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Paradoxes

For the past six months or so, I've been using ConsensusDOCS agreement forms wherever I can reasonably do so ---- meaning that I'm using them for projects on which there is not an owner or architect who insists on using AIA documents. I usually represent owners, have used many AIA standard form agreements over the years (with modifications) and continue to use them.



But where there is not a vested interest in staying with AIA forms, I have tried to use ConsensusDOCS, because my twenty-plus years of experience as a construction lawyer has demonstrated that the premise on which they are based is valid --- a collaborative rather than an adversarial relationship among project participants will, without fail, result in more successful projects.



It is distressing, then, to say the least, to read in a recent Engineering News Record (June 29, 2009) that slow pay has now become a huge issue for contractors and subcontractors throughout the construction sector and in all parts of the country. Pay cycles for contractors have stretched from the customary 30 days, to 45 or 60 days. For subcontractors, pay cycles of 90 days are common. In addition, contractors and subs report that retainages are being held beyond any reasonable time frames, and change orders for indisputably changed work are more frequently being withheld by owners.



It is truly paradoxical that while the ConsensusDOCS are being endorsed by many and varied industry participants (including owners, contractors and subcontractors), the reality is that the economic straits in which we exist make it all but impossible to forge the collaborative relationship the documents contemplate and on which they are based. (This entry published by Karen Estelle Carey, a construction attorney and member of Womble Carlyle's construction group.)

ConsensusDOCS for Public Contracts? Yes, In South Dakota

It will be interesting to see how quickly South Dakota begins using ConsensusDOCS for public contracts after the February 2009 legislation permitting the use of the "ConsensusDOCS 200 Standard Agreement and General Conditions Between Owner and Contractor." It seems safe to assume that the South Dakota chapter of the AGC will be working hard to encourage the use of this contract form, and indeed, it probably is in use now for some public projects.




Several press releases covering passage of the law permitting the use of ConsensusDOCS 200 hailed the law as revolutionary in showing other states how to have a better and more efficient contracting process (for one such release, click here). This could be true, if the ConsensusDOCS 200 is used pretty much "as is". However, H B 1212, the law that gives permission for the use of the form, also provides that any public corporation can modify or delete any portion of it. As with most other things like this, the devil will be in the details of what changes a given public corporation makes to the form. (Post published by Karen Estelle Carey).








How do you measure damages when a construction blunder saves an owner $200 million?

A recent story out of Las Vegas, covered in the NY Times, poses an interesting question for construction and real estate lawyers ---- what would be the measure of damages for defective construction, the result of which is estimated to save the owner at least $200 million?

The Harmon hotel tower, part of MGM Mirage's acclaimed $9 billion development called the CityCenter, had been designed as a 48-story tower, the upper 20 floors to be luxury condominiums. But recently it was discovered that the rebar installed in the concrete beams in the first 15 stories already constructed had been positioned incorrectly, and could not safely support a 48-story tower. Correcting the problem would involve extensive and very expensive demolition and rebuilding.

So MGM Mirage made the decision to top out the building at 28 stories, and not build out the 200 condo units planned for the upper stories --- resulting in a savings estimated at $200 million. And also not being stuck with a lot of unsold condos in the very soft Las Vegas market. The chairman of MGM Mirage said "It takes pressure off of selling more condominiums; it takes pressure off of occupying more rooms."

The measure of damages for defective construction is normally the cost to repair the defective work. However, if the cost to repair is so enormous relative to the value of the structure that it would constitute economic waste to fix it ("economic waste" is a term of art with varying meanings depending on the facts and circumstances), then the measure of damages is usually the diminution in value of the structure.

Under these facts and circumstances, it appears there is a good argument that demolishing and rebuilding the existing 28 stories correctly would constitute economic waste, and that the appropriate measure of damages is the diminution in value of the hotel tower. But this appears to present a problem. In the absence of any obvious market for condos in Las Vegas these days, has the value of the building really been diminished at all?

It would seem not.

But there is something else to consider. The Harmon will be the closest building to the Strip in the CityCenter, so the shortening of the tower is going to change how the development looks. It seems that a lot of work has become necessary to figure out what the new skyline of the CityCenter should be and to satisfy City government on that score. Maybe that's the way to approach the damages calculation.

To read the articles in the NY Times, click here and here. (This blog was published by Karen Carey, a member of Womble Carlyle's Real Estate Development and Construction Law practice groups.)

Employee Free Choice Act Reintroduced; Battle Lines Are Already Drawn

On Tuesday, March 10, George Miller (D-CA), Chairman of the House Education and Labor Reform Committee, introduced the Employee Free Choice Act (H.R. 1409). Asserting that the bill would agive workers the ability to stand up for themselvesa and heralding the effort as a key component of economic recovery, Chairman Miller insisted the EFCA would restore employee rights. Co-sponsor Tom Harkin (D-IA) explained, ajust as the National Labor Relations Act, the 40-hour week and the minimum wage helped to pull us out of the Great Depression and into a period of unprecedented prosperity, so too will the Employee Free Choice Act help reinvigorate our economy.a

The bill, essentially the same as one passed by the House but killed in the Senate two years ago, faces a stiff fight. Although President Obama has pledged his support to the legislation, employer organizations have mobilized a well-coordinated campaign to highlight what they perceive as significant weaknesses in the Act, also countering with their own proposal, the Secret Ballot Protection Act. To make matters even more confusing, on March 11 Joe Sestak (D-PA) proffered yet another alternative, the National Labor Relations Moderation Act (H.R. 1355), which Congressman Sestak describes as a amiddle grounda compromise to preclude a divisive confrontation. As the rhetoric on either side escalates, examination of the key features of EFCA is essential.

To read about the key features of EFCA, continue here.

(This entry was published by Charlie Edwards, a member of the firm's employment law practice group.)

Real Estate Developers Ask for a Bailout

The WSJ and the Washington Post report that some of the country's biggest commercial property developers have sought out government assistance as debt comes due.

Although the numbers vary by source, roughly $530 billion in commercial mortgages will be coming due in the next three years, with $160 - $400 billion coming due in 2009. Delinquency rates have begun to rise as rent prices fall and vacancies rise for commercial properties; despite the rise, delinquency rates are still below historic levels (i.e the vast majority of these loans are performing).

The problem is these types of loans are underwritten for five, seven, or 10 years with a balloon payment due at maturity. At maturity the loan is typically refinanced by the property owner. But the credit markets are virtually frozen (in large part because hardly anyone is securitizing commercial mortgages) and little, if any credit is available for refinancing (except for loans being made by HUD, Fannie Mae, and Freddie Mac).

To address this problem, property owners are asking the Treasury and the Federal Reserve to include the commercial real estate industry in the $200 billion loan program to rescue the consumer debt market, money intended to help investors purchase securities backed by those assets. Property owners hope that including commercial real estate will encourage banks to refinance mortgages coming due because the banks could securitize the mortgages. Some property owners have gone one step further and asked the Treasury to set up a separate fund just for commercial real estate.

The Treasury and Federal Reserve have said they will consider including commercial real estate in the $200 billion loan program.

Unfortunately, including commercial real estate in this loan program may not be enough to save the industry if only $200 billion is available and $160-400 billion in loans are coming due in 2009. Even if the program includes enough money to cover commercial real estate, Lenders may not be able to underwrite the loans; they may not be able to accurately price the assets because of plummeting property values.

Family Online Safety Institute (FOSI) Releases Online Safety Proposals

The Family Online Safety Institute ("FOSI") released its report Making Wise Choices Online in which it provides a survey of ongoing initiatives to ensure the safety of children using the Internet as well as four policy proposals for the coming Administration to consider. The release coincides with the Second Annual FOSI Conference, held today in Washington, D.C., themed "Safe At Any Speed: Rules, Tools & Public Policies to Keep Kids Safe Online."
Womble Carlyle is pleased to have sponsored the FOSI Conference and to have forged a friendship with this organization.

Click here to learn more about FOSI's Internet safety proposals.

Entrepreneur Removes Home From the Power Grid with the Help of LEDs

Eric Taub of the New York Times posted an interesting story this morning about Dean Kamen, the eccentric inventor of the Segway scooter. Mr. Kamen owns a small, three-acre island off the coast of Connecticut where he built his home, and he recently decided to take his entire island off the power grid--that is, produce his own electrical power (in this case through wind and solar).

To do that, Mr. Kamen had to dramatically reduce his power consumption. He accomplished that goal by using LEDs, or light-emitting diodes, to light his home's interior and exterior. Mr. Taub explains that an LED light fixture uses one-fifth to one-tenth of the power of a standard incandescent fixture. As a result of this change, Mr. Kamen was able to reduce energy consumption in the house by 70 percent. As an added benefit, the bulbs will not need to be changed for years.

The downside of this switch is cost. Although the price of LED fixtures are dropping, they are still significantly more expensive than an incandescent fixture. For that reason, it may be years before builders use this technology in spec homes and buildings.

Source: New York Times

Infrastructure Projects In the Obama Administration --- a Bright Spot In An Otherwise Gloomy Future

From the early days of his presidential campaign, President-Elect Obama has emphasized the importance, and priority, of rebuilding our nation's infrastructure. At first, this was not particularly tied to the goal of job creation, or at least that part of the equation was not stressed. But as the economic downturn spiraled out of control in the past months, rebuilding infrastructure became explicitly tied to creating a large number of new jobs.

