Construction Law Blog

Construction Warranty vs. Statute of Limitations Between Builder and Owner

Like the strings of a marionette puppet, after the completion of a New York construction project there are various legal theories that serve as ties between the builder and the owner.

For the builder, the sooner these lingering ties can be removed the less exposure they face for claims of defects. For the owners, the longer they are able to establish these connections the longer they may have legal recourse against the builder for defects, should that be necessary.

 

Article 36-B of the N.Y. General Business Law establishes minimum warranty standards, including that the home will meet or exceed the 'specific standards of the applicable building code'. Although only available to 'new' homes, it further states that a housing merchant warranty shall provide:

• defects due to a failure to have been constructed in a skillful manner for one year;
  
  
• defects in the installation of the plumbing, electrical, heating, cooling and ventilation systems for two years; and
  
  
• material defects coverage for six years from and after the warranty date

This is provided by statute as an 'implied' warranty, or where there is no other written or 'express' warranty agreement. Where such a warranty is provided, it will state what items are being covered, and the length of time for such covereage. Express warranties are specifically enforced by New York Courts, meaning that courts will enforce them to the letter and not expand protections beyond what is stated.

Warranty claims, however, are generally not an exclusive remedy available to the owner and are not the only time limitations at play.

A builder can still be subject to a breach of contract claim from an owner for items such as defective workmanship and materials for a period of six years, unless there are other provisions which specifically limit the owner's time to bring legal action.

A contractual warranty period is not a limitation of time in which a part may bring suit for defects or breach of other contractual obligations. The warranty provision is only a period of time which a contractor has a duty to correct defects through supplemental performance. A warranty period does not shorten a statute of limitation or otherwise bar suit by an owner against the builder.

Your comments and future article topic suggestions are invited in the field below.

The author, John Caravella Esq., is a construction attorney and formerly practicing project architect at The Law Office of John Caravella, P.C., representing architects, engineers, contractors, subcontractors, and owners in all phases of contract preparation, litigation, and arbitration across New York and Florida. He also serves as an arbitrator to the American Arbitration Association Construction Industry Panel. Mr. Caravella can be reached by email: John@LIConstructionLaw.com or (631) 608-1346.

 

 

 

This is a general information article and should not be construed as legal advice or a legal opinion. The content above has been edited for conciseness and additional relevant points are omitted for space constraints. Readers are encouraged to seek counsel from a construction lawyer for advice on a particular circumstance.

New York Announces Surety Bond Assistance Program for MWBE'S

Governor Andrew M. Cuomo this week launched the first statewide surety bond assistance program for Minority -and Women -Owned Businesses. This program will provide financial assistance to help MWBEs secure surety bonds and state contracts.

"New York's strength is in the diversity, innovation, and entrepreneurship of all its residents," Governor Cuomo said. "By breaking down barriers to growth for MWBEs, we are putting that strength to work for all New Yorkers, building a more diverse and competitive business climate. These steps will level the playing field and open up doors for greater economic opportunity and job growth in communities that need it most."

As Governor Cuomo outlined in his 2012 State of the State Address, one of the biggest challenges facing small and MWBE contractors is securing credit, which limits their ability to obtain state contracts. To eliminate this barrier to growth, New York State has launched a new statewide bond assistance program that will provide financial assistance in the form of credit support to help small and minority— and women—owned businesses secure surety bonds and state contracts. The revolving loan fund provides irrevocable letters of credit, up to 30 percent of the base contract amount on a project specific basis, and is expected to facilitate $200 million in new bonding activity over five years. The state is also collaborating with intermediary lenders to help facilitate working capital loans to New York State contractors. To learn more about the New York State Surety Bond Assistance Program please visit http://esd.ny.gov/BusinessPrograms/BondingAssistance.html. 

Your comments and future article topic suggestions are invited in the field below.

The author, John Caravella Esq., is a construction attorney and formerly practicing project architect at The Law Office of John Caravella, P.C., representing architects, engineers, contractors, subcontractors, and owners in all phases of contract preparation, litigation, and arbitration across New York and Florida. He also serves as an arbitrator to the American Arbitration Association Construction Industry Panel. Mr. Caravella can be reached by email: John@LIConstructionLaw.com or (631) 608-1346.

