CONDOMINIUM AND NEW HOME
WARRANTIES AND RIGHTS OF ACTION
Raymond Daniel Burke
Ober Kaler Grimes & Shriver
100 Light Street
Baltimore, Maryland 21202
410-347-7392
[email protected]
www.marylandcondolaw.com
www.ober.com
www.bakerdonelson.com
IMPLIED WARRANTIES UNDER MARYLAND LAW
Warranties that the law implies
p
in every new home purchase
agreement
www.bakerdonelson.com
© 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC
IMPLIED WARRANTIES UNDER MARYLAND LAW
Do not have to appear
pp
in any
y
written document
www.bakerdonelson.com
© 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC
IMPLIED WARRANTIES UNDER
MARYLAND LAW
Implied Warranties Under Title 10
www.bakerdonelson.com
© 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC
IMPLIED WARRANTIES UNDER MARYLAND LAW
Implied Warranties Under Title 10
Apply to "improvements" meaning every
newly constructed private dwelling unit
and
d every fi
fixture
t
and
d structure
t t
made
d partt
of it at the time of construction by a
building contractor of subcontractor
www.bakerdonelson.com
© 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC
IMPLIED WARRANTIES UNDER MARYLAND LAW
Implied Warranties Under Title 10
Enforceable against a "vendor"
Any person engaged in the business of
erecting or otherwise creating an improvement
to realty
or
To whom a completed improvement has
been granted for resale in the course of his
business
www.bakerdonelson.com
© 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC
IMPLIED WARRANTIES UNDER MARYLAND LAW
Implied Warranties Under Title 10
(1) Free from faulty materials
www.bakerdonelson.com
© 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC
IMPLIED WARRANTIES UNDER MARYLAND LAW
Implied Warranties Under Title 10
(1) Free from faulty materials
(2) Constructed according to sound
engineering standards
www.bakerdonelson.com
© 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC
IMPLIED WARRANTIES UNDER MARYLAND LAW
Implied Warranties Under Title 10
(1) Free from faulty materials
(2) Constructed according to sound
engineering standards
(3) Constructed in a workmanlike manner
www.bakerdonelson.com
© 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC
IMPLIED WARRANTIES UNDER MARYLAND LAW
Implied Warranties Under Title 10
(1) Free from faulty materials
(2) Constructed according to sound
engineering standards
(3) Constructed in a workmanlike manner
(4) Fit for habitation
www.bakerdonelson.com
© 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC
IMPLIED WARRANTIES UNDER MARYLAND LAW
Implied Warranties Under Title 10
Home must comply with:
(1) Applicable building codes
www.bakerdonelson.com
© 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC
IMPLIED WARRANTIES UNDER MARYLAND LAW
Implied Warranties Under Title 10
Home must comply with:
(1) Applicable building codes
(2) The contract documents
www.bakerdonelson.com
© 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC
IMPLIED WARRANTIES UNDER MARYLAND LAW
Implied Warranties Under Title 10
Home must comply with:
(1) Applicable building codes
(2) The contract documents
(3) Industry standards
www.bakerdonelson.com
© 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC
IMPLIED WARRANTIES UNDER MARYLAND LAW
Implied Warranties Under Title 10
Home must comply with:
(1) Applicable building codes
(2) The contract documents
(3) Industry standards
(4) Manufacturer’s specifications
www.bakerdonelson.com
© 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC
IMPLIED WARRANTIES UNDER MARYLAND LAW
Implied Warranties Under Title 10
Home must comply with:
(1) Applicable building codes
(2) The contract documents
(3) Industry standards
(4) Manufacturer's specifications
(5) Americans With Disabilities Act
www.bakerdonelson.com
© 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC
IMPLIED WARRANTIES UNDER MARYLAND LAW
Implied Warranties Under Title 10
Cannot be excluded or modified unless the
h
home
h
has b
been completed
l t d
www.bakerdonelson.com
© 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC
IMPLIED WARRANTIES UNDER MARYLAND LAW
Implied Warranties Under Title 10
An exclusion or modification of the
warranties on a completed home must:
(1) Be in writing
www.bakerdonelson.com
© 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC
IMPLIED WARRANTIES UNDER MARYLAND LAW
Implied Warranties Under Title 10
An exclusion or modification of the
warranties on a completed home must:
(1) Be in writing
( ) Set out "in detail"
(2)
deta tthe
e warranty
a a ty to be
excluded or modified
www.bakerdonelson.com
© 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC
IMPLIED WARRANTIES UNDER MARYLAND LAW
Implied Warranties Under Title 10
An exclusion or modification of the
warranties on a completed home must:
(1) Be in writing
(2) Set out "in
in detail"
detail the warranty to be
excluded or modified
(3) Set out the terms of the new
agreement
www.bakerdonelson.com
© 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC
IMPLIED WARRANTIES UNDER MARYLAND LAW
Implied Warranties Under Title 10
An exclusion or modification of the
warranties on a completed home must:
(1) Be in writing
( ) Set out "in detail"
(2)
deta tthe
e warranty
a a ty to be
excluded or modified
(3) Set out the terms of the new
agreement
(4) State that the purchaser consents
www.bakerdonelson.com
© 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC
IMPLIED WARRANTIES UNDER MARYLAND LAW
Implied Warranties Under Title 10
An exclusion or modification of the
warranties on a completed home must:
(1) Be in writing
( ) Set out "in detail"
(2)
deta tthe
e warranty
a a ty to be
excluded or modified
(3) Set out the terms of the new
agreement
(4) State that the purchaser consents
(5) Signed by the purchaser
www.bakerdonelson.com
© 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC
IMPLIED WARRANTIES UNDER MARYLAND LAW
Implied Warranties Under Title 10
Run for one (1) year from
(1) Delivery of the deed
deed, or
(2) Date of possession
Whichever is first
www.bakerdonelson.com
© 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC
IMPLIED WARRANTIES UNDER MARYLAND LAW
Implied Warranties Under Title 10
Run for one (1) year from
(1) Delivery of the deed
Or
(2) Date of possession
Whichever is first
Except:
Where the home is not complete at the time of delivery of the
deed,
the warranties run one (1) year from
(1) Date of completion
or
(2) Date of possession
Whichever is first
www.bakerdonelson.com
© 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC
IMPLIED WARRANTIES UNDER MARYLAND LAW
Implied Warranties Under Title 10
Run for one (1) year from
(1) Delivery of the deed
or
(2) Date of Possession
Whichever is First
Except:
Wh
Where
the
th h
home iis nott complete
l t att th
the titime off d
delivery
li
off th
the
deed, the warranties run one (1) year from
(1) Date of completion
or
(2) Date of possession
Whichever is first
Except:
For "structural defects" the warranties run for two (2) years
from those dates
www.bakerdonelson.com
© 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC
IMPLIED WARRANTIES UNDER MARYLAND LAW
Implied Warranties Under Title 10
In the event of a breach of the warranties,
a court may award legal or equitable relief
relief,
or both, as justice requires
www.bakerdonelson.com
© 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC
IMPLIED WARRANTIES UNDER MARYLAND LAW
Implied Warranties Under Title 10
An action must be commenced
(1) Within two (2) years after the defect as
discovered or should have been discovered
www.bakerdonelson.com
© 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC
IMPLIED WARRANTIES UNDER MARYLAND LAW
Implied Warranties Under Title 10
An action must be commenced
(1) Within two (2) years after the defect as
discovered or should have been discovered
or
(2) Within two (2) years after the expiration of
the warranty
Whichever is first
www.bakerdonelson.com
© 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC
IMPLIED WARRANTIES UNDER MARYLAND LAW
Implied Warranties Under Title 10
Apply to newly constructed condominiums
and the common elements
www.bakerdonelson.com
© 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC
IMPLIED WARRANTIES UNDER MARYLAND LAW
Implied Warranties Under Title 10
Apply to newly constructed condominiums and
the common elements
One or more original unit owners can sue for
breach of the warranties as to the common
elements, and can recover the full damages
Starfish Condominium Ass'n. v. Yorkridge
Service Corp., 195 Md. 673 (1983)
www.bakerdonelson.com
© 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC
IMPLIED WARRANTIES UNDER MARYLAND LAW
Implied Warranties Under Title 10
Apply to newly constructed condominiums and
the common elements
One or more original unit owners can sue for
breach of the warranties as to the common
elements, and can recover the full damages
Even if some unit owners' claims are time-barred
www.bakerdonelson.com
© 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC
IMPLIED WARRANTIES UNDER MARYLAND LAW
Implied Warranties Under Title 10
Apply to newly constructed condominiums and
the common elements
One or more original unit owners can sue for
breach of the warranties as to the common
elements, and can recover the full damages
Even if some unit owners' claims are time-barred
The council of unit owners can bring the action on
behalf of any two or more unit owners
www.bakerdonelson.com
© 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC
IMPLIED WARRANTIES UNDER
MARYLAND LAW
Condominium Implied Warranties
Under Title 11
www.bakerdonelson.com
© 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC
IMPLIED WARRANTIES UNDER MARYLAND LAW
Condominium Implied Warranties Under Title 11
The Title 10 implied warranties apply to all
sales by developers of condominiums,
and a “newly
newly constructed private dwelling
unit” means a newly constructed or newly
converted condominium unit and its
appurtenant undivided fee simple interest
in the common areas
www.bakerdonelson.com
© 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC
IMPLIED WARRANTIES UNDER MARYLAND LAW
Condominium Implied Warranties Under Title 11
May
y not be modified or excluded
www.bakerdonelson.com
© 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC
IMPLIED WARRANTIES UNDER MARYLAND LAW
Condominium Implied Warranties Under Title 11
Implied Warranties On The Unit
www.bakerdonelson.com
© 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC
IMPLIED WARRANTIES UNDER MARYLAND LAW
Condominium Implied Warranties Under Title 11
Implied Warranties On The Unit
In addition to the Title 10 implied warranties there
is a warranty that the developer will correct any
defects in materials or workmanship in the
construction of
www.bakerdonelson.com
© 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC
IMPLIED WARRANTIES UNDER MARYLAND LAW
Condominium Implied Warranties Under Title 11
Implied Warranties On The Unit
In addition to the Title 10 implied warranties there
is a warranty that the developer will correct any
defects in materials or workmanship in the
construction of
(1) walls
www.bakerdonelson.com
© 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC
IMPLIED WARRANTIES UNDER MARYLAND LAW
Condominium Implied Warranties Under Title 11
Implied Warranties On The Unit
In addition to the Title 10 implied warranties there
is a warranty that the developer will correct any
defects in materials or workmanship in the
construction of
(1) walls
(2) ceilings
www.bakerdonelson.com
© 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC
IMPLIED WARRANTIES UNDER MARYLAND LAW
Condominium Implied Warranties Under Title 11
Implied Warranties On The Unit
In addition to the Title 10 implied warranties there
is a warranty that the developer will correct any
defects in materials or workmanship in the
construction of
(1) walls
(2) ceilings
(3) floors
www.bakerdonelson.com
© 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC
IMPLIED WARRANTIES UNDER MARYLAND LAW
Condominium Implied Warranties Under Title 11
Implied Warranties On The Unit
In addition to the Title 10 implied warranties there
is a warranty that the developer will correct any
defects in materials or workmanship in the
construction of
(1) walls
(2) ceilings
(3) floors
And that the heating and air-conditioning systems
were installed in accordance with acceptable
industry standards
www.bakerdonelson.com
© 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC
IMPLIED WARRANTIES UNDER MARYLAND LAW
Condominium Implied Warranties Under Title 11
Implied warranties on the unit
Run for one (1) year from the transfer of title to
the unit
www.bakerdonelson.com
© 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC
IMPLIED WARRANTIES UNDER MARYLAND LAW
Condominium Implied Warranties Under Title 11
Implied warranties on the unit
Run for one (1) year from the transfer of title to
the unit
Notice of a defect must be given to the
developer within the one (1) year warranty
period
www.bakerdonelson.com
© 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC
IMPLIED WARRANTIES UNDER MARYLAND LAW
Condominium Implied Warranties Under Title 11
Implied warranties on the unit
Run for one (1) year from the transfer of title to
the unit
Notice of a defect must be given to the
developer within the one (1) year warranty
period
An action must be commenced within one (1)
year of the end of the warranty period
www.bakerdonelson.com
© 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC
IMPLIED WARRANTIES UNDER MARYLAND LAW
Condominium Implied Warranties Under Title 11
Implied warranty on the common elements
In addition to the Title 10 warranties there is a warranty
that the developer will correct any defects in defect in materials or
workmanship in the following specified components
www.bakerdonelson.com
© 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC
IMPLIED WARRANTIES UNDER MARYLAND LAW
B. Condominium Implied Warranties Under Title 11
Implied warranty on the common elements
In addition to the Title 10 warranties there is a warranty
that the developer will correct any defects in defect in materials or
workmanship in the following specified components
and
that the following components are within acceptable
industry standards in effect when the building was constructed:
www.bakerdonelson.com
© 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC
IMPLIED WARRANTIES UNDER MARYLAND LAW
B. Condominium Implied Warranties Under Title 11
Implied warranty on the common elements
In addition to the Title 10 warranties there is a warranty
that the developer will correct any defects in defect in materials or
workmanship in the following specified components
and
that the following components are within acceptable
industry standards in effect when the building was constructed:
(1) roof
www.bakerdonelson.com
© 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC
IMPLIED WARRANTIES UNDER MARYLAND LAW
B. Condominium Implied Warranties Under Title 11
Implied warranty on the common elements
In addition to the Title 10 warranties there is a warranty
that the developer will correct any defects in defect in materials or
workmanship in the following specified components
and
that the following components are within acceptable
industry standards in effect when the building was constructed:
(1) roof
(2) foundation
www.bakerdonelson.com
© 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC
IMPLIED WARRANTIES UNDER MARYLAND LAW
B. Condominium Implied Warranties Under Title 11
Implied warranty on the common elements
In addition to the Title 10 warranties there is a warranty
that the developer will correct any defects in defect in materials or
workmanship in the following specified components
and
that the following components are within acceptable
industry standards in effect when the building was constructed:
(1) roof
(2) foundation
(3) external and supporting walls
www.bakerdonelson.com
© 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC
IMPLIED WARRANTIES UNDER MARYLAND LAW
B. Condominium Implied Warranties Under Title 11
Implied warranty on the common elements
In addition to the Title 10 warranties there is a warranty
that the developer will correct any defects in defect in materials or
workmanship in the following specified components