State and local governments are very much on board with investing in infrastructure, and doing it quickly. At a meeting of the National Governors Association earlier this week in Philadelphia, the governors told Mr. Obama that over $130 billion worth of infrastructure projects have already won regulatory approval and just need funding to "get the shovels in the ground". Thousands of jobs could be created if these projects could get underway.

It seems that the specific types of projects mentioned most frequently are roads, bridges and schools. This is certainly good news for construction companies who are in the business of horizontal construction and manufacturers of road and bridge-building materials. It is also good news for the many construction companies who have long done business with local counties and school boards.

There are other kinds of infrastructure projects that also should be undertaken --- light rail and other forms of mass transit, wide-ranging installation of broadband, and other things that are badly overdue and will help move our country forward. To read more about President-Elect Obama's conversation with the governors about this subject, click here. (This blog entry was published by Karen Carey, a member of Womble Carlyle's construction law and real estate development practice group.)

AASHE Conference Highlights Sustainability Agenda, Colleges and Local Governments

The second biennial conference of the Association for the Advancement of Sustainability in Higher Education (AASHE) was held at the new Raleigh (NC) Convention Center from November 9-12. The purpose of the conference was to provide a "unique opportunity for every sector of higher education in the United States & Canada to come together to demonstrate how colleges and universities can lead the way to a sustainable future." AASHE lined up host institutions Appalachian State University, Duke University, North Carolina State University and the University of North Carolina at Chapel Hill with the theme of "working Together for Sustainability -- On Campus and Beyond." Admission also included a tradeshow highlighting sustainable solutions from a range of providers from Cree, Siemens and Duke Energy to Aramark, Ecolab and Johnson Controls.

The stated goals for the AASHE conference were to:

Further conference detail may be found at http://www.aashe.org/conf2008/schedule.php.

As reported in The Chronicle of Higher Education, the closing panel highlighted ways that colleges and other sustainability interests can work with local governments. Speakers included moderator Jim Elder, the director of the Campaign for Environmental Literacy, the clerk of courts from Miami-Dade County Florida, the mayor of Chapel Hill and Debra Rowe, a professor at Oakland Community College. Professor Rowe, "who is famously involved in countless sustainability organizations and efforts, said that many campus career offices donat tell students about the sustainability jobs that city governments will need to fill in the future. Sustainability advocates, she said, should use that potential demand to push sustainability education on campus." (This entry published by Liz Riley, a member of Womble Carlyle's construction and real estate development practice group.)


Ten Battle-tested Rules for Communicating Well in Hard Times

The line of organizations delivering bad news these days is a long one. And with the financial market challenges causing a ripple effect across the broader economy, that line may be long across America for some time. Communicating tough news is an unenviable task, and legal advisers are increasingly called upon to guide clients through the delivery of news that can be jarring: layoffs, declining profits, product recalls and ethical breaches, to name a few. Henry Fawell, a Strategic Communications consultant at Womble Carlyle based in the firm's Baltimore office, outlines how you can communicate effectively as an organization during difficult financial times.

Click here to read more...

Architects Feel the Hit

A recent article in Architectural Record describes the economic downturn's effect on design firms, and the gloomy forecast for the forseeable future. According to the article, retail and hotel building will fall 10 per cent in 2009, with office construction constricting by 12 percent. While some regional banks for still making loans for projects that are not speculative, even this activity is undercut by fundamental problems in the construction industry, one of the most important being the steep rise in prices of construction materials.

Institutional projects are being impacted as well. Public projects are typically financed by bonds, and voter support this year is extremely uncertain. As for private schools, endowments are typically invested in the stock market, the volatility of which is front page news every day.

The article finds one potential bright spot --- for firms that are able to diversity with international projects. Since this article was published (October 15, 2008), however, it has become painfully clear that the economic downturn is global. To read the entire article, click here. (This entry published by Karen Carey, a member of Womble Carlyle's Real Estate Development and Construction Law practice groups.)

Housing Construction Decline Hits Long-time Construction Supply Company

Stock Building Supply, established 86 years ago in Raleigh, North Carolina as Carolina Builders, "is slashing 3,000 jobs and closing 86 facilities in six states as it struggles with the biggest housing slump in more than six decades" reports the News & Observer. Parent company Wolseley Plc (UK), made the announcement on October 23. The story notes that other building suppliers are also cutting back as a result of the economic slowdown, although the Triangle and Charlotte may fare better than other areas such as Florida, California and Louisiana. (This entry posted by Liz Riley, a member of Womble Carlyle's Real Estate Development and Construction Practice Group.)

Zero Trans fat Homes?

Michelle Kaufmann, an architect known for her line of prefab homes, recently proposed a standardized "nutrition" label to communicate the benefits of a green building to potential buyers. She notes that we traditionally buy a home based on qualities like location, curb appeal, size, and upfront costs, but exclude important factors like sustainability, healthfulness of the indoor environment, and the cost of operating a home.

The purpose of the sustainability label is to quantify the advantages of a green home in easy to understand terms. Her proposed label, similar to the nutritional label found on packaged food products, lists key figures such as energy consumption, carbon dioxide emissions, and insulation values. The label would allow consumers to compare the long-term cost benefits of homes on the market and a home's contribution to improving the environment. In the same way that nutritional labels have changed the way people buy food (for example, the recent push for zero trans fats), Michelle Kaufmann hopes that a standardized sustainability label will change the way people buy homes.

The label could also be married to existing green building standard, such as LEED. The LEED distinction on the label would promote USGBC's brand, and listing key figures on the label will help distinguish a LEED building from one built using traditional building standards.

For more information and an example of a "sustainability label" see Michelle's blog entry and her whitepaper.

House Energy Bill Seeks Improved Energy Efficiency and Green Development for the Built Environment

On Tuesday of last week, the U.S. House of Representatives passed the much talked about energy bill, H.R. 6899, by a vote of 236 to 189. Politicians and the press have spent a great deal of energy focusing on this year's hot button issue, offshore drilling, but the bill also includes a number of provisions that could have an impact on sustainable development and construction. For example, Title VI of the bill is a reformulation of a bill originally proposed by Rep. Ed Perlmutter (D-Co) last spring, the Green Act of 2008.

Among other things, Title VI seeks to cause a 20% reduction in energy consumption for single and multifamily structures built or rehabilitated with HUD assistance; creates an energy efficiency demonstration program that applies to multifamily properties in certain enumerated federally assisted program (e.g. Section 8); establishes incentives for increasing the energy efficiency of multifamily housing, including discounts on premiums for mortgage insurance and allowing mortgages to exceed certain dollar amount limits prescribed by law; and authorizes HUD to make grants to states, cities, and counties to carry out energy efficiency programs for new and existing multifamily housing.

Rep. Perlmutter stated in a recent press release, "The Green Act measures will help revitalize our economy by making energy efficiency practices more affordable, accessible and achievable by consumers, businesses and government entities. By prioritizing energy efficiency practices, we can ease the woes of homeowners, lenders, financial markets, builders and our environment."

Earlier this summer, Karen Carey summarized the testimony of representatives of the National Multi-Family Housing Counsel (NMHC) and the National Apartment Association (NAA) who offered a number of recommendations to improve the original Green Act of 2008. Some, but not all, of these recommendations were incorporated into Title VI, such as including the new National Green Building Standard as one of the applicable green building standards. See Karen's entry on Womble Carlyle's Multifamily and Mixed Use Development Blog for a summary of the other recommendations and a link to the full testimony.

Sen. Saxby Chambliss (R-Ga) predicted that the House energy bill would go nowhere in the Senate. The Senate intends to unveil its own energy bill before it recesses next week, but does not intend to address it until after the November elections.

Sources: HR 6899, Atlanta Journal Constitution

California's Green Building Standard

California's Green Building Standard, adopted by the California Building Standards Commission on July 18, 2008, appears to remain the only state-wide green building standard in existence --- which is somewhat surprising, given the sudden popularity of "going green" in so many business sectors. Hardly a day goes by without several emails in my In box advertising programs, books, events, etc. touting the benefits of being green.

California's standards appear to focus heavily on reducing water use --- by one account, the standards will require (when they become mandatory in a couple of years) that water use be reduced by 20 percent and water for landscaping by 50 percent for all new construction. The standards will also require reducing energy usage by 15 percent. Click here to find the final approved standards.

One thing that makes the California standards attractive is that they don't specify how to make the called-for reductions. Giving the construction industry the flexibility to choose how to reduce water consumption and energy should be helpful not only to the industry but also to consumers (whether this flexibility will carry over into the mandatory standards that are to be developed over the next two years or so remains to be seen).

It will be interesting to see whether, and when, other states follow California's lead. I suspect it won't be until after the economy bottoms out and begins to recover. It is hard to concentrate on much of anything else at this point. (This post published by Karen Estelle Carey, an attorney in Womble Carlyle's real estate and construction practice.)

First Measure to Link Transportation Funding to Urban Planning

The Wall Street Journal recently reported that a revolutionary bill has just passed both houses of the California legislature and is on its way to Governor Schwarzenegger's desk for his signature or veto. The Bill, Senate Bill 375, intends to cut carbon-dioxide emissions by rewarding cities and counties that prevent sprawl and improve public transportation.

