Category Archives: law

Construction Law-Insurance

I represented an owner who hired a contractor to build a large equestrian center. The roofing was put on upside down! The result was that water leaked into the building, soaking the insulation, which in turn fell on the floor in great sheets, damp, smelly and a general mess. The resulting litigation involved the owner, the contractor, the architect, the roofing sub-contractor, and the roofing material supplier. That’s another story.

[more…]

The point here is that when a claim was made to the insurance carrier of the general contractor, who in turn made a claim to the insurance carrier of the roofing subcontractor for the roof which had to be redone, the carrier denied coverage, based on the “your work” exclusion. The carrier would cover the damage caused by the water leak but not the cost of redoing the roof. Why? Because the “your work” exclusion means that insurance coverage does not cover poor/improper/negligent work. Damages from the work-yes. The redo of the work, no. Contractors commonly think that if they have insurance, they are covered for everything. No. They are only covered for damage caused by their poor work. The solution to the owner is to require a performance bond. It is not a cure all, but it is better than trying to recover from a contractor who has nothing, or in this case, filed bankruptcy. The reason why the roof was put on upside down is another

Business Law-joint owners

It is a common practice when two folks start a business to decide on joint ownership. It might be as 50-50 partners in a partnership, or 50% ownership in stock, or as equal members and joint managers of an LLC. Let me suggest it is a recipe for major trouble, or a disaster. The problem comes when there is a disagreement. How do you settle it? Somebody has to concede, or there is no resolution–which is what commonly happens. Since neither party has a majority, either party can block a decision. The decision then gets made by a third party–either an arbitrator or a judge. That means you have turned your business and the resolution of the dispute over to someone you don’t know, who knows nothing about the nuances of your business, or the effect of resolving the impasse. His/her job is to resolve the dispute–that’s it.

Cam Charges

When tenants are negotiating a lease for a commercial property they commonly look at the rent as the main financial term. While that is critical, there is another critical element, and that is the Common Area Maintenance or CAM charges.

[more…]

Those are the charges for the common area of the building. The definition of the common area is critical and should be closely examined. Some landlords include the roof, or the Heating, Ventilation and Air Conditioning (HVAC) system as part of the CAM charges. Tenants think of sidewalks, parking lots and landscaping as common area. While those are all generally included, the above examples are not unusual.

Another element is a management fee. I have seen the fee as a percentage of the rent or other times totally undefined and annually a very big number. I recently saw a 15% depreciation fee included.

The point of all this is that CAM charges are in addition to the rent. Landlords are wise enough to know that tenants focus on rent. CAM charges can add major amounts to the monthly bill, so examine them closely.