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This blog focuses on real estate, land use and construction-related topics affecting Virginia and the Washington, D.C. metro area. With topics ranging from contract drafting and negotiation to local and regional land use project updates, the attorneys at Bean, Kinney & Korman provide timely insight and commentary on the issues affecting owners, builders, developers, contractors, subcontractors and other players in the industry. If you are interested in having us cover a specific topic, please let us know.

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Posts from September 2009.

Think twice before you accept a check tendering only partial payment!  In a recent case, Helton v. Phillip A. Glick Plumbing, Inc., [pdf], the Virginia Supreme Court ruled for a homeowner who had repeatedly disputed his plumbing company’s charges and argued that his bill was excessive. The homeowner wrote his last check for  $1300 -- $1686.51 less than the final invoice -- and included the words “paid in full” in the memo line of the check.  He sent the check with a letter raising yet again the issue of overbilling and wasted time and materials, and said that he would make no more payments.  The plumbing company cashed the check, crossing out “paid in full” and writing “No” and “balance due $1686.51.”

September 28, 2009
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The current state of the economy makes clear that cash-flow is king in the construction industry. As our last post discussing the failed Granby Tower project in Norfolk demonstrates, even very high profile projects can suffer disastrous failures if the players have not addressed financing issues appropriately. For both general contractors and subcontractors, the first key to protecting yourself is to know the applicable rules of the game regarding mechanic’s liens and payment bonds.

  • Know the timing requirements – failing to comply can and often will be fatal to your claim
  • Know the precise contents of required bond and lien notices – again, failure is not an option
  • Do not assume that all states are the same – with regards to both liens and bonds, you must know the applicable rules for each state in which you are doing work, and states differ substantially on form, content, and timing of required notices
  • For bonds, obtain copies of the bonds before you start work as a subcontractor – on private jobs, the bond terms will control and your notices need to comply with the bond or again your claim may fail
  • Do the research before the last second - you do not want to find out no day 91 that your lien notice was required on day 90; it is best to know the requirements before the job starts
  • Associated corollary - if possible, spare your lawyer the heart attack and get them involved early, before the last second!

I had a great time last Thursday at another one of Rutherfoord’s Trends in Building Green seminars. We got to hear from Tommy Russo from Akridge, Eric Oliver from EMO Energy Solutions, Bobby Christian from Tangible, and Tom Mawson, the Executive Director for the U.S. Green Building Council’s National Capital Region Chapter. 

I made a presentation outlining our region’s local jurisdictional green building trends, policies and incentives for private commercial development from a zoning, planning and land-use perspective. Here’s the slide show from the presentation. There was quite a bit more explanation beyond what is outlined in the slides, including bonding and other security requirements for incentives and a number of new initiatives a number of localities are currently pursuing. If anyone has any questions about what any of these localities (Arlington County, City of Alexandria, Fairfax County, Loudoun County, Prince William County, Montgomery County, Prince George's County and Washington, D.C.) are doing, please feel free to post a question and I can respond in more detail.

One of the more intriguing and rewarding aspects of our recent entry into the legal blogging and social media arena has been the rapid development of conversations and connections with interesting people.  Two of these friendships have led to cross-posts on a pair of our friend's blogs.

We have been friendly with Chris Hill at Construction Law Musings for some time before the launch of our blog.  Not only has Chris been a tremendous source of information, support, and helpful advice during our first fledgling steps, but we have enjoyed an extended dialogue on various topics, blog posts, and twitter.  Chris invited us to guest post at Construction Law Musings and you can see that post today, Yes, Virginia, Contract Terms Do Matter: Financing Term Offers Owner an Escape Hatch.

As noted earlier today, we had the opportunity to post on the Construction Law Musings blog today as a guest blogger.  The post discusses litigation involving the failed Granby Tower project in Norfolk, Virginia - Norfolk inhabitants will likely know this project as the excavated hole in the ground downtown filling with water for the last couple years.

 

As discussed previously, USGBC has imposed extended reporting requirements as part of its minimum program requirements for LEED. It appears the extended reporting already adopted may only be an initial step. We may see extended reporting requirements backed up by decertification; we may see on-going recertification as a basic part of LEED program structure.  I admit this is speculative, but we may be seeing a shift from LEED using energy modeling towards an actual performance model.

The recent New York Times piece criticizing LEED (discussed previously) has reignited discussion of the potential for decertification after initial issuance of LEED certification. Some previously pointed to the USGBC addition of extended energy reporting for five years after occupancy as a "Minimum Performance Requirement" and the threat of decertification as an enforcement mechanism.  More recently, commentators have predicted recertification programs.  Rich Cartlidge even called for a wedding between LEED for New Construction and LEED for Existing Buildings.

The USGBC changes must be viewed against the backdrop of the development of international, state and local building codes and even Congressional legislation.  Codified efficiency standards would clearly and immediately raise the minimum energy bar across the board and reduce or eliminate some of the arguments raised by the Times article.  Reducing compliance to clear codes may also reduce in part the increasingly complex interface between local authorities interpreting prescriptive codes and the interpretive voluntary third party organization subject to little if any legal challenge or appeal (commented on previously by Chris Hill).   LEED as a voluntary tool has succeeded in driving the dialogue and advancing knowledge of green building.  LEED as a remotely delegated code interpretative structure with limited avenues of legal challenge is far more complicated.

September 16, 2009
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It is common to have arbitration clauses in contracts, and courts will honor these clauses in all but very rare instances. In fact, Virginia courts have repeatedly stated a clear public policy in favor of arbitration and upholding arbitration agreements.  Additionally, Virginia Code Section 8.01-581.02 (A) [pdf] mandates a court to compel arbitration when a party to an arbitration agreement petitions the court and the opposing party refuses to arbitrate.