The bill requires California's regional planning authorities to develop plans to meet a set of emission reduction goals in order to receive transportation funding. Builders who construct projects closer to public transportation will be graced with a lighter regulatory hand (e.g. reduced requirements for environmental studies).

There were a number of concerns, including an increase in the cost of housing, the loss of a city's right to determine the use of its land, and a fear that the law would impede California's growth, but the bill was ultimately supported by environmentalists, local governments, and builders.

Proponents hope that this bill will be a model used by other states to reduce the spread of sprawl, increase transportation-minded development, and lower carbon-dioxide emissions.

There is no word yet on whether the Governor will sign the bill into law.

Another Construction Nightmare

The Womble Carlyle Fair Labor Standards Act Law Blog chronicles the Act with a particular emphasis on the southeast United States. In a blog entry posted yesterday, Charlie Edwards focuses on the increase in new construction industry filings in several specific areas, including a dispute over what constitutes compensible time for purposes of recording worked time. For further information, see his blog entry here.

BIM for Facilities Management

Today I listened in on a webinar presented by Autodesk on the subject of BIM in Facilities Management. Although I am a construction lawyer, not an architect or a facilities manager, I could readily see the value of BIM to facilities managers. To be able to have at one's fingertips complete information on all your facilities, including the physical structure, the mechanical and electrical systems, furnishings, furniture and equipment is quite remarkable. And although FM Desktop can amass much of this information, it is lacking the information that a BIM can provide, and now can be exported, as I understand it directly from Autodesk's REVIT in which the model was created.

I realize that some federal and state governmental agencies are now requiring the use of BIM in designing new buildings. I think large private institutional owners are not there yet, and it may be because the architects they typically use are not educating the owners about the benefits of BIM and giving them the opportunity to take advantage of these opportunities. From what I understand, most architects are still telling their owner clients that "BIM will not be used on this project". It's time for that to change.

In fact, it seems to me that the greatest value of BIM, when all is said and done, may be in the area of facilities management. (This post submitted by Karen Estelle Carey, a member of the Construction and Real Estate Development team.)

Couple Runs Afoul with Implied Warranty of Habitability

A recent NC case arises from an Outer Banks construction lot in Duck, which according to an online resource on Duck is a town established in the 1870as and named for the many ducks and water fowl in the area. A migratory town with around 500 full time residents, nearly a quarter million people flock there every summer.

Waddling through the tangled web of the case, Developer One built a bulkhead retaining wall around a lot fronting the Currituck Sound in Duck. Later, Mr./Mrs. Mancuso purchased the lot individually, and then had their company, Developer Two, build a house, swimming pool and second bulkhead. Buyers bought the house and less than a year later, Developer Oneas first bulkhead sagged and bowed. Not wanting to pay the bill, Buyers filed suit against Mr./Mrs., but not their company Developer Two.

The North Carolina Court of Appeals reaffirmed that North Carolina recognizes a claim for breach of implied warranty of habitability against a "vendor" who is in the business of building dwellings. The implied warranty covers recently constructed dwellings, including all "fixtures," so they are sufficiently free from major structural defects and constructed in a workmanlike manner.

After ruling the bulkhead a "fixture" due to its "annexation to the land", the court needed to find that Mr./Mrs. are "vendors" to hold them liable. Since (1) Mr./Mrs. signed the contract as individuals, (2) Buyers did not know that Mr./Mrs. intended to contract the construction to a separate company, and (3) Mr./Mrs. were actively involved in the construction, the court ruled that Mr./Mrs. were out of luck and could not duck their implied warranty responsibilities by contracting with their own corporation. (This entry posted by Ken Michael, a member of Womble Carlyleas real estate development and construction law practice group.)

Source: Regis M. Burek and wife, Lynda G. Burek v. Bernard Mancuso, Jr. and wife, Frances Mancuso, 657 S.E.2d 446, 2008 WL 565112 (N.C. App. 2008)

The Hidden Risks of Going Green

In a recent article entitled "The Hidden Risks of Green Buildings: Avoiding Moisture and Mold Problems", authors J. David Odom, Richard Scott and George H. DuBose of the Liberty Building Forensics Group, LLC caution owners and other parties thinking of building a "sustainable" or "green" building to pay close attention to the materials being used to determine whether the materials have been adequately tested to ensure that the materials not only qualify as sustainable or LEED certified materials, but also to ensure that the materials are durable and will last as long as other non-green materials. The authors note that "[w]e don't believe that anyone would deem a structure "sustainable" if it cannot survive the first five years without a major renovation because of moisture problems."

As with all buildings, the authors note that the most important components of a building to be scrutinized are the building envelope and the HVAC system. The authors conclude with several recommendations for dealing with the increased risk in using green designs including, 1) a technical peer review of the design focusing on the performance of the HVAC and building envelope systems, 2) adherence to institutional knowledge in the fields of humidity control, waterproofing and building envelope design and resistance against "building flush out" and other practices that have fallen out of favor, and 3) new green products should be examined and evaluated in order to weigh the green benefit against the likely performance of the product, particularly in areas of the building where the risk of failure and the resulting cost to remedy the failure are the greatest. (This entry published by Culley Carson, a member of Womble Carlyle's construction law practice group.)

Source: The Hidden Risks of Green Buildings

Mutual Waiver of Consequential Damages Re-Visited

From an Owner's perspective, the mutual waiver of consequences damages that was introduced into the AIA standard form design and construction contracts in 1997 and survives in the 2007 edition of these contracts continues to be problematic. While Architects and Contractors embrace this waiver, it is not so good for owners. In reflecting recently on how best to describe to an Owner the potential consequences of waiving consequential damages in the Owner's agreement with the Architect, I created the scenario below that illustrates how this waiver could be seriously detrimental to an owner. Although unlikely to occur exactly as played out below, the scenario is based on fact.

The Architect makes a negligent mistake in the mechanical design of the HVAC system in an assisted living facility. As a result, the air doesn't circulate properly. Word gets around about how terrible the air quality is in the facility. There is some bad press about it, and in fact the air quality is so unpleasant that a few people move out of their units. A particularly fragile lady falls and breaks a hip while moving out, and the family sues the Owner, claiming that she would not have had to move out except for the terrible air quality in her unit. Another resident develops pneumonia and dies, and the family sues the Owner claiming that the faulty air circulation was the proximate cause of the pneumonia. More bad press.

Whatever costs the Owner incurs in defending against these lawsuits and in repairing its public image, and whatever liability it is ultimately found to have would likely be consequential damages. If the Owner waives its right to recover consequential damages, the Owner would have no claim against the Architect for the damages the Owner suffered as a result of the lawsuits and the bad publicity it received.

The point is that Owners should not lightly accept a mutual waiver of consequential damages simply because it appears in the standard form agreement. (This entry was published by Karen Carey, a member of Womble Carlyle's real estate development and construction law practice group.)

Centralizing International Study on Campus: FedEx Global Education Center at UNC-Chapel Hill

As noted in the "Buildings and Grounds" blog of The Chronicle of Higher Education, and recently highlighted at the Society for College and University Planningas annual conference in Montreal, UNC-Chapel Hill has gathered its various international program elements under one roof at The FedEx Global Education Center at University of North Carolina at Chapel Hill, designed by Leers Weinzapfel Associates, and Pearce Brinkley Cease + Lee. Having a central home has improved the global education profile at UNC-Chapel Hill, with faculty, students, international visitors and others making good use of the Global Center since its opening last year. Although some question the ultra-traditional, almost utilitarian style of the building, a look beyond the red brick exterior reveals "a green roof and a large glassy facade. It is oriented around a central atrium that provides for serendipitous meetings between students and faculty members and also offers ample space for banquets. Classrooms in the building are open not only to international programs, but also to programs like biology and philosophy that might benefit from the international atmosphere." (This blog entry was published by Liz Riley, a member of Womble Carlyle's real estate development and construction law practice group.)

Source: The Chronicle of Higher Education

NC Court of Appeals Holds That Risk Allocation Provision Does Not Violate North Carolina Anti-Indemnification Statute

Indemnification and limitation of liability provisions are commonplace in construction contracts. By statute in North Carolina (N.C. Gen. Stat. ASS 22Ba1 (2007)), any contractual agreement relating to the design, planning, construction, alteration, repair or maintenance of a building, road, appurtenance or appliance purporting to indemnify a party against liability for damages caused by such partyas own negligence, in whole or part, is unenforceable. This rule extends to the partyas independent contractors, agents and employees as well.

Recently, the North Carolina Court of Appeals clarified that N.C. Gen. Stat. ASS 22B-1 (2007), North Carolinaas version of the so-called aanti-indemnification statutesa that have been enacted across the country, does not apply to a limitation of liability provision agreed to by parties to a contract in the context of construction.

In Blaylock Grading Co. v. Smith, 658 S.E.2d 680 (2008), the North Carolina Court of Appeals upheld a arisk allocationa provision contained in a construction contract that limited the amount of liability that could be imposed on the defendant for the consequences of his own negligence. In Blaylock, the plaintiff, a grading company, brought a claim of breach of contract and negligence against the defendant, the surveyor on the project. On the issue of liability, the jury determined that the defendant breached the contract with the plaintiff and was negligent in the performance of its surveying duties. On the issue of damages, the jury found that the defendant was liable for over $500,000. The defendant appealed arguing that the Risk Allocation provision in the contract limited the defendantas ultimate liability to $50,000.