 

 

 

This is a general information article and should not be construed as legal advice or a legal opinion.  Readers are encouraged to seek counsel from a construction lawyer for advice on a particular circumstance.

NY Supreme Court Strikes Contractor Liability Limitation Provision

 Many contractors and subcontractors go about their work feeling protected from claims for damages because their agreements contain certain exclusions. Some of these agreements will even have language stating 'Not responsible for [X, Y, and Z]'.

But the ruling handed down February 14, 2012 by the Supreme Court, Nassau County serves as a reminder that contractual indemnity provisions are more of a privilege than a right, and are not subject to enforcement automatically.

"The law is settled that a party seeking contractual indemnification must prove itself free of negligence in order to enforce the indemnity clause." Cibellis Constr., Inc., v. Hamilton Owners, Inc. This effectively places an affirmative burden on the party seeking the enforcement of this protection to prove that no negligence on their part exists. The proving of any negative event can be challenging however, like proving the loch ness monster does not exist.

Ultimately this line of logic is what caused the ruling to come down against this contractor, as the court declined enforcement of its contractual indemnity protection. As the underlying project facts of this matter relate to damages to the underground electrical service caused during excavation of a driveway, it was found to be evidence of negligence on the contractor's part for failure to call the "one-call" notification system to verify the precise locations of the underground facilities.

Your comments and future article topic suggestions are invited in the field below.

The author, John Caravella Esq., is a construction attorney and formerly practicing project architect at The Law Office of John Caravella, P.C., representing architects, engineers, contractors, subcontractors, and owners in all phases of contract preparation, litigation, and arbitration across New York and Florida. He also serves as an arbitrator to the American Arbitration Association Construction Industry Panel. Mr. Caravella can be reached by email: John@LIConstructionLaw.com or (631) 608-1346.

 

 

This is a general information article and should not be construed as legal advice or a legal opinion.  Readers are encouraged to seek counsel from a construction lawyer for advice on a particular circumstance.

Homeowner Challenges to New York Mechanic's Liens

 

When a private improvement lien is filed in New York, the entire body of the New York Lien Law is imported which establishes the rules for filing, enforcing (or foreclosing the lien) and for challenging or discharging the lien. There may often be defenses to the lien for the property owner as outlined below.  For those seeking to file a valid lien, the below serves as a reminder of common issues to avoid.

Often in the construction context a homeowner may find a lien filed against their property by a contractor hired to perform work on the property. Also it is common for the homeowner to have complaints about or criticisms of the work performed. For the homeowner who finds their property with a lien, and unsatisfactory work performed, it is possible to seek relief from the court. “A lien will be vacated where the court finds the work was not substantially completed or is below industry standards.” New Day Builders v. SJC Realty 219 A.D.2d 623, 631 N.Y.S.2d 707, N.Y.A.D. 2 Dept., September 18, 1995 (NO. 93-06390).

The time provided for a party to lien a property for being unpaid for work performed is also limited under the New York Lien Law and strict compliance with all requirements is required for a lien to be valid and enforceable. For work performed on a single family dwelling the time allowed for a lien to be filed is 4 months from the date of last work NY Lien Law § 10. This time limit, however, can be unclear if there was a termination or an abandonment of the job by the contractor, or when the contractor returns for repairs or warranty work after completion.

“Where a contract has been abandoned (by the contractor), the date to file runs from the date of abandonment” Locke v. Goode 174 N.Y.S.2d 435. Any work done after abandonment will not extend the time allowed to file a lien. Likewise it follows that any repair or warranty call-backs on a completed project would also not extend the time available to the contractor for the filing of a lien. Nelson v. Schrank 75 N.Y.S.2d 761.

The homeowner often will not have direct dealings or agreements with subcontractors supplied by their contractor and can find their property liened by a subcontractor due to the contractor’s failure to pay the subcontractors. “If, before a lien is filed, the owner has paid the contractor, but the contractor has failed to pay the subcontractor, the subcontractor’s remedy is to look to the contractor [for payment]” Central Valley Concrete 310 N.Y.S.2d 925. “[An] owner’s liability to subcontractors is strictly limited to the amount of the lien fund, that amount owed to the general contractor.” NY Lien Law § 4.