and
that the following components are within acceptable
industry standards in effect when the building was constructed:
(1) roof
(2) foundation
(3) external and supporting walls
(4) mechanical systems
www.bakerdonelson.com
© 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC
IMPLIED WARRANTIES UNDER MARYLAND LAW
B. Condominium Implied Warranties Under Title 11
Implied warranty on the common elements
In addition to the Title 10 warranties there is a warranty
that the developer will correct any defects in defect in materials or
workmanship in the following specified components
and
that the following components are within acceptable
industry standards in effect when the building was constructed:
(1) roof
(2) foundation
(3) external and supporting walls
(4) mechanical systems
(5) electrical systems
www.bakerdonelson.com
© 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC
IMPLIED WARRANTIES UNDER MARYLAND LAW
B. Condominium Implied Warranties Under Title 11
Implied warranty on the common elements
In addition to the Title 10 warranties there is a warranty
that the developer will correct any defects in defect in materials or
workmanship in the following specified components
and
that the following components are within acceptable
industry standards in effect when the building was constructed:
(1) roof
(2) foundation
(3) external and supporting walls
(4) mechanical systems
(5) electrical systems
(6) plumbing systems
www.bakerdonelson.com
© 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC
IMPLIED WARRANTIES UNDER MARYLAND LAW
B. Condominium Implied Warranties Under Title 11
Implied warranty on the common elements
In addition to the Title 10 warranties there is a warranty
that the developer will correct any defects in defect in materials or
workmanship in the following specified components
and
that the following components are within acceptable
industry standards in effect when the building was constructed:
(1) roof
(2) foundation
(3) external and supporting walls
(4) mechanical systems
(5) electrical systems
(6) plumbing systems
(7) other structural components
www.bakerdonelson.com
© 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC
IMPLIED WARRANTIES UNDER MARYLAND LAW
B. Condominium Implied Warranties Under Title 11
Implied warranties on the common elements
Run for three (3) years from
Th fi
The
firstt ttransfer
f off titl
title to
t a unit
it owner
www.bakerdonelson.com
© 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC
IMPLIED WARRANTIES UNDER MARYLAND LAW
B. Condominium Implied Warranties Under Title 11
Implied warranties on the common elements
Run for three (3) years from
The first transfer of title to a unit owner
Except:
As to any common element not completed at the time of
first transfer of title, the warranty runs for three (3) years
from completion of that element or from its availability for
use by all unit owners, whichever is later
www.bakerdonelson.com
© 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC
IMPLIED WARRANTIES UNDER MARYLAND LAW
B. Condominium Implied Warranties Under Title 11
Implied warranty on the common elements
Runs for three (3) years from
The first transfer of title to a unit owner
www.bakerdonelson.com
© 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC
IMPLIED WARRANTIES UNDER MARYLAND LAW
B. Condominium Implied Warranties Under Title 11
Implied warranty on the common elements
Runs for three (3) years from
The first transfer of title to a unit owner
or
Runs for two (2) years from
Th date
The
d t on which
hi h the
th unit
it owners,
other than the developer and its affiliates,
first elect a controlling majority of the board of directors
www.bakerdonelson.com
© 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC
IMPLIED WARRANTIES UNDER MARYLAND LAW
B. Condominium Implied Warranties Under Title 11
Implied warranty on the common elements
Runs for three (3) years from
The first transfer of title to a unit owner
or
Runs for two (2) years from
Th date
The
d t on which
hi h the
th unit
it owners,
other than the developer and its affiliates,
first elect a controlling majority of the board of directors
Except:
As to any common element not completed at the time of
first transfer of title, the warranty runs for three (3) years
from completion of that element or from its availability for
use by all unit owners, whichever is later
www.bakerdonelson.com
© 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC
IMPLIED WARRANTIES UNDER MARYLAND LAW
B. Condominium Implied Warranties Under Title 11
Implied warranty on the common elements
Notice of a defect must be given to the developer
within the two (2) or three (3) year warranty period
whichever is applicable
www.bakerdonelson.com
© 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC
IMPLIED WARRANTIES UNDER MARYLAND LAW
B. Condominium Implied Warranties Under Title 11
Implied warranty on the common elements
Notice of a defect must be given to the developer
within the two (2) or three (3) year warranty period
whichever is applicable
An action must be commenced within one (1) year
of the end of the warranty period
www.bakerdonelson.com
© 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC
HOMEOWNER ASSOCIATION
WARRANTIES
www.bakerdonelson.com
© 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC
HOMEOWNER ASSOCIATION WARRANTIES
Every homeowner receives the Title 10
implied warranties on their home
unless they are modified or excluded by
contract
www.bakerdonelson.com
© 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC
HOMEOWNER ASSOCIATION
WARRANTIES
Common area warranties under Title 11B
www.bakerdonelson.com
© 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC
HOMEOWNER ASSOCIATION WARRANTIES
Common area warranties under Title 11B
Implied warranty on the common areas
In addition to the Title 10 warranties on the
homes
Warranty from the developer to the homeowners
association
www.bakerdonelson.com
© 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC
HOMEOWNER ASSOCIATION WARRANTIES
Common area warranties under Title 11B
Implied warranty on the common areas
In addition to the Title 10 warranties on the homes
Warranty from the developer to the homeowners
p
to the common
association that the improvements
areas are
(1) free of faulty materials
www.bakerdonelson.com
© 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC
HOMEOWNER ASSOCIATION WARRANTIES
Common area warranties under Title 11B
Implied warranty on the common areas
In addition to the Title 10 warranties on the homes
Warranty from the developer to the homeowners
association that the improvements
p
to the common
areas are
(1) free of faulty materials
(2) constructed according to sound engineering
standards
www.bakerdonelson.com
© 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC
HOMEOWNER ASSOCIATION WARRANTIES
Common area warranties under Title 11B
Implied warranty on the common areas
In addition to the Title 10 warranties on the homes
Warranty from the developer to the homeowners
p
to the common
association that the improvements
areas are
(1) free of faulty materials
(2) constructed according to sound engineering
standards
(3) constructed in a workmanlike manner
www.bakerdonelson.com
© 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC
HOMEOWNER ASSOCIATION WARRANTIES
Common area warranties under Title 11B
Implied warranty on the common areas
Common areas must comply with:
(1) Applicable building codes
www.bakerdonelson.com
© 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC
HOMEOWNER ASSOCIATION WARRANTIES
Common area warranties under Title 11B
Implied warranty on the common areas
Common areas must comply with:
(1) Applicable building codes
(2) The
Th contract
t t documents
d
t
www.bakerdonelson.com
© 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC
HOMEOWNER ASSOCIATION WARRANTIES
Common area warranties under Title 11B
Implied warranty on the common areas
Common areas must comply with:
(1) Applicable building codes
(2) The
Th contract
t t documents
d
t
(3) Industry standards
www.bakerdonelson.com
© 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC
HOMEOWNER ASSOCIATION WARRANTIES
Common area warranties under Title 11B
Implied warranty on the common areas
Common areas must comply with:
(1) Applicable building codes
(2) The
Th contract
t t documents
d
t
(3) Industry standards
(4) Manufacturer’s specifications
www.bakerdonelson.com
© 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC
HOMEOWNER ASSOCIATION WARRANTIES
Common area warranties under Title 11B
Implied warranty on the common areas
Common areas must comply with:
(1) Applicable building codes
(2) The
Th contract
t t documents
d
t
(3) Industry standards
(4) Manufacturer’s specifications
(5) Americans With Disabilities Act
www.bakerdonelson.com
© 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC
HOMEOWNER ASSOCIATION WARRANTIES
Common area warranties under Title 11B
Implied warranty on the common areas
Pools
Playgrounds
Clubhouses
Sport Centers
Pavilions
www.bakerdonelson.com
© 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC
HOMEOWNER ASSOCIATION WARRANTIES
Common area warranties under Title 11B
Implied warranty on the common areas
Retaining Walls
Curbs and sidewalks
Parking lots
Drainage areas
Private roads
www.bakerdonelson.com
© 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC
HOMEOWNER ASSOCIATION WARRANTIES
Common area warranties under Title 11B
Implied warranty on the common areas
Runs for two (2) years from the first transfer of
title to a lot
www.bakerdonelson.com
© 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC
HOMEOWNER ASSOCIATION WARRANTIES
Common area warranties under Title 11B
Implied warranty on the common areas
Runs for two (2) years from the first transfer of
title to a lot
Except:
As to any common are improvement not
completed at the time of first transfer of title, the
warranty runs for two (2) years from completion
of that improvement or from its availability for
use by the lot owners, whichever is later
www.bakerdonelson.com
© 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC
HOMEOWNER ASSOCIATION WARRANTIES
Common area warranties under Title 11B
Implied warranty on the common areas
Runs for two (2) years from the first transfer of
title to a lot
www.bakerdonelson.com
© 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC
HOMEOWNER ASSOCIATION WARRANTIES
Common area warranties under Title 11B
Implied warranty on the common areas
Runs for two (2) years from the first transfer of
title to a lot
or
Runs for two (2) years from the date on which
the lot owners, other than the declarant and its
affiliates, first elect a controlling majority of the
governing body of the homeowner association
www.bakerdonelson.com
© 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC
HOMEOWNER ASSOCIATION WARRANTIES
Common area warranties under Title 11B
Implied warranty on the common areas
Notice of a defect must be given to the vendor or
grantor within the two (2) year warranty period
www.bakerdonelson.com
© 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC
HOMEOWNER ASSOCIATION WARRANTIES
Common area warranties under Title 11B
Implied warranty on the common areas
Notice of a defect must be given to the vendor or
grantor within the two (2) year warranty period
An action can be brought by the homeowner
association or any lot owner
www.bakerdonelson.com
© 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC
HOMEOWNER ASSOCIATION WARRANTIES
Common area warranties under Title 11B
Implied warranty on the common areas
Notice of a defect must be given to the vendor or
grantor within the two (2) year warranty period
An action can be brought by the homeowner
association or any lot owner
Action must be brought within one (1) year of
the end of the warranty period
www.bakerdonelson.com
© 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC
EXPRESS WARRANTIES UNDER
MARYLAND LAW
www.bakerdonelson.com
© 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC
EXPRESS WARRANTIES UNDER MARYLAND LAW
G
Governed
d by
b Title
Ti l 10
www.bakerdonelson.com
© 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC
EXPRESS WARRANTIES UNDER MARYLAND LAW
Governed by Title 10
Applies to representations concerning
“improvements” meaning every newly
constructed private dwelling unit and
every fixture and structure made part of
it at the time of construction by a
building contractor of subcontractor
www.bakerdonelson.com
© 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC
EXPRESS WARRANTIES UNDER MARYLAND LAW
Governed by Title 10
Representations by a “vendor”
www.bakerdonelson.com
© 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC
EXPRESS WARRANTIES UNDER MARYLAND LAW
Governed by Title 10
Express warranties:
(1) Any written affirmation of fact or promise which
relates to the improvement and is made a part of the basis of
the bargain between the vendor and the purchaser creates an
express warranty that the improvement conforms to the
affirmation or promise.
www.bakerdonelson.com
© 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC
EXPRESS WARRANTIES UNDER MARYLAND LAW
Governed by Title 10
Express warranties:
(1) Any written affirmation of fact or promise which
relates to the improvement and is made a part of the basis of
the bargain between the vendor and the purchaser creates an
express warranty that the improvement conforms to the
affirmation or promise.
(2) Any written description of the improvement,
including plans and specifications of it, which is made part of
the basis of the bargain between the vendor and the purchaser
creates an express warranty that the improvement conforms
to the description.
www.bakerdonelson.com
© 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC
EXPRESS WARRANTIES UNDER MARYLAND LAW
Governed by Title 10
Express warranties:
(1) Any written affirmation of fact or promise which
relates to the improvement and is made a part of the basis of
the bargain between the vendor and the purchaser creates an
express warranty that the improvement conforms to the
affirmation or promise.
(2) Any written description of the improvement,
including plans and specifications of it, which is made part of
the basis of the bargain between the vendor and the purchaser
creates an express warranty that the improvement conforms
to the description.
(3) Any sample or model which is made a part of
the basis of the bargain between the vendor and the
purchaser creates an express warranty that the improvement
conforms substantially to the sample or model.
www.bakerdonelson.com
© 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC
EXPRESS WARRANTIES UNDER MARYLAND LAW
Governed by Title 10
Express warranties:
Even orall representations
E
t ti
may be
b
actionable
www.bakerdonelson.com
© 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC
EXPRESS WARRANTIES UNDER MARYLAND LAW
Governed by Title 10
Express warranties:
Can be written or oral
Not necessary to use formal words
like “warranty” or “guaranty”
www.bakerdonelson.com
© 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC
EXPRESS WARRANTIES UNDER MARYLAND LAW
Governed by Title 10
Express warranties:
Can be written or oral
Not necessary to use formal words
like “warranty” or “guaranty”
Content of brochures and sales
literature
www.bakerdonelson.com
© 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC
EXPRESS WARRANTIES UNDER MARYLAND LAW
Governed by Title 10
Express warranties:
Can be written or oral
Not necessary to use formal words
like “warranty” or “guaranty”
Content of brochures and sales
literature
Statements by sales agents
www.bakerdonelson.com
© 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC
EXPRESS WARRANTIES UNDER MARYLAND LAW
Governed by Title 10
Express warranties:
Does nott iinclude
D
l d affirmation
ffi
ti off the
th value
l
or statement of opinion or recommendation
www.bakerdonelson.com
© 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC
EXPRESS WARRANTIES UNDER MARYLAND LAW
Governed by Title 10
Once made “neither words in the contract of sale,
the deed, other instrument of grant, nor merger of the
contract of sale into the deed or other instrument of
grant is effective to exclude or modify the warranty.”