On appeal, the Court of Appeals held that ASS 22Ba1 did not apply in this case, noting that the statute only prevents one party to a contract from agreeing to be liable for the negligence of the other party to a contract. By contrast, the Risk Allocation provision contained in the contract at issue only limited the amount of damages recoverable by one contracting party from the other and did not impose liability and damages on the plaintiff for the defendantas negligence. Consequently, the Court held that the Risk Allocation provision did not violate N.C. Gen. Stat. ASS 22B-1 (2007).

Thus, the lesson to be learned for contract draftsmen is that risk allocation provisions are a viable and powerful means to limit prospectively the damages for which a company may be liable. (This entry was published by Culley Carson, a member of Womble Carlyle's construction law practice group.) (PDF)

Source: Blaylock Grading Co. v. Smith (PDF)

Mobile Art Pavilion will make stop in Central Park - Then Disappear...

According to a story in the July 24 New York Times, a traveling art building (of sorts) designed by London architect Zaha Hadid is heading to Central Park this fall. The "Mobile Art" pavilion will showcase works of contemporary artists as well as advertise for its sponsor, Chanel. The 7,500 square foot structure can be packed in 51 containers and shipped to various locations around the world. Mobile Art "will occupy the Rumsey Playfield, midpark at 70th Street, from Oct. 20 to Nov. 9. (It is Ms. Hadidas first New York building, albeit temporary, and has already made stops in Hong Kong and Tokyo and is headed later for London, Moscow and Paris.) ...Ms. Hadid, who won the Pritzker Prize a architectureas highest honor a in 2004, said that she liked the idea that a pavilion 'lands, creates a buzz and disappears.'" See full story, exhibition admission details and cool photos here. (This blog entry was published by Liz Riley, a member of Womble Carlyle's real estate development and construction law practice group.)

Builders Instituting Lender Liability Lawsuits

The Wall Street Journal reports that the "love affair" between lenders and builders that existed during the housing boom is over, and the lender liability lawsuits that characterized the real-estate downturn in the early 1990s are making a comeback.

Builders are beginning to file suits against lenders contending that the lenders forced the builders and their projects into insolvency by acting in bad faith. The bad faith allegations include delaying or stopping projects midstream by refusing to release funds from construction loans, launching lengthy audits and appraisals, and aggressively enforcing personal guaranties.

The Journal suggests that the clampdown is the result of financial institutions acting in the face of intense pressure from regulators and shareholders to reduce their real-estate exposure and avoid crippling losses.

For more information, see the Wall Street Journal.

Keyword Selected: construction

Paradoxes

For the past six months or so, I've been using ConsensusDOCS agreement forms wherever I can reasonably do so ---- meaning that I'm using them for projects on which there is not an owner or architect who insists on using AIA documents. I usually represent owners, have used many AIA standard form agreements over the years (with modifications) and continue to use them.



But where there is not a vested interest in staying with AIA forms, I have tried to use ConsensusDOCS, because my twenty-plus years of experience as a construction lawyer has demonstrated that the premise on which they are based is valid --- a collaborative rather than an adversarial relationship among project participants will, without fail, result in more successful projects.



It is distressing, then, to say the least, to read in a recent Engineering News Record (June 29, 2009) that slow pay has now become a huge issue for contractors and subcontractors throughout the construction sector and in all parts of the country. Pay cycles for contractors have stretched from the customary 30 days, to 45 or 60 days. For subcontractors, pay cycles of 90 days are common. In addition, contractors and subs report that retainages are being held beyond any reasonable time frames, and change orders for indisputably changed work are more frequently being withheld by owners.



It is truly paradoxical that while the ConsensusDOCS are being endorsed by many and varied industry participants (including owners, contractors and subcontractors), the reality is that the economic straits in which we exist make it all but impossible to forge the collaborative relationship the documents contemplate and on which they are based. (This entry published by Karen Estelle Carey, a construction attorney and member of Womble Carlyle's construction group.)

ConsensusDOCS for Public Contracts? Yes, In South Dakota

It will be interesting to see how quickly South Dakota begins using ConsensusDOCS for public contracts after the February 2009 legislation permitting the use of the "ConsensusDOCS 200 Standard Agreement and General Conditions Between Owner and Contractor." It seems safe to assume that the South Dakota chapter of the AGC will be working hard to encourage the use of this contract form, and indeed, it probably is in use now for some public projects.




Several press releases covering passage of the law permitting the use of ConsensusDOCS 200 hailed the law as revolutionary in showing other states how to have a better and more efficient contracting process (for one such release, click here). This could be true, if the ConsensusDOCS 200 is used pretty much "as is". However, H B 1212, the law that gives permission for the use of the form, also provides that any public corporation can modify or delete any portion of it. As with most other things like this, the devil will be in the details of what changes a given public corporation makes to the form. (Post published by Karen Estelle Carey).








How do you measure damages when a construction blunder saves an owner $200 million?

A recent story out of Las Vegas, covered in the NY Times, poses an interesting question for construction and real estate lawyers ---- what would be the measure of damages for defective construction, the result of which is estimated to save the owner at least $200 million?

The Harmon hotel tower, part of MGM Mirage's acclaimed $9 billion development called the CityCenter, had been designed as a 48-story tower, the upper 20 floors to be luxury condominiums. But recently it was discovered that the rebar installed in the concrete beams in the first 15 stories already constructed had been positioned incorrectly, and could not safely support a 48-story tower. Correcting the problem would involve extensive and very expensive demolition and rebuilding.

So MGM Mirage made the decision to top out the building at 28 stories, and not build out the 200 condo units planned for the upper stories --- resulting in a savings estimated at $200 million. And also not being stuck with a lot of unsold condos in the very soft Las Vegas market. The chairman of MGM Mirage said "It takes pressure off of selling more condominiums; it takes pressure off of occupying more rooms."

The measure of damages for defective construction is normally the cost to repair the defective work. However, if the cost to repair is so enormous relative to the value of the structure that it would constitute economic waste to fix it ("economic waste" is a term of art with varying meanings depending on the facts and circumstances), then the measure of damages is usually the diminution in value of the structure.

Under these facts and circumstances, it appears there is a good argument that demolishing and rebuilding the existing 28 stories correctly would constitute economic waste, and that the appropriate measure of damages is the diminution in value of the hotel tower. But this appears to present a problem. In the absence of any obvious market for condos in Las Vegas these days, has the value of the building really been diminished at all?

It would seem not.

But there is something else to consider. The Harmon will be the closest building to the Strip in the CityCenter, so the shortening of the tower is going to change how the development looks. It seems that a lot of work has become necessary to figure out what the new skyline of the CityCenter should be and to satisfy City government on that score. Maybe that's the way to approach the damages calculation.

To read the articles in the NY Times, click here and here. (This blog was published by Karen Carey, a member of Womble Carlyle's Real Estate Development and Construction Law practice groups.)

Employee Free Choice Act Reintroduced; Battle Lines Are Already Drawn

On Tuesday, March 10, George Miller (D-CA), Chairman of the House Education and Labor Reform Committee, introduced the Employee Free Choice Act (H.R. 1409). Asserting that the bill would agive workers the ability to stand up for themselvesa and heralding the effort as a key component of economic recovery, Chairman Miller insisted the EFCA would restore employee rights. Co-sponsor Tom Harkin (D-IA) explained, ajust as the National Labor Relations Act, the 40-hour week and the minimum wage helped to pull us out of the Great Depression and into a period of unprecedented prosperity, so too will the Employee Free Choice Act help reinvigorate our economy.a

The bill, essentially the same as one passed by the House but killed in the Senate two years ago, faces a stiff fight. Although President Obama has pledged his support to the legislation, employer organizations have mobilized a well-coordinated campaign to highlight what they perceive as significant weaknesses in the Act, also countering with their own proposal, the Secret Ballot Protection Act. To make matters even more confusing, on March 11 Joe Sestak (D-PA) proffered yet another alternative, the National Labor Relations Moderation Act (H.R. 1355), which Congressman Sestak describes as a amiddle grounda compromise to preclude a divisive confrontation. As the rhetoric on either side escalates, examination of the key features of EFCA is essential.

To read about the key features of EFCA, continue here.

(This entry was published by Charlie Edwards, a member of the firm's employment law practice group.)

Real Estate Developers Ask for a Bailout

The WSJ and the Washington Post report that some of the country's biggest commercial property developers have sought out government assistance as debt comes due.

Although the numbers vary by source, roughly $530 billion in commercial mortgages will be coming due in the next three years, with $160 - $400 billion coming due in 2009. Delinquency rates have begun to rise as rent prices fall and vacancies rise for commercial properties; despite the rise, delinquency rates are still below historic levels (i.e the vast majority of these loans are performing).

The problem is these types of loans are underwritten for five, seven, or 10 years with a balloon payment due at maturity. At maturity the loan is typically refinanced by the property owner. But the credit markets are virtually frozen (in large part because hardly anyone is securitizing commercial mortgages) and little, if any credit is available for refinancing (except for loans being made by HUD, Fannie Mae, and Freddie Mac).

To address this problem, property owners are asking the Treasury and the Federal Reserve to include the commercial real estate industry in the $200 billion loan program to rescue the consumer debt market, money intended to help investors purchase securities backed by those assets. Property owners hope that including commercial real estate will encourage banks to refinance mortgages coming due because the banks could securitize the mortgages. Some property owners have gone one step further and asked the Treasury to set up a separate fund just for commercial real estate.

