrative corners to secure jobs. Florida Statute §489.128 bars an unlicensed contractor from receiving payment for their work, and they are required to return any payments received for services rendered.

  3. Negotiate the Contract
    Some contractors may want to reach a “handshake agreement” with you. Insist that the terms of the contract be put in writing. You want to know the exact scope of the project, the schedule for the work, and your rights under the contract. There are literally hundreds of terms that come into play when negotiating a contract. Most contractors will have a form contract and they will expect you to sign it without modification. AIA Documents provide balanced and sufficiently detailed contracts that will protect all parties. If a contractor is unwilling to negotiate as to terms that are vital to you, you must be willing to walk away and find the right contractor for your situation. Remember, the long view trumps the quick fix.
  4. Avoid Double-Paying
    Property owners frequently make payments without receiving assurances that everyone downstream has been paid for their respective work. This may lead to one or more Claims of Lien being recorded against your property. Before releasing payment to your general contractor, insist on receiving a Partial Release of Lien for any work performed by a sub-contractor and a Final Release of Lien at the conclusion of the project that comply with Florida Statute §713.01. This will ensure that you will only pay once and have sufficient funds to complete the project.
  5. Consult with an Attorney
    Although you may have the knowledge and experience to work through the rebuilding process, there may be occasions when an attorney’s advice will help you avoid costly mistakes. An investment of just a few hours may end up saving you tens, or even hundreds, of thousands of dollars and may be the difference between your home or business being rebuilt, or stuck in limbo for months.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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