www.bakerdonelson.com
© 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC
EXPRESS WARRANTIES UNDER MARYLAND LAW
Governed by Title 10
An exclusion or modification of an express warranty
must:
(1) Be in writing
(2) Set out “in detail” the warranty to be excluded or
modified
(3) Set out the terms of the new agreement
(4) State that the purchaser consents
(5) Signed by the purchaser
www.bakerdonelson.com
© 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC
EXPRESS WARRANTIES UNDER MARYLAND LAW
Unless the express warranty provides otherwise:
Run for one (1) year from
(1) Delivery of the deed
(2) Date of possession
Whichever is first
www.bakerdonelson.com
© 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC
EXPRESS WARRANTIES UNDER MARYLAND LAW
Unless the express warranty provides otherwise:
Run for one (1) year from
(1) Delivery of the deed
(2) Date of possession
Whichever is first
Except:
Where the home is not complete at the time of delivery of
the deed,
The warranties run one (1) year from
(1) Date of completion
(2) Date of possession
Whichever is first
www.bakerdonelson.com
© 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC
EXPRESS WARRANTIES UNDER MARYLAND LAW
In the event of a breach of an express, a
court may award legal or equitable relief
relief, or
both, as justice requires
www.bakerdonelson.com
© 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC
EXPRESS WARRANTIES UNDER MARYLAND LAW
An action must be commenced
(1) Within two (2) years after the defect as
discovered or should have been discovered
www.bakerdonelson.com
© 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC
EXPRESS WARRANTIES UNDER MARYLAND LAW
An action must be commenced
(1) Within two (2) years after the defect as
discovered or should have been discovered
or
(2) Within two (2) years after the expiration of
the warranty
Whichever is first
www.bakerdonelson.com
© 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC
SEPARATE CLAIMS UNDER CONTRACT LAW
A representation or promise about the
condition of an improvement at the time it is
sold is a warranty, and enforcement is governed
by warranty law.
www.bakerdonelson.com
© 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC
SEPARATE CLAIMS UNDER CONTRACT LAW
A promise to perform an obligation in the future
other than the payment of money is a contractual
obligation governed by the law of contracts
www.bakerdonelson.com
© 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC
SEPARATE CLAIMS UNDER CONTRACT LAW
“We will fix it.”
Creates a promise of future performance
which constitutes a contractual obligation
www.bakerdonelson.com
© 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC
SEPARATE CLAIMS UNDER CONTRACT LAW
Governed by the discovery rule:
A claim accrues when the claimant
knew or,
knew,
or in the exercise of reasonable
diligence, should have known, of the
wrong
www.bakerdonelson.com
© 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC
SEPARATE CLAIMS UNDER CONTRACT LAW
Governed by the discovery rule:
A claim accrues when the claimant
knew or,
knew,
or in the exercise of reasonable
diligence, should have known, of the
wrong
A claim must be brought within three (3)
years from the date of discovery
www.bakerdonelson.com
© 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC
CLAIMS UNDER THE MARYLAND
CONSUMER PROTECTION ACT
www.bakerdonelson.com
© 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC
CLAIMS UNDER THE MARYLAND
CONSUMER PROTECTION ACT
Applies to “consumer realty”
property
p y purchased
p
New sales of real p
primarily for personal, household, family
or agricultural purposes
www.bakerdonelson.com
© 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC
CLAIMS UNDER THE MARYLAND
CONSUMER PROTECTION ACT
“Unfair
Unfair and deceptive trade practices”
practices
www.bakerdonelson.com
© 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC
CLAIMS UNDER THE MARYLAND
CONSUMER PROTECTION ACT
“Unfair and deceptive trade practices”
Representation that realty has a “characteristic”
or “quality” that it does not have
www.bakerdonelson.com
© 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC
CLAIMS UNDER THE MARYLAND
CONSUMER PROTECTION ACT
“Unfair and deceptive trade practices”
Representation that realty has a “characteristic”
or “quality” that it does not have
A representation that a property was constructed
in accordance with the plans and specifications
is a representation of a “characteristic” which, if
false, is an unfair and deceptive trade practice
under the Act.
www.bakerdonelson.com
© 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC
CLAIMS UNDER THE MARYLAND
CONSUMER PROTECTION ACT
Enforceable by the Attorney Generals’ Office
www.bakerdonelson.com
© 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC
CLAIMS UNDER THE MARYLAND
CONSUMER PROTECTION ACT
Enforceable by the Attorney Generals’ Office
The Act also provides for a private right
of action to recover in law or equity
www.bakerdonelson.com
© 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC
CLAIMS UNDER THE MARYLAND
CONSUMER PROTECTION ACT
The Act also provides for a private right
of action to recover in law or equity
Claimant can recover “reasonable
attorney’s fees”
www.bakerdonelson.com
© 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC
CLAIMS UNDER THE MARYLAND
CONSUMER PROTECTION ACT
The Act also provides for a private right
of action to recover in law or equity
Claimant can recover “REASONABLE
ATTORNEY’S FEES”
www.bakerdonelson.com
© 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC
NEGLIGENCE ACTIONS
www.bakerdonelson.com
© 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC
NEGLIGENCE ACTIONS
Maryland recognizes a general cause of action for failure to exercise
due care in construction. This includes negligence in the design and
construction of the project, negligent selection of materials, and
negligent supervision of the various trades.
www.bakerdonelson.com
© 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC
NEGLIGENCE ACTIONS
Maryland recognizes a general cause of action for failure to exercise
due care in construction. This includes negligence in the design and
construction of the project, negligent selection of materials, and
negligent supervision of the various trades.
(1) A duty will be imposed, even where only economic loss is
involved, where the nature of the harm gives rise to the risk of serious
personal injury among a foreseeable group.
(2) A duty will be imposed where the harm results in property
damage.
(3) Where the harm is purely economic loss, without the risk of
personal injury, a duty will be imposed where there is contractual
privity between the parties, or a sufficiently close nexus or relationship
so as to be the functional equivalent of contractual privity.
www.bakerdonelson.com
© 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC
NEGLIGENCE ACTIONS
Maryland recognizes a general cause of action for failure to exercise
due care in construction. This includes negligence in the design and
construction of the project, negligent selection of materials, and
negligent supervision of the various trades.
(1) A duty will be imposed, even where only economic loss is
involved, where the nature of the harm gives rise to the risk of serious
personal injury among a foreseeable group.
(2) A duty will be imposed where the harm results in property
damage.