The Treasury and Federal Reserve have said they will consider including commercial real estate in the $200 billion loan program.

Unfortunately, including commercial real estate in this loan program may not be enough to save the industry if only $200 billion is available and $160-400 billion in loans are coming due in 2009. Even if the program includes enough money to cover commercial real estate, Lenders may not be able to underwrite the loans; they may not be able to accurately price the assets because of plummeting property values.

Family Online Safety Institute (FOSI) Releases Online Safety Proposals

The Family Online Safety Institute ("FOSI") released its report Making Wise Choices Online in which it provides a survey of ongoing initiatives to ensure the safety of children using the Internet as well as four policy proposals for the coming Administration to consider. The release coincides with the Second Annual FOSI Conference, held today in Washington, D.C., themed "Safe At Any Speed: Rules, Tools & Public Policies to Keep Kids Safe Online."
Womble Carlyle is pleased to have sponsored the FOSI Conference and to have forged a friendship with this organization.

Click here to learn more about FOSI's Internet safety proposals.

Entrepreneur Removes Home From the Power Grid with the Help of LEDs

Eric Taub of the New York Times posted an interesting story this morning about Dean Kamen, the eccentric inventor of the Segway scooter. Mr. Kamen owns a small, three-acre island off the coast of Connecticut where he built his home, and he recently decided to take his entire island off the power grid--that is, produce his own electrical power (in this case through wind and solar).

To do that, Mr. Kamen had to dramatically reduce his power consumption. He accomplished that goal by using LEDs, or light-emitting diodes, to light his home's interior and exterior. Mr. Taub explains that an LED light fixture uses one-fifth to one-tenth of the power of a standard incandescent fixture. As a result of this change, Mr. Kamen was able to reduce energy consumption in the house by 70 percent. As an added benefit, the bulbs will not need to be changed for years.

The downside of this switch is cost. Although the price of LED fixtures are dropping, they are still significantly more expensive than an incandescent fixture. For that reason, it may be years before builders use this technology in spec homes and buildings.

Source: New York Times

Infrastructure Projects In the Obama Administration --- a Bright Spot In An Otherwise Gloomy Future

From the early days of his presidential campaign, President-Elect Obama has emphasized the importance, and priority, of rebuilding our nation's infrastructure. At first, this was not particularly tied to the goal of job creation, or at least that part of the equation was not stressed. But as the economic downturn spiraled out of control in the past months, rebuilding infrastructure became explicitly tied to creating a large number of new jobs.

State and local governments are very much on board with investing in infrastructure, and doing it quickly. At a meeting of the National Governors Association earlier this week in Philadelphia, the governors told Mr. Obama that over $130 billion worth of infrastructure projects have already won regulatory approval and just need funding to "get the shovels in the ground". Thousands of jobs could be created if these projects could get underway.

It seems that the specific types of projects mentioned most frequently are roads, bridges and schools. This is certainly good news for construction companies who are in the business of horizontal construction and manufacturers of road and bridge-building materials. It is also good news for the many construction companies who have long done business with local counties and school boards.

There are other kinds of infrastructure projects that also should be undertaken --- light rail and other forms of mass transit, wide-ranging installation of broadband, and other things that are badly overdue and will help move our country forward. To read more about President-Elect Obama's conversation with the governors about this subject, click here. (This blog entry was published by Karen Carey, a member of Womble Carlyle's construction law and real estate development practice group.)

AASHE Conference Highlights Sustainability Agenda, Colleges and Local Governments

The second biennial conference of the Association for the Advancement of Sustainability in Higher Education (AASHE) was held at the new Raleigh (NC) Convention Center from November 9-12. The purpose of the conference was to provide a "unique opportunity for every sector of higher education in the United States & Canada to come together to demonstrate how colleges and universities can lead the way to a sustainable future." AASHE lined up host institutions Appalachian State University, Duke University, North Carolina State University and the University of North Carolina at Chapel Hill with the theme of "working Together for Sustainability -- On Campus and Beyond." Admission also included a tradeshow highlighting sustainable solutions from a range of providers from Cree, Siemens and Duke Energy to Aramark, Ecolab and Johnson Controls.

The stated goals for the AASHE conference were to:

Further conference detail may be found at http://www.aashe.org/conf2008/schedule.php.

As reported in The Chronicle of Higher Education, the closing panel highlighted ways that colleges and other sustainability interests can work with local governments. Speakers included moderator Jim Elder, the director of the Campaign for Environmental Literacy, the clerk of courts from Miami-Dade County Florida, the mayor of Chapel Hill and Debra Rowe, a professor at Oakland Community College. Professor Rowe, "who is famously involved in countless sustainability organizations and efforts, said that many campus career offices donat tell students about the sustainability jobs that city governments will need to fill in the future. Sustainability advocates, she said, should use that potential demand to push sustainability education on campus." (This entry published by Liz Riley, a member of Womble Carlyle's construction and real estate development practice group.)


Ten Battle-tested Rules for Communicating Well in Hard Times

The line of organizations delivering bad news these days is a long one. And with the financial market challenges causing a ripple effect across the broader economy, that line may be long across America for some time. Communicating tough news is an unenviable task, and legal advisers are increasingly called upon to guide clients through the delivery of news that can be jarring: layoffs, declining profits, product recalls and ethical breaches, to name a few. Henry Fawell, a Strategic Communications consultant at Womble Carlyle based in the firm's Baltimore office, outlines how you can communicate effectively as an organization during difficult financial times.

Click here to read more...

Architects Feel the Hit

A recent article in Architectural Record describes the economic downturn's effect on design firms, and the gloomy forecast for the forseeable future. According to the article, retail and hotel building will fall 10 per cent in 2009, with office construction constricting by 12 percent. While some regional banks for still making loans for projects that are not speculative, even this activity is undercut by fundamental problems in the construction industry, one of the most important being the steep rise in prices of construction materials.

Institutional projects are being impacted as well. Public projects are typically financed by bonds, and voter support this year is extremely uncertain. As for private schools, endowments are typically invested in the stock market, the volatility of which is front page news every day.

The article finds one potential bright spot --- for firms that are able to diversity with international projects. Since this article was published (October 15, 2008), however, it has become painfully clear that the economic downturn is global. To read the entire article, click here. (This entry published by Karen Carey, a member of Womble Carlyle's Real Estate Development and Construction Law practice groups.)

Housing Construction Decline Hits Long-time Construction Supply Company

Stock Building Supply, established 86 years ago in Raleigh, North Carolina as Carolina Builders, "is slashing 3,000 jobs and closing 86 facilities in six states as it struggles with the biggest housing slump in more than six decades" reports the News & Observer. Parent company Wolseley Plc (UK), made the announcement on October 23. The story notes that other building suppliers are also cutting back as a result of the economic slowdown, although the Triangle and Charlotte may fare better than other areas such as Florida, California and Louisiana. (This entry posted by Liz Riley, a member of Womble Carlyle's Real Estate Development and Construction Practice Group.)

Zero Trans fat Homes?

Michelle Kaufmann, an architect known for her line of prefab homes, recently proposed a standardized "nutrition" label to communicate the benefits of a green building to potential buyers. She notes that we traditionally buy a home based on qualities like location, curb appeal, size, and upfront costs, but exclude important factors like sustainability, healthfulness of the indoor environment, and the cost of operating a home.

The purpose of the sustainability label is to quantify the advantages of a green home in easy to understand terms. Her proposed label, similar to the nutritional label found on packaged food products, lists key figures such as energy consumption, carbon dioxide emissions, and insulation values. The label would allow consumers to compare the long-term cost benefits of homes on the market and a home's contribution to improving the environment. In the same way that nutritional labels have changed the way people buy food (for example, the recent push for zero trans fats), Michelle Kaufmann hopes that a standardized sustainability label will change the way people buy homes.

The label could also be married to existing green building standard, such as LEED. The LEED distinction on the label would promote USGBC's brand, and listing key figures on the label will help distinguish a LEED building from one built using traditional building standards.

For more information and an example of a "sustainability label" see Michelle's blog entry and her whitepaper.

House Energy Bill Seeks Improved Energy Efficiency and Green Development for the Built Environment

On Tuesday of last week, the U.S. House of Representatives passed the much talked about energy bill, H.R. 6899, by a vote of 236 to 189. Politicians and the press have spent a great deal of energy focusing on this year's hot button issue, offshore drilling, but the bill also includes a number of provisions that could have an impact on sustainable development and construction. For example, Title VI of the bill is a reformulation of a bill originally proposed by Rep. Ed Perlmutter (D-Co) last spring, the Green Act of 2008.

Among other things, Title VI seeks to cause a 20% reduction in energy consumption for single and multifamily structures built or rehabilitated with HUD assistance; creates an energy efficiency demonstration program that applies to multifamily properties in certain enumerated federally assisted program (e.g. Section 8); establishes incentives for increasing the energy efficiency of multifamily housing, including discounts on premiums for mortgage insurance and allowing mortgages to exceed certain dollar amount limits prescribed by law; and authorizes HUD to make grants to states, cities, and counties to carry out energy efficiency programs for new and existing multifamily housing.