 

The author, John Caravella Esq., is a construction attorney and formerly practicing project architect at The Law Office of John Caravella, P.C., representing architects, engineers, contractors, subcontractors, and owners in all phases of contract preparation, litigation, and arbitration across New York and Florida. He also serves as an arbitrator to the American Arbitration Association Construction Industry Panel. Mr. Caravella can be reached by email: John@LIConstructionLaw.com or (631) 608-1346.

 

 

This is a general information article and should not be construed as legal advice or a legal opinion.  Readers are encouraged to seek counsel from a construction lawyer for advice on a particular circumstance.

LI ConstructionLaw.com Opens New Ft. Lauderdale Office

 

The Law Offices of John Caravella, P.C., is proud to announce the launch of our new downtown Ft. Lauderdale Office to also serve the legal needs of the South Florida construction community, and those with ties to it.

We are also pleased to announce that Mrs. Sue-Ann Robinson Caddy has joined the firm bringing her substantial trial experience.

We invite you to visit our Florida Firm website, www.FTLConstructionLaw.com, to learn more about our Florida Construction Litigation and Arbitration Firm, our skilled attorneys, and services offered.

Serving the Palm Beach, Broward, and Dade County construction community.  

The author, John Caravella Esq., is a construction attorney and formerly practicing project architect at The Law Office of John Caravella, P.C., representing architects, engineers, contractors, subcontractors, and owners in all phases of contract preparation, litigation, and arbitration across New York and Florida. He also serves as an arbitrator to the American Arbitration Association Construction Industry Panel. Mr. Caravella can be reached by email: John@LIConstructionLaw.com or (631) 608-1346 or (954) 271-6053.

 

New York Construction Defects Paper

 

Defects exist throughout all construction projects, and it is likely no construction project is ever completed perfectly. In New York construction, however, perfection is not the legal standard work is required to achieve.

 

Issues relating to defective constrution make for complex litigation and arbitrations, and correcting defective construction can come with a large price tag.

 

This free paper provides a generalized introduction to this area of law, as well as examinations of design based defects, construction based defects, improperly used materials, improperly installed materials, and a discussion of some of the time limitations imposed on bringing a New York construction defect action.

NY Appellate Court Limits Contractor Liability in Home Explosion

The Appellate Division of the Supreme Court of New York, 4^th Department, on December 30, 2011, upheld in large part the ruling of a trial court in a unanimous decision.

In the matter of New York Cent. Mut. Fire Ins. Co. v. Glider Oil Company, Inc., & Stewart Brockett, d/b/a Another Construction Company, an action was brought against the contractor and an LP gas installer and supplier by the homeowner’s insurance company to recover the losses paid to the homeowner upon the destruction of the home by an LP gas explosion.

The homeowner entered a contract with Brockett for the construction of a home which was to include an LP gas system. The homeowners also entered into a separate contract with Glider for the installation of the LP system, and for subsequent deliveries of LP gas.

Construction of the home was completed in September, 2001, and the LP system was completely installed by October, 2001. Glider returned to the home several times since construction to service the system and supply LP gas, the last being on November 6, 2006. The home was destroyed March 20, 2007 by an LP gas explosion.

 

The homeowner's insurance company initially brought claims of breach of contract, negligence, breach of warranty and strict products liability. Both Brockett and Glider moved for summary judgment seeking dismissal of complaint against them. The trial court granted summary judgment to Brockett and partially granted Glider’s motion for summary judgment, and the plaintiff insurance company took this appeal.

The appellate court failed to find the decision of the trial court to be in error in allowing summary judgment and partial summary judgment for the defendants.