(3) Where the harm is purely economic loss, without the risk of
personal injury, a duty will be imposed where there is contractual
privity between the parties, or a sufficiently close nexus or relationship
so as to be the functional equivalent of contractual privity.
An action must be brought within three (3) years of discovery under the
discovery rule
www.bakerdonelson.com
© 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC
NEGLIGENCE ACTION
The economic loss doctrine bars claims against design
professionals in the absence of contractual privity; i.e., the
privity equivalent
equivalent” exception does not apply.
apply
“privity
Balfour Beatty Infrastructure, Inc. v. Rummel Klepper & Kahl, LLP,
226 Md. App. 420 (2016)
www.bakerdonelson.com
© 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC
MARYLAND CONSTRUCTION LAW DESKBOOK
Published by the Maryland Bar Association
Construction Law Section
www.bakerdonelson.com
© 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC
MARYLAND CONDO LAW BLOG
www.marylandcondolaw.com
www.bakerdonelson.com
© 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC
Labor and Employment Law
CHRISTOPHER R. RYON, ESQ.
Overview of Chapter
X
Covers core labor law concepts
X
Highlights nuances in labor law related to
construction
X
Addresses areas of employment law that
frequently surface in construction industry
Kahn, Smith & Collins, P.A.
Nature of Construction Employment
Mobile, multi-trade, and multi-employer worksites
Often seasonal and transient
X Short term projects
X Employees often laid off when the project or
specialized work is completed
X Employers depend on a variety of craft skills to
complete often complex projects
X
X
Kahn, Smith & Collins, P.A.
Labor Law
X
Governs rights and relationships among employees,
employers, and unions
X
Largely controlled by federal law
X
Landscape differs depending on whether or not the
employees are represented by a union
X
Special provisions applicable only to construction
Kahn, Smith & Collins, P.A.
THE NATIONAL LABOR RELATIONS ACT
X
Enacted as part of FDR’s “New Deal” legislation
X
Applies to most private
pri ate sector employers
emplo ers (including
(incl ding
government contractors)
X
Prohibits “unfair labor practices”
X
Establishes the National Labor Relations Board (“NLRB”)
Kahn, Smith & Collins, P.A.
NLRB
X
Jurisdiction over vast majority of private sector
employers
e
p oye s in construction
co s uc o industry
dus y
X Non-Retailers:
Gross inflow or outflow of at least
$50,000 (includes commercial construction)
Kahn, Smith & Collins, P.A.
Role of NLRB
Conducts elections
Investigates unfair labor practice charges,
decides cases, and enforces orders
X Comprised of five members
X Rulemaking
X Case law has taken into account distinct traits
of construction industry employment
X
X
Kahn, Smith & Collins, P.A.
Rights of Employees under NLRA
X To
engage in protected concerted activity
p
for “mutual aid or protection”
X Covers applicants
X Applies to undocumented workers.
X Protects “salting”
X May refrain from engaging union activities
Kahn, Smith & Collins, P.A.
Protected Concerted Activity
X
Picketing
X
Strikes
X
Union organizing campaign
X
Handbilling
X
Social media
Kahn, Smith & Collins, P.A.
Unions
X Selected
as the exclusive representative
through voluntary recognition or election
X Once
certified as the exclusive bargaining
representative for a unit of employees, union
negotiates and administers the collective
bargaining agreement (“CBA”) with the
employer.
Kahn, Smith & Collins, P.A.
Collective Bargaining
X
Occurs either through individual employers or multiemployer units
X
CBA typically applies to the geographic jurisdiction of
the local or regional union that is a party to the
agreement
X
Mandatory, permissive, and unlawful subjects of
bargaining.
Kahn, Smith & Collins, P.A.
Employer Unfair Labor Practices
Threats of or actual retaliation for union activities
Discrimination in hiring or terms of employment
that encourages or discourages union
membership
X Retaliation for filing a ULP charge or participating
in ULP proceeding
X Failing to bargain in good faith
X
X
Kahn, Smith & Collins, P.A.
Hot Cargo Clauses
X
Section 8(e) of NLRA prohibits “hot cargo” agreements.
X
Exception for Construction Industry ((“construction
construction
industry proviso”)
X Permits
“hot cargo agreement” that relates to
contracting or subcontracting of work to be done at
the construction site.
Kahn, Smith & Collins, P.A.
Union Unfair Labor Practices
X
Discriminating against employee because of
union
u
o membership
e be s p
X
Engaging in secondary boycott
X
Violence, intimidation, reprisal, or threats of
employees related to Union activity
X
Failing to bargain in good faith
Kahn, Smith & Collins, P.A.
Pre-Hire Agreements
X
Construction employers may enter valid pre-hire
agreements under Section 8(f) of the NLRA.
X
Rationale: Construction employers differ from those in
other industries in that (1) they may choose to work with
a union in order to win certain contracts and (2) it is
characterized by short-term employment.
Kahn, Smith & Collins, P.A.
Project Labor Agreements
Pre-hire agreements between building trade unions
and site contractors.
X Governs terms and conditions of employment for
craft labor at project site.
X Used on large-scale public and private construction
projects involving Walt Disney World, the TransAlaska Pipeline, and the Kennedy Space Center,
among others.
X
Kahn, Smith & Collins, P.A.
PLAs Cont.
X
Generally require that all bidders on project:
X hire
X
workers through union hiring halls
X follow
specified dispute resolution procedures
X abide
by union wage and benefit scales
Unions promise labor peace through the life of
the contract
Kahn, Smith & Collins, P.A.
State of Maryland’s Use of PLAs
X
Balfour Beatty Const. v. Maryland Dep
Dep’tt of Gen. Servs.,
220 Md. App. 334 (2014) (finding that a procuring
agency may give positive weight to a bidder’s use of a
PLA).
Kahn, Smith & Collins, P.A.
Employment Law
X
Statutes and judicial decisions that address:
X discrimination in
X family and
the workplace
medical leave
X workers’ compensation
X wage
and hour
X safety
X employment
torts and contracts
X unemployment insurance
Kahn, Smith & Collins, P.A.
X
immigration issues
Independent Contractor Versus Employee
X
Classification matters
X Tax
consequences
X Insurance
implications
X May
trigger rights of workers and obligations
of employers, including the obligation to pay
overtime.
Kahn, Smith & Collins, P.A.
Independent Contractor Versus Employee
X
Workplace Fraud Act applies to employers in the
construction industry;
X
Ad t the
Adopts
th “ABC test”
t t”
X
employer-employee relationship is presumed unless:
X
(1) individual who performs the work is free from control and direction;
X
(2) individual customarily is engaged in an independent business of the
same nature; and
X
(3) work is outside of employer’s usual course of business or performed
outside of any place of business of the employer
Kahn, Smith & Collins, P.A.
Wage and Hour Laws
X
Fair Labor Standards Act (“FLSA”)
X
Maryland Wage and Hour Law
X
Maryland Wage Payment and Collection Act (“MWPCA”)
X
Prevailing Wage Laws (i.e., Davis-Bacon)
Kahn, Smith & Collins, P.A.