Rep. Perlmutter stated in a recent press release, "The Green Act measures will help revitalize our economy by making energy efficiency practices more affordable, accessible and achievable by consumers, businesses and government entities. By prioritizing energy efficiency practices, we can ease the woes of homeowners, lenders, financial markets, builders and our environment."

Earlier this summer, Karen Carey summarized the testimony of representatives of the National Multi-Family Housing Counsel (NMHC) and the National Apartment Association (NAA) who offered a number of recommendations to improve the original Green Act of 2008. Some, but not all, of these recommendations were incorporated into Title VI, such as including the new National Green Building Standard as one of the applicable green building standards. See Karen's entry on Womble Carlyle's Multifamily and Mixed Use Development Blog for a summary of the other recommendations and a link to the full testimony.

Sen. Saxby Chambliss (R-Ga) predicted that the House energy bill would go nowhere in the Senate. The Senate intends to unveil its own energy bill before it recesses next week, but does not intend to address it until after the November elections.

Sources: HR 6899, Atlanta Journal Constitution

California's Green Building Standard

California's Green Building Standard, adopted by the California Building Standards Commission on July 18, 2008, appears to remain the only state-wide green building standard in existence --- which is somewhat surprising, given the sudden popularity of "going green" in so many business sectors. Hardly a day goes by without several emails in my In box advertising programs, books, events, etc. touting the benefits of being green.

California's standards appear to focus heavily on reducing water use --- by one account, the standards will require (when they become mandatory in a couple of years) that water use be reduced by 20 percent and water for landscaping by 50 percent for all new construction. The standards will also require reducing energy usage by 15 percent. Click here to find the final approved standards.

One thing that makes the California standards attractive is that they don't specify how to make the called-for reductions. Giving the construction industry the flexibility to choose how to reduce water consumption and energy should be helpful not only to the industry but also to consumers (whether this flexibility will carry over into the mandatory standards that are to be developed over the next two years or so remains to be seen).

It will be interesting to see whether, and when, other states follow California's lead. I suspect it won't be until after the economy bottoms out and begins to recover. It is hard to concentrate on much of anything else at this point. (This post published by Karen Estelle Carey, an attorney in Womble Carlyle's real estate and construction practice.)

First Measure to Link Transportation Funding to Urban Planning

The Wall Street Journal recently reported that a revolutionary bill has just passed both houses of the California legislature and is on its way to Governor Schwarzenegger's desk for his signature or veto. The Bill, Senate Bill 375, intends to cut carbon-dioxide emissions by rewarding cities and counties that prevent sprawl and improve public transportation.

The bill requires California's regional planning authorities to develop plans to meet a set of emission reduction goals in order to receive transportation funding. Builders who construct projects closer to public transportation will be graced with a lighter regulatory hand (e.g. reduced requirements for environmental studies).

There were a number of concerns, including an increase in the cost of housing, the loss of a city's right to determine the use of its land, and a fear that the law would impede California's growth, but the bill was ultimately supported by environmentalists, local governments, and builders.

Proponents hope that this bill will be a model used by other states to reduce the spread of sprawl, increase transportation-minded development, and lower carbon-dioxide emissions.

There is no word yet on whether the Governor will sign the bill into law.

Another Construction Nightmare

The Womble Carlyle Fair Labor Standards Act Law Blog chronicles the Act with a particular emphasis on the southeast United States. In a blog entry posted yesterday, Charlie Edwards focuses on the increase in new construction industry filings in several specific areas, including a dispute over what constitutes compensible time for purposes of recording worked time. For further information, see his blog entry here.

BIM for Facilities Management

Today I listened in on a webinar presented by Autodesk on the subject of BIM in Facilities Management. Although I am a construction lawyer, not an architect or a facilities manager, I could readily see the value of BIM to facilities managers. To be able to have at one's fingertips complete information on all your facilities, including the physical structure, the mechanical and electrical systems, furnishings, furniture and equipment is quite remarkable. And although FM Desktop can amass much of this information, it is lacking the information that a BIM can provide, and now can be exported, as I understand it directly from Autodesk's REVIT in which the model was created.

I realize that some federal and state governmental agencies are now requiring the use of BIM in designing new buildings. I think large private institutional owners are not there yet, and it may be because the architects they typically use are not educating the owners about the benefits of BIM and giving them the opportunity to take advantage of these opportunities. From what I understand, most architects are still telling their owner clients that "BIM will not be used on this project". It's time for that to change.

In fact, it seems to me that the greatest value of BIM, when all is said and done, may be in the area of facilities management. (This post submitted by Karen Estelle Carey, a member of the Construction and Real Estate Development team.)

Couple Runs Afoul with Implied Warranty of Habitability

A recent NC case arises from an Outer Banks construction lot in Duck, which according to an online resource on Duck is a town established in the 1870as and named for the many ducks and water fowl in the area. A migratory town with around 500 full time residents, nearly a quarter million people flock there every summer.

Waddling through the tangled web of the case, Developer One built a bulkhead retaining wall around a lot fronting the Currituck Sound in Duck. Later, Mr./Mrs. Mancuso purchased the lot individually, and then had their company, Developer Two, build a house, swimming pool and second bulkhead. Buyers bought the house and less than a year later, Developer Oneas first bulkhead sagged and bowed. Not wanting to pay the bill, Buyers filed suit against Mr./Mrs., but not their company Developer Two.

The North Carolina Court of Appeals reaffirmed that North Carolina recognizes a claim for breach of implied warranty of habitability against a "vendor" who is in the business of building dwellings. The implied warranty covers recently constructed dwellings, including all "fixtures," so they are sufficiently free from major structural defects and constructed in a workmanlike manner.

After ruling the bulkhead a "fixture" due to its "annexation to the land", the court needed to find that Mr./Mrs. are "vendors" to hold them liable. Since (1) Mr./Mrs. signed the contract as individuals, (2) Buyers did not know that Mr./Mrs. intended to contract the construction to a separate company, and (3) Mr./Mrs. were actively involved in the construction, the court ruled that Mr./Mrs. were out of luck and could not duck their implied warranty responsibilities by contracting with their own corporation. (This entry posted by Ken Michael, a member of Womble Carlyleas real estate development and construction law practice group.)

Source: Regis M. Burek and wife, Lynda G. Burek v. Bernard Mancuso, Jr. and wife, Frances Mancuso, 657 S.E.2d 446, 2008 WL 565112 (N.C. App. 2008)

The Hidden Risks of Going Green

In a recent article entitled "The Hidden Risks of Green Buildings: Avoiding Moisture and Mold Problems", authors J. David Odom, Richard Scott and George H. DuBose of the Liberty Building Forensics Group, LLC caution owners and other parties thinking of building a "sustainable" or "green" building to pay close attention to the materials being used to determine whether the materials have been adequately tested to ensure that the materials not only qualify as sustainable or LEED certified materials, but also to ensure that the materials are durable and will last as long as other non-green materials. The authors note that "[w]e don't believe that anyone would deem a structure "sustainable" if it cannot survive the first five years without a major renovation because of moisture problems."

As with all buildings, the authors note that the most important components of a building to be scrutinized are the building envelope and the HVAC system. The authors conclude with several recommendations for dealing with the increased risk in using green designs including, 1) a technical peer review of the design focusing on the performance of the HVAC and building envelope systems, 2) adherence to institutional knowledge in the fields of humidity control, waterproofing and building envelope design and resistance against "building flush out" and other practices that have fallen out of favor, and 3) new green products should be examined and evaluated in order to weigh the green benefit against the likely performance of the product, particularly in areas of the building where the risk of failure and the resulting cost to remedy the failure are the greatest. (This entry published by Culley Carson, a member of Womble Carlyle's construction law practice group.)

Source: The Hidden Risks of Green Buildings

Mutual Waiver of Consequential Damages Re-Visited

From an Owner's perspective, the mutual waiver of consequences damages that was introduced into the AIA standard form design and construction contracts in 1997 and survives in the 2007 edition of these contracts continues to be problematic. While Architects and Contractors embrace this waiver, it is not so good for owners. In reflecting recently on how best to describe to an Owner the potential consequences of waiving consequential damages in the Owner's agreement with the Architect, I created the scenario below that illustrates how this waiver could be seriously detrimental to an owner. Although unlikely to occur exactly as played out below, the scenario is based on fact.

The Architect makes a negligent mistake in the mechanical design of the HVAC system in an assisted living facility. As a result, the air doesn't circulate properly. Word gets around about how terrible the air quality is in the facility. There is some bad press about it, and in fact the air quality is so unpleasant that a few people move out of their units. A particularly fragile lady falls and breaks a hip while moving out, and the family sues the Owner, claiming that she would not have had to move out except for the terrible air quality in her unit. Another resident develops pneumonia and dies, and the family sues the Owner claiming that the faulty air circulation was the proximate cause of the pneumonia. More bad press.

Whatever costs the Owner incurs in defending against these lawsuits and in repairing its public image, and whatever liability it is ultimately found to have would likely be consequential damages. If the Owner waives its right to recover consequential damages, the Owner would have no claim against the Architect for the damages the Owner suffered as a result of the lawsuits and the bad publicity it received.

The point is that Owners should not lightly accept a mutual waiver of consequential damages simply because it appears in the standard form agreement. (This entry was published by Karen Carey, a member of Womble Carlyle's real estate development and construction law practice group.)

