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Residential Construction

Residential Construction

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If you are a building contractor, homeowner, subcontractor or lender, you know that disputes can arise at any stage of the construction process, from commitments at a project’s start to fundamental disputes over performance after its completion.  Construction litigation is often high risk with significant amounts of money at stake, as well as the personal and professional representations of the parties. Moreover, even went you aren’t involved in litigation, an experienced real estate attorney can help guide you through the process of obtaining the proper licensing and permits or filing mechanic’s liens for non-payment.  I have experience working with homeowners and contractors of all sizes, from large national general contractors such as Lumber Liquidators to local one-man handyman services.

In both Kansas and Missouri, new home construction is governed by a unique set of laws and there are specific requirements regarding the notice that needs to be provided to builders prior to filing a law suit. A real estate attorney with experience addressing such issues will be able to guide you through this process and help you to recover the costs needed to address the construction defects.

How much money will a homeowner be entitled to for construction defects?

There are several ways to measure damages in a construction defects case, including the actual costs of repairs, the diminution of value in the home due to the defects, and/or the value of any incidental costs you incurred due to the defects. Depending on the terms of the contract with the builder, the homeowner may also be able to recover attorney’s fees and court costs. However, since this is a contract dispute, the homeowner will likely not be able to receive an award for punitive damages. As there are many factors that could affect the ultimate decision of the court on damages, the best method for determining the potential value of thr case is to schedule a consultation with an experienced real estate attorney who can .

How long does a construction defect case take?

Cases involving substandard construction can be time-consuming and expensive. Both partieimages will need to retain experts to testify to the quality of the work and the potential damages. Moreover, the parties may wish to conduct depositions (or interviews) with each of the parties involved to determine the exact terms of the contract and quality of the work. For these reasons, it is important to fully discuss your situation and to consider the relative costs of litigation and repairing the defects. If the issues with the home can be cured with $2,000 in repairs, it probably makes sense to avoid a lawsuit. However, if the damages are significant, litigation can be a critical option.

What if there are different issues with the construction?

In addition to defects, there are many other disputes that could arise between a builder and homeowner. For example, the work may not be performed on-time or the builder could fail to deliver something that was a part of the contract (e.g., the contract specifies granite countertops, but the contract installs laminate counters). In these instances, homeowners may wish to pursue litigation to receive compensation for the diminuation of value or lost use of the home during the time the construction was being completed.

How can a contractor make sure he or she gets paid by the homeowner?

The best way to ensure prompt payment is to request payment for materials upfront and regular timely payments for services.  If the customer falls behind on payments, stop the work until they have made payments.  Don’t let yourself get too far ahead on work that the customer has not paid for.  If you do have a customer that does not pay, you can file a mechanic’s lien statement against the property.  These statements can be filed by both general and subcontractors, but there are specific notice provisions that must be followed to ensure the lien is enforceable.  If the lien filing alone does not motivate payment, you have the option of filing an action to foreclosure on the lien.  Theoretically, if you foreclose on a mechanic’s lien, the property will be sold at auction to pay the contractor.  I included the word theoretically because it is rare that a mechanic’s lien action is taken this far as usually an agreement can be reached with the homeowner for payment before having to sell the home on the court steps.

What should be included in a construction or home improvement contract?

Let’s begin by stating what should not be in your contracts.  That is an agreement that the customer will waive claims for the contractor’s negligence or wrongdoing as both Kansas and Missouri prohibit such waivers.  Moreover, in Missouri, your entire contract may be considered void if it contains these waivers.  What should be included in the contract is the details about the job including the projected start and completion dates, the work to be performed and the full payment schedule.  Also, it is to the contractor’s benefit to keep accurate records of all work performed, any changes requested by the consumer and any modifications from the initial contract.  If the homeowner later sues claiming you performed the work poorly, this documentation can help you to defendant against these claims.

How much does real estate litigation cost?

The costs of litigation can very greatly depending on the attorney you hire, the value of the dispute and what actions the opposing party takes during the case that may require more work on the part of the attorney.  Most litigation attorneys charge either a large percentage of what you recover or an hourly billing rate that can be unpredictable as certain months will require significantly more work than others.  We understand that litigation is often an unbudgeted expense and it can be difficult when you receive a large bill for months that included extensive depositions or time-consuming work on the part of the attorney.  Therefore, beginning in 2017, we have started billing clients based upon a flat-rate litigation model that is comprised of an initial payment that is generally between $500 t0 $3,000 and then monthly payments that range from $250 – $1,000 throughout the course of the litigation.  Moreover, if the case is not resolved within the time frames set forth in the initial retainer agreement due to court schedules or other factors beyond your control, the monthly payment will be cut in half for the remainder of the litigation.

Our goals with implementing this flat-rate billing structure is to provide our clients with predictable monthly expenses and to align the firm’s goals with those of our clients as the flat rate billing structure encourages us to be more efficient when providing legal services.  The flat rate also allows you to feel free to call or email the firm with quick questions or for status updates on your case without worrying about the bill you receive at the end of the month.  Finally, by breaking the fee into monthly payments instead of requiring payment in full up front, you do not end up overpaying when the case is settled prior to trial.

 

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