The good news is that owners can reduce construction costs and risks. Following are Stark & Stark’s Top 10 tips for owners to consider:

  1. Refinance. You can cut construction costs, improve loan terms, and reduce risks by taking advantage of low interest rates, rising property values and available financing.
  2. Obtain Competing Proposals. You can save money and reduce risks by obtaining proposals and information from competing contractors and choosing the best for your job.
  3. Expedite Documents. You can save money and reduce risks by expediting the negotiating and drafting of construction contracts, lien and claim waivers, and other documents you need.
  4. Cap Costs. You can limit construction costs to a guaranteed maximum price and also require that work be approved in advance in writing.
  5. Ensure Timely Completion. You can avoid delays by including deadlines and liquidated damages if work is not timely completed.
  6. Ensure Satisfactory Completion. You can prevent problems by including protections you need, including, adequate insurance, indemnification, payment and performance bonds, and lien and claim waivers and releases.
  7. Ensure Compliance. You can avoid fines and penalties by ensuring that all contractors and subcontractors timely obtain permits and approvals and comply with laws, codes, ordinances, rules, regulations, and restrictions.
  8. Obtain Insurance. You can cut costs and reduce risks by obtaining and reviewing all insurance policies to ensure that they are up to date and you and other parties actually have adequate insurance.
  9. Avoid Ambiguity. You can prevent problems by ensuring that contracts, plans and other documents say what you mean, do not conflict, and that any ambiguity will not be interpreted against you.
  10. Include Other Protections. You can cut costs and reduce risks by including other rights you need in your jurisdiction, including rights to withhold payment, limit your liability, pursue the dispute resolution option you choose, and recover damages and legal fees.

These are just a few ways you can reduce construction costs and risks with the help of experienced counsel. Evaluating these issues requires careful review on an individual basis. The attorneys at Stark & Stark can help you address these and other issues.

For a newer community association board that has recently undergone transition from developer to unit owner control, there is significant temptation to accept a quick, lump sum settlement from the developer to “settle” any remaining punch list items. New board members are often in active and frequent communication with the developer, including any developer-appointed (non-unit owner) representatives who are still sitting on the board. In addition, developers are often willing to work with associations up to and during transition to resolve any outstanding construction issues. With a seemingly cooperative developer on the one hand, and the immense costs posed by litigation on the other, boards frequently adopt a “take what we can get” approach to resolving outstanding issues with a developer rather than digging in and using the threat of litigation to leverage a better settlement. At best, this approach will most likely result in the association leaving money on the table; at worst, it will cost unit owners tens of thousands in future special assessments.

When a developer sells 75% of the units in a condominium or home owner association development, majority control of the association board is turned over to unit owners from the developer (who, up until this point, had its own representatives controlling the board). During this process, known as Transition, a developer’s primary concern is to pave the way to selling off the remaining units, obtain releases of its performance bonds and, most importantly, get the association to sign a litigation release that will prevent the association from ever suing the developer in the future. In order to get a litigation release, the developer will often offer a seemingly large sum of money. Often, the amount the developer offers actually exceeds the cost to fix any open punch list items that have yet to be completed. This seemingly generous offer by the developer is designed to tempt the board into quickly releasing the developer from any future claims.

Continue Reading Tempted By A Quick Transition Settlement? Not So Fast!

On January 7, 2015, the Judicial Panel on Multidistrict Litigation (JPML) ordered that six putative class-action lawsuits stemming from Colorado, Illinois, Indiana, Iowa, North Carolina and Ohio will be venued and centralized in the U.S. District Court for the District of New Jersey. New Jersey was selected to handle this MDL litigation matter because the primary defendant/manufacturer of the outdoor decking material at issue, GAF Materials Corp., is headquartered in Wayne, NJ. The cases are consolidated before U.S. District Court Judge Jose Linares in Newark. The number of nationwide suits subject to the consolidation order is expected to at least double.

The claims at issue involve an outdoor decking product manufactured by GAF. One of the class representatives, Thomas McGovern, installed the subject decking at his vacation house in Mackinac Island, Michigan in 2009. The decking almost immediately began to warp and stain when exposed to the elements. The condition of the material was so bad that it had to be completely replaced two years later. The claims involve violations of applicable consumer protection laws, breach of warranty and unjust enrichment, and relate primarily to the defective product itself rather than improper installation.

GAF is represented by Quinn Emanuel in New York. Insofar as GAF has not filed a motion to dismiss any of the actions, it looks like these MDL cases are headed into full-blown litigation.