Centralizing International Study on Campus: FedEx Global Education Center at UNC-Chapel Hill

As noted in the "Buildings and Grounds" blog of The Chronicle of Higher Education, and recently highlighted at the Society for College and University Planningas annual conference in Montreal, UNC-Chapel Hill has gathered its various international program elements under one roof at The FedEx Global Education Center at University of North Carolina at Chapel Hill, designed by Leers Weinzapfel Associates, and Pearce Brinkley Cease + Lee. Having a central home has improved the global education profile at UNC-Chapel Hill, with faculty, students, international visitors and others making good use of the Global Center since its opening last year. Although some question the ultra-traditional, almost utilitarian style of the building, a look beyond the red brick exterior reveals "a green roof and a large glassy facade. It is oriented around a central atrium that provides for serendipitous meetings between students and faculty members and also offers ample space for banquets. Classrooms in the building are open not only to international programs, but also to programs like biology and philosophy that might benefit from the international atmosphere." (This blog entry was published by Liz Riley, a member of Womble Carlyle's real estate development and construction law practice group.)

Source: The Chronicle of Higher Education

NC Court of Appeals Holds That Risk Allocation Provision Does Not Violate North Carolina Anti-Indemnification Statute

Indemnification and limitation of liability provisions are commonplace in construction contracts. By statute in North Carolina (N.C. Gen. Stat. ASS 22Ba1 (2007)), any contractual agreement relating to the design, planning, construction, alteration, repair or maintenance of a building, road, appurtenance or appliance purporting to indemnify a party against liability for damages caused by such partyas own negligence, in whole or part, is unenforceable. This rule extends to the partyas independent contractors, agents and employees as well.

Recently, the North Carolina Court of Appeals clarified that N.C. Gen. Stat. ASS 22B-1 (2007), North Carolinaas version of the so-called aanti-indemnification statutesa that have been enacted across the country, does not apply to a limitation of liability provision agreed to by parties to a contract in the context of construction.

In Blaylock Grading Co. v. Smith, 658 S.E.2d 680 (2008), the North Carolina Court of Appeals upheld a arisk allocationa provision contained in a construction contract that limited the amount of liability that could be imposed on the defendant for the consequences of his own negligence. In Blaylock, the plaintiff, a grading company, brought a claim of breach of contract and negligence against the defendant, the surveyor on the project. On the issue of liability, the jury determined that the defendant breached the contract with the plaintiff and was negligent in the performance of its surveying duties. On the issue of damages, the jury found that the defendant was liable for over $500,000. The defendant appealed arguing that the Risk Allocation provision in the contract limited the defendantas ultimate liability to $50,000.

On appeal, the Court of Appeals held that ASS 22Ba1 did not apply in this case, noting that the statute only prevents one party to a contract from agreeing to be liable for the negligence of the other party to a contract. By contrast, the Risk Allocation provision contained in the contract at issue only limited the amount of damages recoverable by one contracting party from the other and did not impose liability and damages on the plaintiff for the defendantas negligence. Consequently, the Court held that the Risk Allocation provision did not violate N.C. Gen. Stat. ASS 22B-1 (2007).

Thus, the lesson to be learned for contract draftsmen is that risk allocation provisions are a viable and powerful means to limit prospectively the damages for which a company may be liable. (This entry was published by Culley Carson, a member of Womble Carlyle's construction law practice group.) (PDF)

Source: Blaylock Grading Co. v. Smith (PDF)

Mobile Art Pavilion will make stop in Central Park - Then Disappear...

According to a story in the July 24 New York Times, a traveling art building (of sorts) designed by London architect Zaha Hadid is heading to Central Park this fall. The "Mobile Art" pavilion will showcase works of contemporary artists as well as advertise for its sponsor, Chanel. The 7,500 square foot structure can be packed in 51 containers and shipped to various locations around the world. Mobile Art "will occupy the Rumsey Playfield, midpark at 70th Street, from Oct. 20 to Nov. 9. (It is Ms. Hadidas first New York building, albeit temporary, and has already made stops in Hong Kong and Tokyo and is headed later for London, Moscow and Paris.) ...Ms. Hadid, who won the Pritzker Prize a architectureas highest honor a in 2004, said that she liked the idea that a pavilion 'lands, creates a buzz and disappears.'" See full story, exhibition admission details and cool photos here. (This blog entry was published by Liz Riley, a member of Womble Carlyle's real estate development and construction law practice group.)

Builders Instituting Lender Liability Lawsuits

The Wall Street Journal reports that the "love affair" between lenders and builders that existed during the housing boom is over, and the lender liability lawsuits that characterized the real-estate downturn in the early 1990s are making a comeback.

Builders are beginning to file suits against lenders contending that the lenders forced the builders and their projects into insolvency by acting in bad faith. The bad faith allegations include delaying or stopping projects midstream by refusing to release funds from construction loans, launching lengthy audits and appraisals, and aggressively enforcing personal guaranties.

The Journal suggests that the clampdown is the result of financial institutions acting in the face of intense pressure from regulators and shareholders to reduce their real-estate exposure and avoid crippling losses.

For more information, see the Wall Street Journal.

Ancient forest in China discovered by cave explorers

Scientists have expressed enthusiasm after the discovery of an ancient forest at the bottom of a giant sinkhole in the Guangxi region of southern China. The forest contains both undergrowth and tall trees, some reaching up to 130 feet in height, and was first stumbled upon by cave explorers who notified scientists to have a look at it.A [...]

Historic Texas hotel combines the past with the future

TheA Albert HotelA is a landmark of Texas hill country in historic DowntownA Fredricksburg located on Main Street. Built on the site of and retaining the Keidel family pharmacy and homestead founded 175 years ago, the Albert Hotel has been renovated and expanded in a sustainable updateA designed byA Clayton Korte in partnership with New Waterloo.[...]

The best and worst cities for clean air around the world

The air we breathe is one of the most critical elements of our existence, so itas no surprise thereas concern over the quality of that air. Air pollution is the result of a combination of natural and human-made particulates that together create unhealthy, unpleasant air. The air quality experts at HouseFresh recently released "The Worldas Best and Worst Towns and Cities for Clean Air in 2022." It outlines where fine particulate matter of 2.5 microns or less measure highest and lowest around the globe.A [...]

They create loungewear committed to social change

If you want to support a sustainable company doing good in the world, consider Eavolu. They are a loungewear clothing brand that does good beyond the production and packaging. Eavolu, along with a growing number of other companies, partners with organizations committed to environmental and social change. [...]

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How to Refinance a Reverse Mortgage: The Ultimate Guide

The process of refinancing a reverse mortgage is similar to that of traditional refinance. There are standard eligibility criteria set by mortgage lenders and certain steps to be followed.  In most cases, it helps stabilize the financial situation. However, it has consequences as well. So, understanding the basics of refinancing your Texas reverse mortgage loan […]

The post How to Refinance a Reverse Mortgage: The Ultimate Guide appeared first on Lonestar Financing.


The Underwriting Process: Everything You Need to Know

Do you know that 65% of homeowners in the US have a Mortgage?  Are you planning to take out a home loan in Texas? Many mortgage lenders can help you get approved for a loan. However, one thing sets a lender apart from the rest- underwriting approval. Before applying for a mortgage, you need to […]

The post The Underwriting Process: Everything You Need to Know appeared first on Lonestar Financing.


How Much Money Will You Need to Purchase a Home in 2022?

Are you wondering how much money youall need to come up with in order to buy your dream home? Well, weave come up with the ultimate guide for you! Trying to figure out how much money you’ll need to purchase a house has always been difficult for first-time buyers. But in 2022, it’s become even […]

The post How Much Money Will You Need to Purchase a Home in 2022? appeared first on Lonestar Financing.


In-House Underwriting: Top Criteria & Benefits You Must Know

Are you in the last stages of your home loan application? Now that you’ve gone through the tedious process of rate locking, appraisals, and inspections, you may be wondering what comes next, which brings us to the underwriting process. It may sound frightening at first, but it becomes much less intimidating once you understand what […]

The post In-House Underwriting: Top Criteria & Benefits You Must Know appeared first on Lonestar Financing.


Manual Underwriting Vs. Automated Underwriting: The Complete Guide

The mortgage underwriting process helps mortgage lenders determine if your financial status is solid enough to repay the home loan youare applying for. Because anyone’s financial condition can change, the underwriting process considers whether the property you want to buy is worth enough to repay the loan if the lender has to foreclose. In a […]

The post Manual Underwriting Vs. Automated Underwriting: The Complete Guide appeared first on Lonestar Financing.


VA Home Loan v/s Conventional Home Loan: Choosing the Best Loan Option

When you are planning to buy a home, the type of mortgage you choose is an important decision. But with so many options available, it can be challenging to decide which loan is right for you. Each loan product has its advantages and disadvantages, so it is imperative that you understand the differences between a […]

The post VA Home Loan v/s Conventional Home Loan: Choosing the Best Loan Option appeared first on Lonestar Financing.


Fixed & Adjustable Mortgage Rates: Everything You Need to Know

When youare considering taking out a mortgage loan, you must first determine which loan is best for you. Getting a clear understanding of different mortgage companies, types of mortgages, primarily Fixed Rate Mortgage or Adjustable Rate Mortgage, will help you plan and proceed accordingly. In addition, our experienced mortgage lenders in Texas can help you […]

The post Fixed & Adjustable Mortgage Rates: Everything You Need to Know appeared first on Lonestar Financing.