FLSA and Maryland Wage and Hour Laws
X
Overtime requirement
X
Continuous workday rule
X
Pay required for all hours worked (including work at warehouse).
X
Serious consequences for violations:
X Double
X Fee
(FLSA) or treble (MWPCA) damages
shifting
Kahn, Smith & Collins, P.A.
Prevailing Wage Laws
X
Davis-Bacon Act sets wage standards for workers
performing under federal construction projects.
X
Many federal laws that authorize federal aid for
construction projects through grants, loans, loan
guarantees, and insurance are Davis-Bacon “related
Acts.”
X These
related Acts include provisions that require the
payment of prevailing wage rates.
Kahn, Smith & Collins, P.A.
Prevailing Wage Laws
X
Prevailing wage rate varies based on the type of work
performed and where the work is performed.
X
Lower rates may be paid to apprentices.
X
Davis-Bacon Act is administered by Wage and Hour
Division of the Department of Labor.
X
No private cause of action under Davis-Bacon
Kahn, Smith & Collins, P.A.
Maryland’s Prevailing Wage Law
(Little Davis-Bacon Act)
X
Part of Maryland’s General Procurement Law
X
Applies to certain State construction projects
$
contracts in excess of $500,000
when
State dollars are used to provide 50% or more of the
project’s overall construction cost.
X Public works
X
Rates set by Department of Labor, Licensing and
Regulation (“DLLR”)
X
Misclassification is a common complaint.
Kahn, Smith & Collins, P.A.
Thank you
Christopher R. Ryon, Esq.
Kahn, Smith & Collins,
Kahn
Collins P
P.A.
A
201 North Charles Street, 10th Floor
Baltimore, MD 21201
(410) 244-1010
[email protected]
X
Kahn, Smith & Collins, P.A.
Maryland Construction Law Institute
Building the Foundation
March 2017
INSURANCE COVERAGE
Thomas V. McCarron
Nicole Lentini
SEMMES, BOWEN & SEMMES
25 S. Charles Street, Suite 1400
Baltimore, Maryland 21201
Common Types of Policies
y Commercial General Liability (CGL) policies
y Errors and omissions (E&O) policies for
construction professionals
y Owner/Contractor controlled insurance
program/wrap-up insurance
y Subcontractor Default Insurance
y Builder’s Risk Insurance
Commercial General Liability (“CGL”)
Overview
y designed to provide third party liability coverage
y scope is limited by many exclusions
{ “insurable
insurable
risks”
risks
damages
y Generally no coverage for
{ ordinary business risks
{ costs of replacement for faulty workmanship
{ damage caused by intentional acts
{ consequential
Choice of Law
y What law applies?
y lex loci contractus
y Exceptions:
ƒ
ƒ
public policy
renvoi
ƒ Choice-of-law clauses
ƒ
RESTATEMENT (SECOND)
CONFLICT OF LAWS § 187
Liability Coverages: Occurrence vs. Claims-Made
CGL Policies: “Occurrence”
y “Occurrence” =
Accident
y Accident or Intentional?
y 2 Tests:
1.
1 intentional act; or
2. expected or
intended injury
y Coverage only extended
if the act was
unforeseeable and
unintended
{
{
CGL Policies: “Occurrence” – Example
Kaufman v. Travelers Companies, Inc. (D. Md. Mar. 5, 2010)
y Scenario: insured seller misrepresented a
restaurant’s seating capacity to be 400 when it was
200 requiring the seller to remedy the size for the
200,
buyer.
y Occurrence?
{ No
– damages found to be a foreseeable result of
the misrepresentation, thus, no “accident.”
CGL Policies: “Occurrence” – Example
French v. Assurance Co. of America, 448 F.3d 693 (4th Cir.)
y Scenario: subcontractor’s defective roof installation
damages rest of house contractor is building.
y Occurrence?
{ No – for coverage for the roof.
{ Yes – for coverage of the rest of the house damaged by the
defect.
y Property damage caused by defect to non-defective
property will generally be within coverage when the
damage is unforeseeable.
CGL Policies: “Occurrence” – Example
Nautilus Insurance Co. v. BSA Limited Partnership, 602 F.
Supp. 2d 641 (D. Md. 2009)
y Scenario:
{ Insured owned townhomes and contracted with HUD to
participate in Section 8 rental program
program. Contact expired
expired,
insured refused to honor “enhanced vouchers.” Tenants
sued owner for violating both federal and state law, with
damages alleged including discrimination, and
interference with tenants’ rights to use vouchers.
y Occurrence?
{ No – damages found to be a “foreseeable and expected”
damage following the owner’s intentional act.
CGL Policies: “Occurrence” – Example
Lerner Corp. v. Assurance Co. of Am., 120 Md. App. 525 (1998)
y Scenario:
{
Insured contractor constructed a building, five years latent
defects emerged and insured sought coverage under its
CGL policy for the repair costs.
y Occurrence?
{
No – damages not unforeseen where there was a
contractual obligation to make the repairs; defective
construction is not an occurrence triggering coverage for
the defective property.
CGL Policies: “Occurrence” – Example
OneBeacon Insurance Co. v. Metro Ready-Mix, Inc., 242 F.
App’x 936, 940–41 (4th Cir. 2007)
y Scenario:
{ Insured installed grout defectively and removed otherwise
non-defective
non
defective caps and columns to remedy defect
defect. Insured
contended the “damage” to the caps and columns was an
instance where a defect caused damage to non-defective
property and should constitute an occurrence.
y Occurrence?
{ No – court found removal of the caps and columns was not
unintended property damage, but rather the “damage” was
intended as an attempt to remedy the grout defect.
CGL Policies: Exclusions
y Narrow coverage
y Construed like any other
contract provision
y Each exclusion applied
independently
y insurer has burden of
establishing the
applicability
CGL– Contractual liability exclusion
This insurance does not apply to:
y Contractual Liability
"B dil iinjury"
"Bodily
j " or "property
"
damage" for which the insured is
obligated to pay damages by reason
of the assumption of liability in a
contract or agreement.
CGL– “business risk” exclusions
1. “Your Work” Exclusion
2. “Your Product”
Exclusion
3. “That Particular Part”
Exclusion
4. “Impaired Property”
Exclusion
5. “Faulty Workmanship”
Exclusion
6. Damage to Owned
Property
1. “Your Work” Exclusion
This insurance does not apply to:
y “Property damage” to “your work” arising out
of it or any part of it and included in the
“products-completed operations hazard”.
y This exclusion does not apply if the damaged
work or the work out of which the damage
arises was performed on your behalf by a
subcontractor.
2. “Your Product” Exclusion
This insurance does not apply to:
y “Property damage” to “your product”
arising out of it or any part of it.
y Note: accepted definition of “product”
excludes real property, so exclusion
generally not applied to construction
defect claims.
3. “That Particular Part” Exclusion
This insurance does not apply to:
y “Property Damage” to that particular
part of real p
p
property
p y on which yyou or
any contractors or subcontractors
working directly or indirectly on your
behalf are performing operations, if the
“property damage” arises out of those
operations.