 “We reject the contention of plaintiff on its appeal that the court erred in granting that part of Brockett's motion for summary judgment dismissing the breach of contract cause of action against him as time-barred. The statute of limitations for a breach of contract cause of action is six years (see CPLR 213 [2]). In an action "against a general contractor and architect for defective construction and design, the cause of action generally accrues upon the completion of construction, meaning completion of the actual physical work" (State of New York v Lundin, 60 N.Y.2d 987, 989; see Phillips Constr. Co. v City of New York, 61 N.Y.2d 949, 951, rearg denied 62 N.Y.2d 646; Caleb v Sevenson Envtl. Servs., Inc., 19 A.D.3d 1090, 1091), i.e., "when the contract in question was substantially completed" (Town of Poughkeepsie v Espie, 41 A.D.3d 701, 706, lv dismissed 9 N.Y.3d 1003, lv denied 15 N.Y.3d 715)”

“Although there is evidence in the record that Brockett returned to the home in either the fall of 2001 or 2002 to complete work, that evidence is insufficient to raise a triable issue of fact concerning the date when the home was substantially completed (see generally Zuckerman, 49 NY2d at 562). Indeed, the work in question was described as incidental and cosmetic, and it was performed in a few hours on one day (see Lundin, 60 NY2d at 989-990; Tom L. LaMere & Assoc., Inc. v City of Syracuse Bd. of Educ., 48 A.D.3d 1050, 1051-1052). "[C]onstruction may be complete even though incidental matters relating to the project remain open" (Lundin, 60 NY2d at 989; see Phillips Constr. Co., 61 NY2d at 951; Tom L. LaMere & Assoc., Inc., 48 AD3d at 1052)”

The appellate court further rejected the plaintiff’s arguments that the trial court erred in dismissing the breach of warranty cause of action as against Glider.

“The statute of limitations for a breach of warranty cause of action is four years (see UCC 2-725 [1]), and such a cause of action "against a manufacturer or distributor accrues on the date the party charged tenders delivery of the product'" (Rissew v Yamaha Motor Co., 129 A.D.2d 94, 99, quoting Heller v U.S. Suzuki Motor Corp., 64 N.Y.2d 407, 411; see UCC 2-725 [2]). It is undisputed that Glider installed and connected the LP gas tank and supply system on or about October 22, 2001, and this action was commenced more than four years after that cause of action accrued (see UCC 2-725 [2]; Heller, 64 NY2d at 411).”

The appellate court further found that plaintiff’s claims against Glider for negligence and strict products liability causes of action were improperly dismissed by the trial court, and modified the trial court’s order accordingly.

Full text of the decision can be located here, and provides additional discussion on the topics of breach of contract, tort recovery, and strict products liability.

Your comments and article topic suggestions are invited in the field below.

The author, John Caravella Esq., is a construction attorney and formerly practicing project architect at The Law Office of John Caravella, P.C., representing architects, engineers, contractors, subcontractors, and owners in all phases of contract preparation, litigation, and arbitration across New York and Florida. He also serves as an arbitrator to the American Arbitration Association Construction Industry Panel. Mr. Caravella can be reached by email: John@LIConstructionLaw.com or (631) 608-1346.

 

This is a general information article and should not be construed as legal advice or a legal opinion.  Readers are encouraged to seek counsel from a construction lawyer for advice on a particular circumstance.

"Wall of Shame" for Contractors Pending Enactment in Suffolk

Unscrupulous home improvement contractors may be identified for their transgressions, thanks to a new bill passed by the Suffolk County Legislature. In continuing efforts to assist homeowners searching for reputable home improvement contractors, the Suffolk County Legislature recently unanimously passed a bill which would have the Suffolk County Office of Consumer Affairs post an online directory, nicknamed the ‘Contractor Wall of Shame’.

The bill, proposed by outgoing Majority Leader Jon Cooper (D-Lloyd Harbor), is planned to be a tool homeowners will be able to use prior to selecting any home improvement contractor.

 

Home improvement contractors in Suffolk County can find themselves listed in this dubious ranking if they have either lost their license, been cited for operating without proper license(s), or have been convicted of fraud, larceny, or false advertising.

Information to be posted on contractors includes names, addresses, photographs, and any known aliases used by contractors. If this bill becomes law in Suffolk County, unlicensed or convicted contractors will be required to supply the Suffolk County Consumer Affairs Office with their names, addresses, and photographs. Those who fail to register can be subject to a year in jail and a fine of up to $1,000.

“The Department of Consumer Affairs is strongly in favor of Legislator Cooper’s ‘Wall of Shame’ bill,” Consumer Affairs Director Cliff Coleman wrote in a letter to the Legislature urging the resolution’s adoption. “Consumer Affairs has hundreds of thousands of dollars in outstanding penalties on uncollected violations and we believe passage of this law will really help solve this problem.”

