New Orleans City Council Passing Construction Requirements

Two weeks ago the New Orleans City Council passed and ordinance that is purported to beef up labor violations for city construction contracts. The council was sharply divided whereby the ordinance passed by a 4-3 final vote.

The ordinance is best described by the City Council’s own publication:

“The Council adopted Ordinance Cal. No. 28,899, authored by Council Vice President Granderson that requires that contractors and subcontractors with city construction contracts of more than $50,000 report to the City Attorney any current company violations of federal, state and municipal laws that govern labor and employment. Specifically, the contractor is required to give notice to the City Attorney within 90 days of the issuance of any labor violation determination. If the contractor fails to correct the violation within a 90 day period the City Attorney will issue a written notice to the contractor and take enforcement action including civil remedies.”

There are many supporters and critics of the new ordinance. Many of the opponents say that it will just create needless paper work for contractors and will not solve the root cause of the problem. Although, supports say that since Katrina undocumented workers have been hurting union workers doing it by the book. The New Orleans City Business and NOLA.com both have their takes on the issue with good write ups. Overall this sounds like it will create more paper work for contractors and subject them to vague and ambiguous labor laws (where they are already subject to them anyway).

Having dealt with the City Attorney’s office in the past, this seems like it will simply be a bullet in its gun when going after small businesses. The city claims that if contractors are obeying the law they have nothing to worry about, unfortunately based on past client experiences, that is not likely the case. Just what the construction industry needs right now, another law.

Around The Web: Housing Bubble On The Rise Again?

Back in 2008, along with major sections of the U.S. economy, the U.S. housing market tanked. This was a terrible time for home builders and most contractors in the industry. There was a ripple effect that was felt industry wide. Signs of the the rebound have been few and far between. We are now one quarter deep into 2012 and there are a few positive signs that the end of the drought may be near.

Just last week CNN reported very good numbers for building permits nation wide. According to the article, new home building permits are up from month to month and a large amount from this time last year. There is also an increase in the number of new apartment / condo permits that are being requested nationwide. The article stated that major contractors and home suppliers are seeing increases in stock value and revenue stream.  Some sites like yahoo.com published a Reuters article stating that there is a “housing comeback.”

A wide range of cities nation wide are reporting similar findings, such as Portland, Oregon and Dayton, Ohio. If this trend keeps up there is a good chance that the housing market will rebound and home sales will start to improve.

Release the Lease

A topic that is tangential to the construction industry is property law. Just recently here at Wolfe Law Group, I had a client come to me with some ownership issues involving leases. Typically after a construction project is complete, especially in the commercial realm, there will be a lease of some type. Many times owners will complete the construction project and then get involve in complex leases with tenants. Landlord / Tenant issues happen often because there are natural opposing positions created by the document and the occupancy.

There are many types of leases out there and it is very important to know the difference and to make sure that you have the power or at least have a fair shake. There are residential, commercial, industrial, green, month-to-month, oral, and a host of others. Just as in any legal contract, the devil is in the details.

I have clients who have disputes over 30 year commercial leases all the way down to those with month-to-month residential leases and the key to successfully getting what you want is to anticipate any issues when drafting the lease and before it is executed.

The Louisiana Civil Code has an entire section on leases which starts with article 2668. The State of Louisiana publishes this helpful brochure for parties to a lease.

There are a number of hot button topics contained in leases, such as notice clauses, termination clauses, lessor responsibilities, lessee responsibilities and duty clauses. If the lease is silent to such matters then the Civil Code will govern. This may or may not be favorable to your position.

I write this blog article because I see so many disputes out there when it comes to leases. As with all contracts (and medicine) an ounce of prevention is worth a pound of cure. If you get your documents reviewed before entering into them, you will be in a much better position if a dispute arises.

New Orleans Business Market Receives National Acclaim

Over the weekend a good friend living in New York City, sent me a link to a Wall Street Journal article which outlines what all of us here in New Orleans have been seeing over the past few years, new exciting business growth. The article by Douglas McCollam, talks about the success of the non-profit Idea Village which was started in NOLA a decade ago.

The most telling aspect of McCollam’s piece is how he sees, and how it is apparent to New Orleans residents, that the attitude and culture of business has changed. Hurricane Katrina helped to rid the city of the negative attitude and filled it with a group of forward thinking resilient entrepreneurs who want to make a difference, while at the same time making a dollar.

One of the more colorful excerpts from McCollam’s article addresses the problem with the former attitude of the city,

“We had found the root of the problem.” It’s a problem that New Orleans seems to have overcome in the years since Hurricane Katrina—so much so that Mr. Williamson can now afford a little levity.

Other positive organizations that are helping to aid in business growth and entrepreneurial spirit include the New Orleans Startup Fund. This all ties into constructionlawmonitor.com because, NOLA startup fund recently picked Zlien.com as one of its featured start up companies to help grow and become a successful New Orleans and nation-wide company. Zlien.com was founded by Wolfe Law Group founder, Scott G. Wolfe, Jr. Scott is the embodiment of the Wall Street Journal article and the national focus on our great city.

The winds of change are among us here in New Orleans and its a great time to live in this city. McCollum points out that Forbes and Inc.com have recently coined New Orleans as a harbor for business growth and young talent. Only time will tell how this will change this city, but it will be a fun ride nonetheless.

