Construction Law

Builder’s Risk Insurance Basics

Broadly speaking, builder’s risk insurance protects against unplanned risks to work under construction and to certain items on the construction site.

Builder’s risk provides first-party coverage, which means that the insured itself can make a claim directly against the policy.texas construction builders risk insurance

For additional reading, the Houston Chronicle has published an overview of builder’s risk insurance here.

Insurance is a specialized practice area, and the precise language of the insurance policy is very important to understanding rights and responsibilities. For this reason, it’s wise to visit with your insurance agent or attorney about your particular situation.

In our Law 101 posts, we define terms, phrases, or concepts with the goal of conveying core information in order to set the stage for more complex discussions.

What is an Owner’s “Program” on a Construction Project?

A program is part of the communication process between the construction project owner and the company(ies) responsible for evaluating, designing, and building the project.texas construction law owner's program

In its most basic elements, an owner’s program contains the owner’s overall goals and limitations for the project, This may include items such as price/budget constraints, scheduling, space requirements, special equipment, safety issues, and more.

The program often serves as the foundation for further discussion about the feasibility of the project in light of the program’s substance. For example, in those instances in which the owner retains an architect for the project, that architect almost invariably provides feedback on the program as part of the schematic design phase, the first of several phases of the architect’s design process.

In our Law 101 posts, we define terms, phrases, or concepts with the goal of conveying core information in order to set the stage for more complex discussions.

Who Should Get the Initial Permits Required to Start Construction?

The owner of the project — the person desiring the construction — is generally required to obtain the preliminary construction permits necessary to begin the work.

However, the owner may reallocate this responsibility by virtue of her contract with the contractor or her contract with the architect/engineer.

In addition to construction permits, there may be other restrictions, laws, or regulations that influence an owner’s ability to build on any particular site.

In our Law 101 posts, we define terms, phrases, or concepts with the goal of conveying core information in order to set the stage for more complex discussions.

 

Texas General Contractors Legally Operate Without Licenses

texas license licensure general contractorsTexas requires licenses for auctioneers, used auto-part recyclers, massage therapists, cat breeders, and others.

General contractors need no license.

Some argue this reduces administrative burdens and thereby keeps down what would otherwise be more excessive costs, which would be passed on to consumers. Others argue this exposes consumers to risky contractors and unduly places the burden of enforcement on private litigants. Additional arguments on both sides abound.

Our Tips & Resources posts are intended to provide general educational information. Like all other material on this blog, it is not a substitute for legal advice.

No Statutory Warranties for Most Texas Residential Construction

Warranties may benefit parties by providing the maker goodwill and the recipient some independent assurance that the promisor will stand behind the good or service it provided.

texas new home construction warranties

Except for contracts for new Texas homes signed June 1, 2005 – August 31, 2009, there are no state statutory warranties or state statutory  performance standards that always apply to the construction of new homes in Texas. This is due to the sunset of the Texas Residential Construction Commission Act on September 1, 2009.

Therefore, any warranties that exist on new home construction arise, if at all, from the (1) contract and dealings between the homeowner and the home builder; and (2) common law.

In our Law 101 posts, we define terms, phrases, or concepts with the goal of conveying core information in order to set the stage for more complex discussions.

Joint Checks on Construction Projects

joint check texas construction project lawWhat are joint checks? How are they used on construction projects? Are they a perfect solution?

A joint check is a check made payable to two or more payees in the conjunctive, e.g. “Jane Doe Masonry, Inc. and Good Brick, Inc.” A financial institution should only honor the check if both payees have correctly endorsed it.

A joint check may provide the parties on a construction project an additional level of security. For example, an owner may issue a joint check payable to both the general contractor and the subcontractor. By endorsing this check, both the general contractor and subcontractor will be admitting receipt of payment: the general contractor from the owner, and the subcontractor from the general contractor. By virtue of this fact, the owner has some assurance that the general contractor has paid the subcontractor at least some portion of what the subcontractor is properly owed. Furthermore, the subcontractor will know when and how much the general contractor has been paid.

Joint checks are not foolproof. People and financial institutions can intentionally or carelessly circumvent the security joint checks may offer.

In our Law 101 posts, we define terms, phrases, or concepts with the goal of conveying core information in order to set the stage for more complex discussions.