How to Find the Best Mortgage Lender

Introduction Planning to purchase your first home but are struggling to find a mortgage lender? We have you covered! Buying a new home usually requires homeowners to take out a mortgage loan. Getting a great deal on your mortgage can be very beneficial to you and your family. You may want to find the lowest […]

The post How to Find the Best Mortgage Lender appeared first on Lonestar Financing.


Texas Mortgage Refinancing See Uptick

The Federal Housing Finance Agency eliminated something called the “Adverse Market Refinance Fee,” a huge incentive for  homeowners looking to refinance their mortgage. The refinancing fee was rolled out in December as a way to pay for some of the COVID mortgage relief.  How it worked was, the agency calculated the fee by taking 0.5% of a […]

The post Texas Mortgage Refinancing See Uptick appeared first on Lonestar Financing.


Will you need an appraisal?

Last November, the Federal Deposit Insurance Corp., the Office of the Comptroller of the Currency, and the Board of Governors of the Federal Reserve released a proposal that would increase the appraisal requirement for home sales from $250,000 to $400,000, meaning that certain home purchases of $400,000 and less would no longer require an appraisal […]

The post Will you need an appraisal? appeared first on Lonestar Financing.


2023 Lexus RZ: Automakeras First Battey EV Features AWD, Steer by Wire System, New Body Design & More

The 2023 Lexus RZ is the luxury automakeras first-ever pure electric vehicle. Toyotaas premium subsidiary wants to attain 100 percent battery electric vehicle (BEV) sales globally by 2035, and it plans to offer a full lineup of new and exciting electric cars across its portfolio by 2030. The RZ is the dawn of a new age for Lexus. aWe believe that Lexus, an established luxury automaker, should continue pursuing the creation of exciting cars while respecting nature and the global […]

Original article: 2023 Lexus RZ: Automaker’s First Battey EV Features AWD, Steer by Wire System, New Body Design & More


Lamborghini HuracA!n Tecnica: Racetrack Prowess & Concept Car Styling

The Lamborghini HuracA!n Tecnica is the next generation of the Italian automakeras rear-wheel drive, V10 architecture. The Tecnica name embodies the evolution of the car’s technical prowess, according to Lamborghini, and slots nicely between the HuracA!n EVO RWD and the track-ready HuracA!n STO. We think that Tecnica is the best-looking HuracA!n yet, and it comes with all the yummy mechanical wizardry we grew to love in Lamborghinias best-selling model yet. aThe HuracA!n Tecnica condenses Lamborghinias design and engineering expertise to […]

Original article: Lamborghini HuracA!n Tecnica: Racetrack Prowess & Concept Car Styling


2023 BMW 7 Series: Distinctive Styling, New Tech Features, All-Electric Model & More

The 2023 BMW 7 Series is the seventh generation of the German automaker’s flagship luxury sedan. It is also the most controversial given its newfound styling idiom, a carryover from the brand’s decent-looking iX electric SUV. The new 7 Series and its massive kidney grilles are hard to miss, but the lighting arrangements are worth a second pause. There was a time when BMW sedans straddled a fine line between polarizing and forward-thinking a we’re talking about the Bangle era […]

Original article: 2023 BMW 7 Series: Distinctive Styling, New Tech Features, All-Electric Model & More


2023 Mercedes-AMG C 43 Sedan: New Engine, Sporty Styling & Innovative Performance Hardware

The 2023 Mercedes-AMG C 43 fulfills a promise of spicing up the all-new W206 C-Class lineup with the brand’s typical array of performance-enhancing technology. But for those who mourn the loss of the outgoing C 43’s twin-turbocharged, 385-horsepower V6 engine, we have unsettling news: The 2023 Mercedes-AMG C 43 will do without a blown V6. Instead, Mercedes-AMG has given the new C 43 the most potent series-production four-cylinder gas engine ever built. 2023 Mercedes-AMG C 43 Powertrain Tech The naturally-aspirated […]

Original article: 2023 Mercedes-AMG C 43 Sedan: New Engine, Sporty Styling & Innovative Performance Hardware


2023 Porsche 911 Sport Classic: Is This The Perfect 911?

The German automaker got it right with the 2023 Porsche 911 Sport Classic. Aiming to infuse vintage styling with the powertrain of modern 911 sports cars, we werenat expecting Porsche to imbibe the 911 Sport Classic with analog components that could make it the best new 911 in our book. 2023 Porsche 911 Sport Classic: Whatas New? The new 911 Sport Classic is based on a 992-Series 911 Turbo S with the same rear-mounted, twin-turbocharged 3.7-liter flat-six and widebody kit. […]

Original article: 2023 Porsche 911 Sport Classic: Is This The Perfect 911?


2022 Audi RS 3: Turbo Five-Cylinder, Enhanced Torque Splitter, Quick NA1/4rburgring Lap Time & More

The 2022 Audi RS 3 is entering our consciousness with proven hardware, performance-enhancing innovations, and record-breaking speed credentials. The first-generation RS 3 came in 2011 as an extreme derivative of a humble Audi A3 Sportback. The second-gen RS 3 Sportback arrived in 2015, and it brought along the first-ever RS 3 Sedan with the same potent five-cylinder turbo engine. The all-new, second-generation RS 3 Sedan (based on the fourth-gen Audi A3) is rejoining the RS family after a brief one-year […]

Original article: 2022 Audi RS 3: Turbo Five-Cylinder, Enhanced Torque Splitter, Quick NA1/4rburgring Lap Time & More


What the Federal Interest Rate Hike Could Mean for the Auto Loan Industry

A series of federal interest rate hikes could have far-reaching effects on the already volatile auto loan industry. Hereas a look at what might be ahead in 2022.

Original article: What the Federal Interest Rate Hike Could Mean for the Auto Loan Industry


6 Most Reputable Extended Car Warranty Companies (May 2022)

Featured Extended Warranty Companies We reviewed the industryas top extended auto warranty providers, and here are our featured picks.  Best Overall Best Maintenance Benefits Most Affordable Endurance Protect My Car CarShield Get Quote Get Quote Get Quote (866) 990-3410 (888) 430-0227 (877) 265-5123       Extended auto warranties can help you better predict the costs of owning a car and bring financial peace of mind. Not all extended warranty providers are trustworthy, so itas important to know how to […]

Original article: 6 Most Reputable Extended Car Warranty Companies (May 2022)


uShip Review (May 2022)

The uShip marketplace can get you cheaper car shipping when auto transport companies bid to earn your business. Find uShip reviews, costs, and services here.

Original article: uShip Review (May 2022)


Sherpa Auto Transport Review (May 2022)

Locked-in pricing and a free car wash? Check out Sherpa Auto Transport reviews, perks, prices, and more to see how Sherpa compares to rival car shipping companies.

Original article: Sherpa Auto Transport Review (May 2022)


Montway Auto Transport Review (May 2022)

Montway Auto Transport is a leader in the car shipping industry, but what do Montway Auto Transport reviews say? Learn about costs, shipping options, and much more.

Original article: Montway Auto Transport Review (May 2022)


2023 GMC Yukon Denali Ultimate Will Arrive Later This Year & Itas Fancy!

As if the Denali wasn’t already the ultimate trim level! The 2023 GMC Yukon Denali Ultimate is kicking things up a notch when it comes to luxury, technology, and performance. The Yukon Denali Ultimate will arrive this fall. Here is a quick look at this lavish land yacht.  Exterior Design & Interior Treatments The Denali Ultimate is decked out with bright chrome along the window and door panels, 22-inch wheels, and unique Vader Chrome accents. Inside, drivers and passengers are […]

Original article: 2023 GMC Yukon Denali Ultimate Will Arrive Later This Year & It’s Fancy!


Internet Banking and Privacy Policies

Privacy policy legislation affects internet banking just as it does any other type of banking establishment. You might want to keep your personal information private. If so, it is good to know how your bank treats privacy policy. A study was done to determine how well different banks, including internet banking companies, dealt with privacy [...]

Books on Internet Banking

There are many intellectual books on internet banking. There seem to be few that the average person can read and understand. With a little investigation at your local bookstore and online, you can find some fairly recent books that have something to say to the average consumer about internet banking. Scams and Swindles: Phishing, Spoofing, [...]

Problems with Internet Banking

Most people who have accounts with traditional banks do some internet banking now. Some are hesitant because of problems they see in the industry. While there are some disadvantages to internet banking, many of the problems start with the consumer. For example, there are still quite a few people who do not use internet banking [...]

Time Management a Itas Not Work That Kills You

Talking of good time management, the first thing that comes to our mind is our professional work or household duties. People say they spend a lot of time in the workplace, hence, do not have time to spend with their family or on themselves. Wrong! The fact is people waste a large amount of time [...]

Phishing And Fraud a What Is It?

Phishing is a very sneaky type of fraud conducted over the Internet. Its name is a throw back to the early days of hacking and identity theft and the practice of phone phreaking. While there can be very complicated schemes devised, they are all based on a very simple concept. Phishers try to persuade you, [...]

Steps To Take If You Are A Victim Of Identity Theft

Identity theft can be one of our worst nightmares, since the stolen identity is always used for illegal purposes. Apart from having your identity stolen from you, you could also become a target of litigation from parties hurt by the actions of the identity thief. So what should you do if you ever become a [...]

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