Is Seattle Recession-Proof? Good News for WA Contractors

Wolfe Law Group, construction attorneys in Washington and Louisiana, posted an interesting article about the construction market in Seattle, WA and the strength of Seattle’s economy as a whole on its construction law blog. The text is reproduced below:

In the midst of the “doom and gloom” economy predictions in the U.S., there seems to be some hope for the Seattle construction market.

Recent reports have been optimistic about the nonresidential sector of Seattle’s construction industry and about the Seattle economy in general.

Forbes Magazine has gone as far as to call Seattle one of America’s Ten “Recession-Proof Cities,” and specifically cited the growth of the city’s manufacturing industry, calling it the strongest statistical showing in the nation.

The Seattle Times jumped into the conversation this week as well, in an article about the “Tale of Two Construction Sectors.” The article discusses the a struggling home building market in the Puget Sound area, but a very robust nonresidential market. Read the article by clicking here.

All Notices Are Not Created Equal: Prelim Notice v Notice of Intent to Lien

In the world of construction liens, the word “Notice” gets frequent use. The technical nature of each state’s notice requirements, however, are often misunderstood.

In general, there are 2 types of “notices” required by lien statutes: Preliminary Notice & Notice of Intent to Lien.

Preliminary Notice vs. Notice of Intent to Lien
A “Preliminary Notice” must usually be provided to the notified party before work begins on a construction project, or within a certain time frame from when materials and/or materials are first furnished.

A “Notice of Intent to Lien,” on the other hand, must usually be provided to the notified party before filing a lien, usually 7-15 days before the filing.

As you can see from these simple definitions, the requirements are extremely different. And it’s safe to assume that if your project and state requires notice, the failure to send it will result in the forfeiture of your company’s lien rights.

When Is Notice Required?
Every state’s requirements are different – and unfortunately, quite technical. Not only does the technical nature of lien statutes make them difficult to understand and interpret, but they also result in sometimes absurd consequences.

Here are some general notice trends:

  • Frequent Rule #1: Almost every state has notice requirements when work is being performed on an “owner-occupied” residence. In theory, this is to protect homeowners from getting burned and having to pay contractors twice. Some states (like Pennsylvania) even prohibit liens against single family homeowner residences. If you’re working on an “owner-occupied” residence – check your state’s lien laws.
  • Frequent Rule #2: The further down the chain you are, the more likely notice is required. Across the nation, there are more notice requirements for subcontractors than prime contractors, and more notice requirements for sub-subcontractors and suppliers than 1st tier subcontractors. If you’re contracting with a subcontractor – check your state’s lien laws.


Zlien.Com
has one of the best free resources for construction lien laws in the United States. View our FAQs, state lien law outlines and summaries, and even download free lien forms on our public wiki: http://wiki.zlien.com.

If you’re looking for information about your state, you can go to the state directory at http://states.zlien.com, or simply enter http://yourstate.zlien.com in as a URL. Of course, in place of “your state,” you should enter your state’s name.

Notice Chart
Here is a quick-glance “notice chart” giving you shorthand rules about the notice requirements in the states we service. Click Here.

The Effectiveness and Strength of Construction Liens

Andrea Goldman, a construction attorney in Massachusetts, recently placed an interesting post about the strengths of construction liens on her blog, “Home Contractor vs. Homeowner.

While the article specifically discusses mechanic’s liens in Massachusetts, the points ring true about liens across the United States:
  • Liens are less costly than filing suit;
  • Liens are a very effective means of pursuing payment;
  • Liens prevent progress payments for new construction projects, prevent the sale of property, and force others to come to the table to try and settle the dispute;
  • Even improperly filed liens require the other party to spend legal fees to file an action seeking the dissolution of the instrument.
To read Ms. Goldman’s article, click on this link:

Electing ADR Post-Contract: It’s Never Too Late


This article is part of a three part series titled “Alternative Dispute Resolution – Why, When & How.” To read the other parts in this series, or to read more articles about ADR, navigate to the Wolfe Law Group ADR page here: ADR.

Under most circumstances, discourse about Alternative Dispute Resolution centers around the construction contract and the importance of “ADR clauses.” However, it’s never too late for the parties to agree to an alternative dispute resolution process.

Agreeing to ADR before filing suit
At the onset of a dispute, the parties can simply agree to forego filing a traditional lawsuit and to engage in some type of ADR process. When this choice is made, the parties are still “contracting” to submit to binding arbitration, but the notion is sometimes forgotten when the original contract is already history and the dispute has already riled the parties.