The Virginia Department of Transportation and the Virginia Soil and Water Conservation Board are each respectively in the process of examining and issuing regulations impacting the development and construction industry.  The proposed VDOT regulations cover access management and relate to minor arterials, collectors, and local streets.  The public comment period began September 15, 2009 and is set to end on October 14, 2009.

The Soil and Water Board's stormwater regulations include significant amendments to stormwater management and were designed to address water quality and quantity and local stormwater management criteria.  Public comment ended on August 21, 2009 resulting in 408 comments.   The very significant level of commentary reflects a high degree of citizen and business interest and involvement.  The comments range from general but impassioned calls to defend the environment to quite a bit of substantive critical comments from design professionals, builders, and ordinary citizens regarding the regulations and their potential resulting economic impact.    

The legal blogosphere has been active the last two weeks with discussion of the recent article in the New York Times critical of LEED. The article in essence uses the example project of the Federal Building in Youngstown, Ohio as a sample for LEED projects that fail to be "green". The Times in particular attacks the actual energy performance of a specific project as an example of why the LEED certified project is not in fact green. Reaction has been varied, from Shari Shapiro pointing out these discussions have been in the mix for some time  to an impassioned, relatively emotional, reaction from Rob Watson, a board member of USGBC and significant national player in the green movement.  Chris Cheatham has pointed out for discussion the interplay between green building success on the one hand and risk associated with projects receiving funding under the American Recovery and Reinvestment Act.  Before we move on to the bigger picture, the article deserves the specific focus on the example project, called by the Times the "Federal Building", but more properly known as the Nathaniel R. Jones Federal Building and US Courthouse (Youngstown, OH). 

A quick “congrats” to Jim Pritchett who has been named Executive Director of Alexandria’s relatively new Housing Development Corporation. The Alexandria Housing Development Corporation (AHDC) is a non-profit developer and owner of affordable housing, primarily focused on projects located in the City of Alexandria, Virginia.

For those of you that don’t already know, Arlington County has filed a complaint against the U.S. Department of Transportation, the Secretary of the United States Department of Transportation, the Federal Highway Administration, the Federal Highway Administrator, the Virginia Department of Transportation, and the Secretary of the Virginia Department of Transportation. Apparently, the purpose of this complaint is to stall and possibly derail the HOV/HOT highway project in Northern Virginia which would add additional travel lanes along the I-95/I-395 corridor from Spotsylvania to the Pentagon. For decades, Arlington County has been tirelessly waging a war against suburban sprawl and the impacts of funneling more and more automobile traffic from outlying suburban counties through Arlington County.

After an astounding nearly two-years of litigation, Virginia’s Fourth Circuit found for a private property owner and the City of Norfolk in August following a challenge by a private citizen of the City’s ability to modify height restrictions in the City’s Ghent historic districts. Apparently, in the Ghent historic districts in Norfolk, maximum building heights may be altered through a legislative act by the City Council through a special exception process which culminates in the enactment of a “Certificate of Appropriateness”. In anticipation of the Christ and Saint Luke’s Episcopal Church being awarded such a certificate to increase the height of a proposed building addition from 35 feet to 53 feet, a private citizen filed a complaint challenging the process via its enabling legislation and on constitutional grounds. 

As the economy has languished, many property sellers and landlords have experienced extensions of property listings. In many cases, these extensions have actually exceeded the terms of the listing agreements with their brokers. This situation can raise some complex questions of exactly what listing terms remain in place and what commission, if any, the real estate broker can recover.

A federal judge in Maryland has ruled that Executive Order mandating compliance with the “e-verify” program for confirmation of immigration status as part of the Federal Acquisition Regulations is constitutional and enforceable. The case decision, issued on August 26, 2009, granted summary judgment to the federal government and leaves intact an administration decision to implement the final rule effective September 8, 2009.

September 1, 2009
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A Fairfax County judge has ruled that a commercial real estate tax used to help fund the rail extension to Dulles Airport is constitutional. According to the Washington Business Journal, Fairfax Circuit Court Judge Stanley Klein approved of the structure in the context of a bond validation suit initiated by Fairfax County and related entities. Fairfax created the Dulles Corridor Phase I Special Improvement Tax District as a funding mechanism to repay bonds issued to fund Fairfax County's contribution to the rail extension project.

Virginia has seen significant challenges to its attempts to create stable funding mechanisms for transportation over the last several years. The most notable challenge was a successful appeal to the Supreme Court of Virginia to significant portions of the overall transportation funding legislation adopted by Virginia's General Assembly in 2007. In the case of Marshall v. Northern Virginia Transportation Authority, the Supreme Court of Virginia held that the General Assembly violated Virginia's Constitution by attempting to delegate its taxation powers to unelected multi-district transportation authorities in Northern Virginia and Hampton Roads.
 

September 1, 2009
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Topics Taxes

The economy has affected the budgets of not just individuals and companies, but also state and local governments. In these hard economic times, governments are facing serious shortfalls of revenue, made worse by the plunging value of real estate, shriveling sources of funding and growing budget deficits.  In response, states and municipalities have become much more proactive about checking and enforcing compliance with all taxes, including business taxes.

You are likely aware of business license requirements, but  you may not realize that you could be required to obtain a nonresident construction license if you work in other states, such as Maryland. Additionally, you could be subject to further business tax obligations above and beyond your business license fee, such as sales or gross receipts taxes and use taxes.