We wrote here of a counterclaim to an Open Meetings case that was perhaps the most frivolous filing we ever had seen. And then today in the Washington Post online we see this blogged by Professor Volokh:
This very well could top that once, one short day later. Maybe there is something in the water.
The Finney Law Firm has a strength in bringing claims under Ohio’s Open Meetings and Public Records laws, and we are used to seeing amazing defenses that public officials raise to their secretive acts in violation of Ohio law.
But even we were surprised at a counterclaim against a Council member brought on the basis that he refused to raise taxes, and refuses to adopt the “company line” on a host of other initiatives. Maggie Thurber of Ohio’s Watchdog.Org writes, here, about this counterclaim against a Finney Law Firm client. It’s going to be an interesting one!
A copy of the counterclaim is here.
This article is the third in a series on new construction. The contents of this series of articles apply to commercial as well as residential projects.
The essence of a real estate contract is that a buyer pays money in exchange for title to real property. In the case of new construction, as discussed here and here, the added difficulty is describing with precision the improvements to be built — defining what the builder is going to deliver.
But defining what the buyer is going to deliver is also a difficulty, for — because we don’t necessarily know the details of what is to be built at contract signing — we also don’t low the final price.
So, the starting point is a clear starting point. At the time of the signing of the contract, it is important to know what the builder has committed to build — and what he has not committed to — and what the buyer has agreed to pay for that product. Once we have that foundation, we can address the construction changes and price changes from that point.
Change orders
Builders work on tight budgets and tight schedules. If the buyer decides mid-course to change something about the construction, it involves re-engineering the project, new material orders, and new subcontractor agreements. The change may well upset the entire construction schedule, which impacts the builders’ costs.
So, it is important that a project be planned well from its inception, and that change orders be kept to a minimum, if the goal is keeping the construction budget under control.
As a result of the variables set forth above, Builders typically want the right to reject change orders. In some instances, the contract calls for change orders to be priced at cost increases plus an increment — 10% to 20% – for the builders’ inconvenience in planning the change. In other circumstances, the builder has the right to price change orders as he sees fit.
Allowances
Allowances are the “hidden” price bombshell in many contracts. This is so because the builder typically sets the level of allowances, but if they re set too low — below what an average homebuyer would select, then the buyer invariably is going to exceed the allowance, and thus incur a price increase. As a result, it is critical that allowances be set at a reasonable level, or the buyer should be aware that the contract price will rise through the construction process.
Selections
In addition to allowances, some builders offer selections that do not increase price — as long as the buyer is willing to live within the selections provided, such as for carpet and other flooring and cabinetry. If the buyer desires to stray from the limited selection offered by the builder, then he exposes himself to additional price increases.
The new construction process can be tricky, and confusion cover change orders, allowances and selections are one key area where costly surprises arise.
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This article is one in a series on the Finney Law Firm blog on new construction. Read more here:
New construction: The problem of “what” is to be built >>
New construction: The “when” >>
New construction: On whose land are you building? >>
New construction: Cost-plus versus fixed-price >>
New construction: What form of contract?
New construction: Ohio residential buyers absolutely protected from liens in limited circumstances
Oh, the intrigue involved with reading the smoke signals emanating from the U.S. Supreme Court! For those who love the law, it can be fascinating to watch.
Today, the Court accepted for review Central Radio Co. v. City of Norfolk, which examines the question as to whether an exemption from a sign ordinance for religious and governmental emblems renders the sign ordinance unconstitutionally content-based.
This question in Central Radio is similar to one the Court has been grappling with for several months in Reed v. Town of Gilbert, heard at oral argument on January 12 of this year. There, the Court will decide if restrictions placed upon temporary signs due to their content is unconstitutional. The Town of Gilbert gives favorable treatment to temporary political, ideological and other messages as compared to directional signs placed for church services.
Volohk speculates that SCOTUS’ plan is to “grant, vacate, and remand the case back to the Fourth Circuit” from whence it came in light of the decision in Town of Gilbert, coming before the end of this month.
We expect that the Court’s decision Town of Gilbert will impact on our pending case, Wagner v. Garfield Heights, addressing similar content-based issues. That interrelationship is addressed here.
Read the Washington Post article analyzing the Central Radio case here.
The concept that man is subject to the rule of law, rather than the rule of law being subject to the whim of man, was birthed 800 years ago this month with the execution of and affixing of his royal seal upon the Magna Carta at Runnymede by King John.
The Wall Street Journal, here, has an excellent article on the world-changing importance of this document, and all freedoms that flowed therefrom: “uncensored newspapers, security of property, equality before the law, habeas corpus, regular elections, sanctity of contract, jury trials.of the things.”
But this 800 years of freedom is, and always has been, under constant threat. We all must remain vigilant.
This article is the second in a series on new construction. The contents of this series of articles apply to commercial as well as residential projects.
In this blog entry, we discuss the “what” is to be built under a new construction contract, residential or commercial. The problem is that, unlike with an existing building, in order to properly contract for the construction of a new building, the parties must carefully define “what” is to be built using words and drawings.
