HOBB Community

Building Is Risky Business
Create job documentation that is so tight, it could scare off a hungry attorney at the onset...Review trade contractor's insurance and written agreements...Time to tune up these items. Study your trade contractor's liability policy to make sure the dollar limits are high enough for your jobs, and check for their exclusions in coverage. For example, if your policy excludes soil movement, then be sure your subcontractor has this particular coverage... All jobs should have a written and signed trade-contractor agreement, preferably one which includes "hold harmless" indemnity clauses, waiver of subrogation, warranty provisions, insurance requirements (that you request), and a provision for binding arbitration for dispute resolution. In simple terms, you want to transfer the risk to your subs, making them the primary insured. This agreement establishes which policyholder's insurance will pay first and who is responsible in a claim... Consult a construction-contract lawyer for review of all your sales contracts. Make sure they, too, contain binding arbitration provisions in the event of a dispute.
 
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Yes.  And then do as you damn well please because you have CYA and there is large gap between theory, protection from liability and questionable business practices, shoddy results, and lack of quality control in the field.

That's exactly the problem with the General Liability insurance industry.   Why should a framing subcontractor, drywall subcontractor, or interior trim sub-contractor be responsible for soil movement or any other defect which they have no responsibility for?
The developer is the primary contractor that develops lots in a subdivision for building.  The subs have nothing to do with off-sites, plan development, engineering, etc.   Most subs that work on subdivision homes supply labor only, but the developers have chosen to shift all their responsibility to each and every sub, due to these clauses in contracts which requires the sub's general liability insurance to take care of all the problems.

As a sub who has been involved in these type of "shift the liability: contracts with a developer, - the only person that benefits is the developer.   Thereafter, the sub's insurance rates go sky-high, often putting the sub out of business, while the developer skates along "scot" free, continues to make unbelievable amounts of profit, and continues to build, often knowing they have defect problems with their plans, or the location of these new subdivisions.  After all, they can just sue the sub, and take no responsibility for their part.

As far as my company is concerned this is legalized extortion.   Until you have been involved with these type of indemnity contracts, you don't know what your talking about.    Developers need to take responsibility for their own development problems.failures.

carol

Carol writes:<<As far as my company is concerned this is legalized extortion.>>

I agree with you.  Perhaps an intelligent, creative legal team (Eliot Spitzer-type) should review the application of RICO to the corporate/public new house building industry? Your company, and the new house buyer, unjustly assume costs which  are legitimately the responsibility of the corporate/public new house builder through their creative exploitation of the legal system, the intent of which is to avoid accountablility and responsibility for the product produced.

Gianni Magazzeni, chief of the U.N.'s human rights office in Baghdad has said of the violence in Iraq, "The more there is impudence and no one is punished for their crimes [read behavior], the more that fuels the cycle of violence and counterviolence."  The same can be said for the lack of responsibility and accountability of some members of the corporate/public new house building industry.