{"id":897272,"date":"2020-04-01T12:10:31","date_gmt":"2020-04-01T18:10:31","guid":{"rendered":"https:\/\/www.myconstructionexpert.com\/blog\/?p=897272"},"modified":"2020-04-01T12:10:34","modified_gmt":"2020-04-01T18:10:34","slug":"few-things-to-consider-instead-of-binging-netflix","status":"publish","type":"post","link":"https:\/\/www.myconstructionexpert.com\/blog\/few-things-to-consider-instead-of-binging-netflix\/","title":{"rendered":"A Few Things You Might Consider Doing Instead of Binging on Netflix"},"content":{"rendered":"\n

Garret Murai | California Construction Law Blog<\/a><\/p>\n\n\n\n

Governments throughout the world have issued \u201cshelter in place\u201d orders requiring that residents stay at home except for \u201cessential\u201d purposes. As a result, in the United States, more than a third of Americans have been ordered to stay at home. This, in turn, has had a direct impact on construction projects which have slowed or have been temporarily shuttered altogether, and it will (not may) have an impact on the flow of project funds. So what can project owners and contractors do? We\u2019ve got a few tips.<\/p>\n\n\n\n

1.     Read Your Contract, Paying Particular Attention to Force Majeure, No Damages for Delay and Notice Provisions<\/strong><\/p>\n\n\n\n

For the most part, with the exception of statutory rights and remedies which we will discuss below, your contract spells out your rights and remedies should the proverbial \u201cS\u201d hit the fan. It is, in other words, the rules you agreed to, and you should know what those rules provide. Three provisions you should look for, and if they\u2019re in your contract, you should review carefully are: (1) Force majeure provisions; (2) No damages for delay provisions; and (3) notice provisions.<\/p>\n\n\n\n

Force Majeure Provisions<\/strong><\/p>\n\n\n\n

Latin for \u201csuperior force,\u201d a force majeure provision defines circumstances beyond a party\u2019s control that may render contractual performance by that party difficult or impossible to perform. A force majeure provision is, by its nature, defensive. In other words, it is a defense against a higher-tiered party\u2019s claim that a lower-tiered party has failed to perform its obligations under a contract.<\/p>\n\n\n\n

Most people think of force majeure events as being \u201cActs of God,\u201d or, in other words, earthquakes, tornadoes, tsunamis and other naturally occurring events. That\u2019s not always the case though. Force majeure provisions can include any number of \u201ctriggering\u201d events including government actions, terrorism, riots and other events that aren\u2019t naturally occurring.<\/p>\n\n\n\n

In short, if your contract includes a force majeure provision, you need to read and understand it, so that you know what events trigger the provision. You also need to understand the intricacies of force majeure provisions. For example, few force majeure provisions that I\u2019ve seen include a trigger for plagues or epidemic outbreaks such as the coronavirus, but many include government actions as a \u201ctriggering\u201d event. Thus, while the coronavirus itself may not be a \u201ctriggering\u201d event, state and local \u201cshelter in place\u201d orders currently in effect would likely constitute a \u201ctriggering\u201d event.<\/p>\n\n\n\n

No Damages for Delay Provisions<\/strong><\/p>\n\n\n\n

The current crisis is going to cause delays on construction projects, whether because the project itself is temporarily shut down due to \u201cshelter in place\u201d orders at the state or local levels, because of an inability to get workers out to the job site because they are sick or scared, because your work is impacted because other trades are not coming out to the project site, or because of delays in the delivery of or the inability to purchase materials and equipment.<\/p>\n\n\n\n

There are many grey areas here, but the impact is the same: Delays on the project. Some contracts, recognizing that there could be delays on the project which no one could have foreseen or controlled, include \u201cno damages for delay\u201d provisions. An example of what a \u201cno damages for delay\u201d provision might look like is the following:<\/p>\n\n\n\n

In the event that Subcontractor\u2019s performance of its Work is delayed through no fault of its own, Subcontractor may request an extension of time for performance of its Work, but in no event shall be entitled to any increase in the Contract Price or damages arising from such delay.<\/p><\/blockquote>\n\n\n\n

In short, a \u201cno damages for delay\u201d provision, while allowing a contractor to seek an extension of the contract time due to delays, prevents a contractor from seeking an increase in the contract price, whether due to the need to pay workers for overtime or hazard pay, for increases in material costs, for extended general conditions, etc.<\/p>\n\n\n\n

Notice Provisions<\/strong><\/p>\n\n\n\n

Most construction contracts include notice provisions setting forth when, under what circumstances, and how notice may be given. Importantly, they often also set forth happens if you don\u2019t give proper notice. In the current situation, notice provisions are extremely important as contractors face delays and time-related costs impacting their ability to meet contractually agreed upon completion dates and ability to perform their work without coming out at a financial loss.<\/p>\n\n\n\n

Many notice provisions provide that if notice is not given, or not timely given, that a contractor waives its right to pursue claims in which notice was required. An example of notice provision related to delays and time-related costs is the following:<\/p>\n\n\n\n

In the event that Contractor claims that its Work has been impacted through no fault of its own, Contractor may request an extension of the Contract Time and\/or increase in the Contract Price by providing written notice to Owner no later than fifteen (15) days of the event giving to the claim. Provided, however, that should Contractor fail to provide timely notice, Contractor waives any right to an extension of the Contract Time or increase in the Contract Price.<\/p><\/blockquote>\n\n\n\n

In short, notice provisions are extremely important right now. In fact, even if your contract doesn\u2019t include a notice provision requiring that notice be provided of delays and\/or time-related costs, my suggestion, is that you consider sending notice anyway. To successfully bring a delay and\/or time-related cost impact claim a contractor needs to show that the delay was both\u00a0compensable and excusable.<\/p>\n\n\n\n