I teach continuing education classes on new construction, and there I define this problem of describing the improvements to be built as a 4-dimensional problem, with the first three dimensions being the height, width and depth of a project — the physical description of what is to be built. The 4th dimension, then, is “when” the project is to be delivered.
This blog entry addresses that topic — the 4th dimension of a construction project — when will the finished product, or substantially finished product, be delivered to the buyer.
There are a myriad of issues that can impact the “when,” starting with selections to be made by the buyer. Here are just a few of the issues impacting the timing of completion:
The timing issues encountered in a construction contract significantly impact both construction costs and operational issues confronted by both buyer and seller. Thus, having a realistic understanding of timing issues at the front end of a construction project is important, and deciding how to allocate the risk of timing issues is a critical contract consideration.
This article is one in a series on the Finney Law Firm blog on new construction. Read more here:
New construction: The problem of “what” is to be built >>
New construction: Change orders, allowances and selections can significantly impact price >>
New construction: On whose land are you building? >>
New construction: Cost-plus versus fixed-price >>
New construction: What form of contract?
New construction: Ohio residential buyers absolutely protected from liens in limited circumstances
Finney Law Firm’s own Curt Hartman today got a shout-out in the accountability department for one of his public records requests from Professor Eugene Volokh of the Volokh Conspiracy blog in the Washington Post.
Read it here.
This article is the first in a series on new construction. The contents of this series of articles apply to commercial as well as residential projects.
Defining “what” is to be built in a new construction contract can be tricky.
For starters, when buying an existing commercial building or house, you can see, touch, feel and inspect what is there, and based upon those observations decide whether or not to buy. But in a new construction contract, we must define — using words and drawings — the end product. And it is an end product with hundreds and thousands of components. Thus, we must carefully use the contract to describe what the builder will build.
This would include dimensions, construction materials, fixtures, mechanical systems and equipment, appliances, and finish materials, such as millwork (cabinets), countertops, flooring, landscaping, etc.
Some of these items are left out of the contract, and references as “allowances,” which are to be addressed in a later article. Be cautious with allowances, as they are frequently the basis for price disputes between builders and buyers.
Second is the intangible of “quality.” The flatness of concrete floors, the waviness of walls, the precision of miter joints, are all exceedingly difficult to describe. One way to tackle this drafting challenge is to refer to a “model” or “sample” that the builder has held out as the general quality of construction. For example: “the general quality of construction — to the finishes and selections — will equal or exceed that of the model home shown to buyer by builder located at 1234 Main Street.” Others try to reference objective standards of quality, but this can be cumbersome to wade through– and be cautious of who drafted these standards as they will invariably be tilted towards the drafter.
So, consider carefully how you define what is to be built, and the quality of the construction. It can mean the difference between a quality project and a disappointment.
This article is one in a series on the Finney Law Firm blog on new construction. Read more here:
New construction: The “when” >>
New construction: Change orders, allowances and selections can significantly impact price >>
New construction: On whose land are you building? >>
New construction: Cost-plus versus fixed-price >>
New construction: What form of contract?
New construction: Ohio residential buyers absolutely protected from liens in limited circumstances
We recently were consulted by a couple who had purchased three residential lots with lake frontage. They intended to build a home that straddles all three lots, so clear title to all three is critical to their plans.
Unfortunately, when they went to the bank for a loan on the properties to build their dream home, they learned that title to two of the lots is impaired.
Before buying the two lots, they had the title checked, and they thought the attorney wrote to them with a title opinion on both. As they checked their paperwork, they did have one title opinion letter, but it recited neither of the lots in question, but rather a lot they had sold.
Thus, they were ready to start construction of their home, but were “stuck” either with bad title, or waiting for the title to be cleared.
How could this situation have been avoided?
This firm worked to assure that the attorney handling the closing will in fact “stand behind” his deficient legal work, but with proper legal work or title insurance coverage in place, they could be proceeding to build their dream house music sooner.
We discuss here the power of a lis pendens action, which is the combination of a law suit to force a seller to perform combined with a public notice to all prospective purchasers and mortgage lenders that the buyer in the litigation has a claim to the title to the real estate.
In addition to litigation — which always runs the risk of becoming expensive, there is another tool available under Ohio law that should have the effect of preventing a seller from conveying title to a second buyer or mortgage lender free from claims of the buyer number 1: An Affidavit of facts relating to title.
Ohio Revised Code Section 5301.252 sets forth the requirements for an Affidavit of Facts Relating to Title. Essentially, one includes the legal description of the disputed land, and then recites the name of the owner and the recording reference for his deed, along with the facts underlying the buyer’s claim. So, if a buyer has a contract to buy real estate that the seller is breaching, one attaches that contract to the Affidavit, recites that pursuant to that Contract the buyer has the right to buy the subject property and places that claim of record.
A subsequent buyer “should” not buy the land, as long as his title examiner catches the claim (which he should). (We have seen circumstances where subsequent buyers blow past these claims.)
Thus, the seller of real property is placed in the position of needing to address the buyers’ claims before he can sell the property to another, or mortgage the property.
An Affidavit of Facts Relating to Title can be a powerful tool to force sellers to deal with a title claim from a buyer whom he would rather ignore.