Mechanics Lien Infographic

The Construction Lien Blog (published by me!) yesterday posted a neat infographic focused on the mechanics lien. There are lots of infographics out there, but very few focused on legal issues. The mechanic lien laws, however, actually made a great subject for such visualized data, and I invite you to take a look at it over on our blog or below.

The infographic was inspired by awesome infographics used in other industries. The mechanics lien infographic visualizes the mechanics lien laws, and also presents some data from a survey Zlien conducted of mechanics lien claimants who filed liens in 2011.

Here it is:

Mechanics Lien Infographic

Construction Contracts – Pay Now to Save Later

All to often in my job I am faced with clients who end up in a dispute on a construction project. Whether it be a public or private, commercial or residential, and no matter how large or small the project or contractor, the first question I ask any potential client is – where’s the contract? The contract is the cornerstone of any construction project and eventual dispute. It contains the scope of work and all provisions which govern when disputes arise.

Construction contract defined:

Construction Contract:A legal document which specifies the details of a construction project. A good construction contract will include: 1.The contractors registration number. 2.A statement of work quality such as ‘Standard Practices of the Trades’ or ‘according to Manufacturers Specifications.’ 3.A set of blue prints or plans. 4.A set of specifications. 5.Any allowances. 6.A construction timetable including starting and completion dates. 7.A fixed price for the work, or a time and materials formula. 8.A payment schedule. 9.A written warrantee. 10.A clause which outlines how any disputes will be resolved.

Any savvy contractor will have a custom tailored contract for each job that will help put that company in a good position when the dispute arises and its time to call the lawyer. A thousand dollar contract upfront can save a contractor thousands upon thousands later on in the project. Properly written ADR clauses and indemnity clauses can save a contractor thousands in legal fees and court/administrative costs.

All to often, I will have contractors operating on oral agreements, (just a handshake and a man’s word!) or I have contractors who download a form off the internet, not knowing what provisions lie within. In these current times, form documents and oral agreements are unacceptable. Parties who operate like this will lose money over the long haul, especially those who want to operate on a large scale and actually make money. Otherwise, the big boy contractors will make you use their contracts which are so lopsided that the other contracting party will never prevail in any dispute.

If you as a contractor are considering using  or signing a contract given to you by a contractor you are subbing to, then you should have that agreement reviewed by a professional so as to make sure the sub’s rights are protected. For more information see Wolfe Law Group’s website regarding contract drafting and contract review.

Louisiana Contractors & State Licensing – Home Improvement

Just the other day here at Wolfe Law Group, I had to do so research for a client on the licensing rules for contractors. I deal with these rules daily but this client’s issue helped to refresh me. This got me thinking that many contractors and hiring parties do not necessarily know the rules that govern contractors of all types. Here in Louisiana, contractor licensing law is governed by the State Licensing Board for Contractors (SLBC). The actual statues are codified in La R.S. 37:2150 et seq.

Today’s post focuses in on a classification called Home Improvement Contracting. Home Improvement Contractors (La R.S. 37:2175.1 et seq) need to have a “certificate” (not a full license) with the SLBC to perform any home improvement contracting services in excess of $7,500 but below $75,000. These contracts need to be in writing and include: 1) full agreement between owner and contractor, 2) full name, address and registration number of the contractor, 3) detailed list of work and materials, 4) total to be paid & how the costs will be paid, and 5) finally signatures of all parties. Finally the owner needs a copy of the contract documents before any work can start. See La R.S. 37:2175.1 for complete list.

This seems like a very commonsensical list, but you will be surprise how many parties get this wrong and/or miss out on critical elements. The contract will not be deemed invalid if an aspect is missing but the rules need to be followed.

Residential contractors need to be registered with the SLBC. The contractor needs to make a written application with the SLBC, under oath. The application needs to include the following information in addition to proof of workers compensation insurance:

(B)(1) The applicant’s name, home address, business address, and social security number.

(2) The names and addresses of any and all owners, partners, or trustees of the applicant including, in case of corporate entities, the names and addresses of any and all officers, directors, and principal shareholders. This Section shall not apply to publicly traded companies.

(3) A statement whether the applicant has ever been previously registered in the state as a home improvement contractor, under what other names he was previously registered, whether there have been previous judgments or arbitration awards against him, and whether his registration has ever been suspended or revoked.

La. R.S. 37:2175.2

The requirements for granting this certification are more relaxed than the normal contractors license but there are grounds for denial and/or revocation.

If contractors are performing projects that fall within the $7,500-$75,000 window on residential improvements and they get caught for not being registered or not having the proper certification there are penalties. Penalties include administrative costs for hearings and a maximum of 25% of the contract price for the violating party. This could essentially mean thousands of dollars in addition to any causes of action that the homeowner may have against the violating contractor.

Finally, and most importantly for contractors, it is easy to get this certification. If a contractor is not properly licensed to be a home improvement contractor, and that contractor is not paid on the home improvement project, that contractor is legally prohibited from filing a lien on the project! (See La R.S. 37:2175.6) This is very important if you are a contractor trying to get paid. The homeowner can rip you off with very little recourse.

Bottom line: if you are a contractor who deals in home improvement, it is easy to get your home improvement license with the state. It will give you protections and keep you legal. Further, if you are a homeowner and know or suspect your contractor is not properly licensed, you have the SLBC to help protect you and penalize the offending contractor. I help contractors get this registration and I’ve also helped homeowners turn in violating contractors.