It is now up to outgoing county Executive Steve Levy whether to sign this bill into law in his remaining days in office. The specific language and full details on proposed penalties included in the bill can be seen here.

Your comments and article topic suggestions are invited in the field below.

The author, John Caravella Esq., is a construction attorney and formerly practicing project architect at The Law Office of John Caravella, P.C., representing architects, engineers, contractors, subcontractors, and owners in all phases of contract preparation, litigation, and arbitration across New York and Florida. He also serves as an arbitrator to the American Arbitration Association Construction Industry Panel. Mr. Caravella can be reached by email: John@LIConstructionLaw.com or (631) 608-1346.

 

This is a general information article and should not be construed as legal advice or a legal opinion.  Readers are encouraged to seek counsel from a construction lawyer for advice on a particular circumstance.

Top 7 Owner Risks in New York Construction Contracts

Construction is fraught with countless risks, from weather conditions, labor strikes, material unavailability, subsurface conditions, and inaccurate plans and specifications, among others. Each has the potential to delay the project, cause increased completion costs, and increase the likelihood of disputes, liens, and litigation.

Construction contract drafting and negotiations are all based in allocating these and other risks. Some parties are in a better position to avoid certain risks in the first place than another party may often be. This is the rationale that has established certain construction ‘norms’ for certain defined risks to be borne by each party.

In New York construction, it is common for the Owner to bear the following risks;

• Subsurface Conditions
• Accuracy of Plans, Specifications, and Code Compliance
• Building Permits and Zoning Compliance
• Presence of Asbestos
• Site Access
• Availability and Adequacy of Financing
• Owner Created Delays

These allocations do not always add additional risk to the owner. It is the owner, after all, who would be in the best position to know if asbestos exists on the property for example. Similarly, if the owner had knowledge of differing subsurface conditions, the owner would have received proposals for construction reflecting those conditions.

If the parties intend for the contractor to bear these risks, the contract should specify that the representations of the owner regarding the subsurface conditions are for informational purposes only, and that the contractor relies upon its own investigation of the site.

It is also logical for the responsibility of accurate plans and specifications to be placed upon the owner. The owner's supplying of plans and specifications to the contractor can create a host of additional legal issues. This will be explored separately in the pending article ‘Defects by Design; Who is Liable for Bad Plans and Specs.’

Contracting for construction can be a complex matter.  Many factors are variable and will differ from project to project and location to location. It is always a good practice to review and consider all known risks and attempt to have them allocated through effective legal representation and negotiations.

Your comments and article topic suggestions are invited in the field below.

The author, John Caravella Esq., is a construction attorney and formerly practicing project architect at The Law Office of John Caravella, P.C., representing architects, engineers, contractors, subcontractors, and owners in all phases of contract preparation, litigation, and arbitration across New York and Florida. He also serves as an arbitrator to the American Arbitration Association Construction Industry Panel. Mr. Caravella can be reached by email: John@LIConstructionLaw.com or (631) 608-1346.

 

 

Long Island Construction Community Invited to Annual Holiday Event

The U.S Green Building Council – Long Island Chapter will be hosting its Annual Holiday Event on Tuesday, December 6, 2011 from 6:00 - 9:00pm at Carlyle on the Green at Bethpage State Park.

The Long Island construction community is invited to come together with members of the USGBC-LI to celebrate the season and to discuss interests and activities in the green construction movement.

Further details and registration information for this event can be found here. 

With membership to the Chapter, admission is free.  Admission fee for guests includes hors d’oeuvres. Anyone with an interest in connecting with the green construction movement on Long Island is invited to attend this event.

This is an open networking forum for members and professionals to share ideas with members of the board and other chapter members. The evening will provide an opportunity to share ideas and learn more about the importance and positive impacts of Building Green on Long Island through Sustainable Design.

Past events have been successful gatherings for the different committee members of the Long Island Chapter to speak face to face, and also for meeting and speaking with members of the Long Island Construction Community.

If you have been curious about learning more about the USGBC-LI, or the Green Construction movement, you are encouraged to come join us for this informal cocktail hour.