2.     Understand Your Statutory Payment Rights<\/strong><\/p>\n\n\n\n

In California, there are three primary statutory payment remedies available to those performing work on construction projects: (1)\u00a0mechanics liens\u00a0and\u00a0design professional liens; (2)\u00a0stop payment notices; and (3)\u00a0payment bond claims. Who can assert these payment remedies, when they can be asserted, and how they are asserted, varies. You can read more about each of these payment remedies by clicking the links above, but here\u2019s a snapshot:<\/p>\n\n\n\n

Who Can Assert These Payment Remedies<\/strong><\/p>\n\n\n\n

Only design professionals, that is, licensed architects, registered engineers, and registered land surveyors, can assert a design professional lien.<\/p>\n\n\n\n

Only direct contractors, subcontractors, material suppliers, equipment lessors and laborers may asset mechanics liens.<\/p>\n\n\n\n

And, only subcontractors, material suppliers, equipment lessors, and laborers may assert stop payment notices and payment bond claims.<\/p>\n\n\n\n

When Can They Be Asserted<\/strong><\/p>\n\n\n\n

Here\u2019s where it gets interesting, most people think that mechanics liens can only asserted after completing their scope of work. For direct contractors who are serving as general contractors that usually means when the entire project is completed. For all others it is when their work is completed.<\/p>\n\n\n\n

But, importantly, given the situation we are in, \u201ccompletion\u201d under Civil Code section 8180 includes, not only completion of the entire project (in the case of general contractors) or completion of a party\u2019s scope of work (in the case of all others), but also \u201ccessation of labor for a continuous period of 60 days.\u201d<\/p>\n\n\n\n

Thus, in a situation where project sites may be closed for a prolonged period of time due to the various \u201cshelter in place\u201d orders, if this includes a cessation of labor for a continuous period of 60 days, contractors, subcontractors, material suppliers, equipment lessors and laborers would be able to record a mechanics lien even though the project or their scope of work has not yet been completed.<\/strong><\/p>\n\n\n\n

As to stop payment notices and payment bond claims, there is no requirement that that a subcontractor, material supplier, equipment lessor, or laborer complete its work before serving a stop payment notice or making a payment bond claim.<\/p>\n\n\n\n

Similarly, for design professionals, a design professional does not need to complete its work before recording a design professional lien. However, there are three requirements that must be met first: (1) a building permit or other \u201cgovernmental approval\u201d must have previously been obtained; (2) construction must not yet have commenced; and (3) the design professional must make demand for payment not less than 10 days before recording its design professional lien.<\/p>\n\n\n\n

Requirements Prior to Assertion<\/strong><\/p>\n\n\n\n

In order to record a mechanics lien, serve a stop payment notice or make a payment bond claim most claimants, with the exception of direct contractors, but then only if there is no construction lender on the project, must have first served a preliminary notice. More information on each of these statutory payment remedies, as well as forms, can be found in the\u00a0Blueprints\u00a0and\u00a0Toolbox\u00a0section of our blog.<\/p>\n\n\n\n

\"\"<\/a><\/figure><\/div>\n\n\n\n

3.     Know How You Can Statutorily Shorten Deadlines <\/strong><\/p>\n\n\n\n

While there are statutory payment remedies available to contractors and others who furnish labor, materials and equipment on a construction project, project owners are not without their own remedies. For projects that are at our near completion, or that are mid-way through construction, a project owner can shorten the deadlines for a claimant to record a mechanics lien, serve a stop payment notice, or make a payment bond claim, by recording a notice of completion or notice of cessation.<\/p>\n\n\n\n

Notices of Completion<\/strong><\/p>\n\n\n\n

A\u00a0notice of completion\u00a0may be recorded upon the occurrence of any of the following events:<\/p>\n\n\n\n

  1. Actual completion of a work of improvement;<\/li>
  2. Occupation or use by the owner accompanied by cessation of labor;<\/li>
  3. Cessation of labor for a continuous period of 60 days; or<\/li>
  4. For public works projects, acceptance by the public entity.<\/li><\/ol>\n\n\n\n

    A notice of completion may be recorded on or before 15 days after completion of a work of improvement.<\/p>\n\n\n\n

    Notices of Cessation<\/strong><\/p>\n\n\n\n

    A\u00a0notice of cessation\u00a0can be recorded if there has been a cessation of labor for period of 30 days.<\/p>\n\n\n\n

    When statutorily permitted, by recording a notice of completion or notice of cessation, a project owner may shorten the time period for potential claimants to record mechanics liens, serve stop payment notices and make payment bond claims, by shortening the time to make such claims by as much as two-thirds.<\/p>\n\n\n\n

    \"\"<\/a><\/figure><\/div>\n","protected":false},"excerpt":{"rendered":"

    Garret Murai | California Construction Law Blog Governments throughout the world have issued \u201cshelter in place\u201d orders requiring that residents stay at home except for \u201cessential\u201d purposes. As a result, in the United States, more than a third of Americans have been ordered to stay at home. This, in turn, has had a direct impact… Continue reading A Few Things You Might Consider Doing Instead of Binging on Netflix<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false},"version":2}},"categories":[14,9],"tags":[9895,12,72,52],"class_list":["post-897272","post","type-post","status-publish","format-standard","hentry","category-construction-2","category-construction-contracts","tag-advise-consult","tag-construction","tag-construction-contracts-2","tag-contractors","entry"],"jetpack_publicize_connections":[],"yoast_head":"\nA Few Things You Might Consider Doing Instead of Binging on Netflix - Advise & Consult, Inc.<\/title>\n<meta name=\"description\" content=\"construction projects have slowed or stopped altogether, and it will impact the flow of project funds. 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