It’s advisable to include ADR clauses in the original contract to avoid this “heat of the moment” problem, but there are many circumstances when the parties – even at odds – can agree to ADR post-contract.

During the course of a construction project, there are many situations whereby the parties are amicably dealing with one another but encountering some disagreements. The ADR process can be very valuable to the parties in this scenario.

The parties can simply agree to submit to the decision of a neutral, or to participate in a speedy mediation on this issue. The decision of the neutral or compromise of the mediation can likely resolve the issue, prevent delay in scheduling and keep the parties on good terms.

It’s oftentimes more difficult to engage an opposing party in ADR in a more mature dispute, as the parties are less likely to agree to anything at the beginning of a adverse proceeding. However, the benefits of the ADR process may outweigh any urge to agree with the adversary, and if litigation is actually commenced, the parties can still later suspend the suit in lieu of ADR.

Agreeing to ADR after suit is filed.
As suggested above, it’s common for parties to submit to an ADR process even after suit has been filed. Depending on the county / parish of your litigation, there are different time requirements for when the parties may or may not participate in alternative dispute resolution. Across the board, however, these requirements are extremely liberal, and the parties are usually only limited when the action is close to trial.

While any ADR process may be elected during litigation, the most common ADR vehicle used by litigants is mediation. Mediation allows the parties to meet, express their position, and evaluate its pros and cons and the risks of litigation in hopes of reaching an acceptable compromise.

Mediation may be initiated most anytime, but litigants most often submit to mediation at the beginning of litigation or towards the end. There are pros and cons to mediation during both periods.

The pros and cons to mediating at the start of litigation:

Pros

  • The parties have not incurred much expense and frustration, and therefore may be more willing to compromise to avoid the same;
  • Even if a settlement is not reached, it provides the parties with an opportunity to analyze its case in-depth, and to get a better picture of the adversary’s position.
  • Usually, neither party has clear leverage over the other party. Oftentimes, at the end of litigation, certain facts have been exposed that weakens the position of one party. At the start of litigation, however, the party with the weaker position has a little more leverage than it will later in the proceeding.

Cons

  • The parties are less willing to compromise. The emotional connection to the dispute is still clear and present, and the expenses of litigation have not been exposed;
  • Stones are unturned – or, in other words, both parties are working on a limited set of facts and understanding of the issues at play. The litigation process allows the parties to research its and the opposing party’s position, and a mediation immediately after suit proceeds before this researching opportunity.

The pros and cons to mediating later in litigation:

Pros

  • The parties have incurred much expense and frustration throughout litigation, and they are more willing to compromise certain positions in exchange with “getting the matter behind them.”
  • Through the litigation process, the parties have an opportunity to develop their respective positions and to investigate their adversary’s position, which gives them a good understanding of their risks in going to trial.
  • The threat of trial is real and present, and the parties are more likely to make compromises to avoid the unpredictable event.
  • The “demands” of the respective parties are more developed and understood.

Cons

  • Since the positions of the parties are better developed and understood, the party with leverage will be aware of the fact and be less willing to make a significant shift in their position – and thus, settlement may be less likely.
  • With trial around the corner, parties may be more willing to wait the extra few weeks or months and let a judge or jury decide.

Electing ADR Post-Contract
Electing ADR post-contract is easy, but the actual process will likely depend on the ADR provider chosen by the parties. Typically, the parties should agree with one another in writing, and then submit the written agreement to the ADR provider.

The American Arbitration Association provides the following clauses as example clauses for choosing ADR post-contract:

Construction Dispute Mediation Submission Clause:
The parties hereby submit the following dispute to mediation administered by the American Arbitration Association under its Construction Industry Mediation Procedures (the clause may also provide for the qualifications of the mediator(s), method of payment, locale of meetings, the tolling of the statute of limitations, pre-dispute resolution step clause with time frames and any other item of concern to the parties). If a party fails to participate in any scheduled mediation conference, that party shall be deemed to have waived its right to mediate the issues in dispute.

Construction Dispute Arbitration Submission Clause:
We, the undersigned parties, hereby agree to submit to arbitration administered by the American Arbitration Association under its Construction Industry Arbitration Rules the following controversy: (cite briefly). We further agree that the controversy be submitted to [one] [three] arbitrator(s). We further agree that we will faithfully observe this agreement and the rules, and that a judgment of any court having jurisdiction may be entered on the award.

Large, Complex Construction Dispute Submission Clause:
We, the undersigned parties, hereby agree to submit to arbitration administered by the American Arbitration Association under its Procedures for Large, Complex Construction Disputes the following controversy [describe briefly]. Judgment of any court having jurisdiction may be entered on the award.