4. “Impaired Property” Exclusion
This insurance does not apply to:
y “Property damage” to “impaired property” or
property that has not been physically injured,
arising out of:
{ (1) A defect, deficiency, inadequacy or
dangerous condition in “your product” or “your
work”; or
{ (2) A delay or failure by you or anyone acting on
your behalf to perform a contract or agreement
in accordance with its terms.
5. “Faulty Workmanship” Exclusion
This insurance does not apply to:
y “Property damage” to that
particular
i l part off any property
that must be restored, repaired or
replaced because “your work” was
incorrectly performed on it.
6. Damage to Owned Property Exclusion
This insurance does not apply to:
y (a) Property owned or occupied by or
rented to the insured;
y (b) Property used by the insured; or
y (c) Property in the care, custody or
control of the insured or as to which
the insured is for any purpose
exercising physical control.
CGL Exclusions – Completed v. ongoing operations
y
y
y
Exclusion of productscompleted operations
coverage.
No coverage for losses
arising
g from the insured’s
work and operations after
the insured has completed
the project.
“completed operations” =
the period when the
majority of the work is
finished.
Other Considerations Additional Insured Coverage
y Common in construction
contracts.
y Obtained by a contractual
agreement with the
i
insurer
reflected
fl t d b
by th
the
policy endorsement.
y Additional insured has a
direct contractual
relationship with the
insurer.
Other Considerations Certificate of Insurance (COI) v. Policy Language
y
y
y
y
Not part of the insurance
policy.
Issued for informational
purposes only.
Does not itself create a
contractual right to
coverage.
Insurance agents often fail
to alter or amend the
coverage to match the
certificate.
Other Types of Policies Errors and omissions (E&O) policies for construction professionals
Architectural and
engineering firms
y Negligence in the
rendering or failing to
render professional
services
y Professional services =
use or application of
special learning or
attainments
y Claims made
y
Other Types of Policies Owner controlled insurance program/wrap-up insurance
y 2 forms:
{ OCIP,
purchased by
the property owner;
and
{ CCIP, purchased by the
contractor.
y Covers all contractors
and subcontractors
working on a project.
OCIP/CCIP - Continued
y Typically purchased for large, long-
term projects > $50,000,000
y Benefits:
{Higher
Hi h li
liability
bili li
limit
i at a llower cost
{Uniform policy decreases chances of
contractor disputes over coverage
{Do not count towards a contractor’s
aggregate liability limit history
Other Types of Policies Subcontractor Default Insurance
y Indemnifies the
contractor for the
costs incurred as a
result
lt off a
subcontractor’s
performance
default.
Other Types of Policies Builder’s Risk Insurance
y Liability from accidental loss arising
during the construction, alteration, or
repair at a project
y “All-risk” or “named peril” coverage
y Property Rights Covered
{typically damage to the structure,
materials, and equipment
Builder’s Risk Insurance – Continued
y Insurable Interest
{ Develops
after making a contract to construct, alter,
or repair a building for a price, and begins with the
start of construction
{ Does
D
nott require
i ownership
hi off property
t
y Coverage extensions can be purchased
y Fortuity Requirement
{ loss must not have been foreseeable when policy
was issued
y Exclusions
Conclusion
y Various types of policies are available.
y Specific policy language,
language including any
endorsements and exclusions, must be
carefully reviewed.
QUESTIONS?
CHANGES
&
EXTRA WORK
Presented By
Kenneth K. Sorteberg, Esquire
www.ConstructionLaw.com
DiscussionTopics
1.
2.
3.
4.
5.
6.
7.
NewChangeOrderStatute
DifferingSiteConditionChangeOrder
ClaimNotice&Prejudice
Effectof“LienRelease”onChangeOrders
IssuesRegardingtheChangeOrderForm
TheCardinalChange
WorkNow,FightLater
NewChangeOrderStatute
StateFinance&ProcurementArticle
Section15Ͳ112ChangeOrders
Effective:July1,2016
NewChangeOrderStatute
• AppliestoStateConstructionContracts
• ExceptforPublicSchoolConstruction
NewChangeOrderStatute
TheStatemaynotrequireaPrimeContractor,and
PrimeContractormaynotrequireaSubcontractor
To begin Change Order Work
TobeginChangeOrderWork
UntiltheProcurementOfficerissuesa
WrittenChangeOrder
ThatspecifiestheBasisofPayment
NewChangeOrderStatute
BasisofPayment:
• (i)
agreeduponprice;
• (ii)unitpricesincludedincontract;
( )
l d d
• (ii) forceaccount;
• (iii) constructionchangedirective;or
• (iv) timeandmaterialsbasis.
NewChangeOrderStatute
• Within5daysafterreceiptofa
writtenchangeorder
• primecontractorshallprovidesubcontractor
• withacopyoftheapprovedchangeorder
andtheamounttobepaidtosubcontractor
NewChangeOrderStatute
WhatHappensIf
TheStateandthePrimeContractor
Disagree
g
WhetherWorkIs
Extra
or
IncludedinBaseContract?
NewChangeOrderStatute
• StatecanORDER
PrimeContractortoproceedwiththework
• PrimeContractorCANNOTREFUSE
toproceedwiththework
• PrimeContractormustMAKEACLAIM
inordertogetpaidforthework
AShortDictionaryof
ConstructionTerminology
ContractorͲ Agamblerwhonevergetstoshuffle,cutordeal.
BidOpeningͲ Apokergameinwhichthelosinghandwins.
BidͲ Awildguesscarriedouttotwodecimalplaces.
g
p
LowBidderͲ Acontractorwhoiswonderingwhatheleftout.
Engineer'sEstimateͲ Thecostofconstructioninheaven.
ProjectManagerͲ Theconductorofanorchestrainwhich
everymusicianisinadifferentunion.
DifferingSiteConditions
TYPEI
SUBSURFACEorCONCEALEDConditions
ThatDifferMATERIALLY
FromThoseINDICATED
OntheContractDocuments
DifferingSiteConditions
UndergroundRock
DifferingSiteConditions
TYPEII
UNUSUALConditions
ThatDifferMATERIALLYFrom
ThoseORDINARILYORINHERENTLYEXISTING
OnaProjectofTHISCHARACTER
DifferingSiteConditions
FormerTrashDump
ClaimNotice&Prejudice
ClaimNoticeProvision
ContractorshallgivewrittennoticetoOwner
withinthirty(30)daysafter
Contractorkneworshouldhaveknown
ofthebasisfortheclaim,
butinanyeventbeforetheclaimworkbegins.
ClaimNotice&Prejudice
Purposes of a claim notice provision:
Ͳ permit early investigation of the claim
while the evidence is available and
witness’ memories are fresh
Ͳ allow for exploration of other options
Ͳ avoid presentment of stale claims at job end
ClaimNotice&Prejudice
Somecourtswillnotenforcenoticeprovisions
tobarclaims,
unlessfailuretogivetimelynotice
resultsin“prejudice.”
Prejudice occurs when lack of notice precludes
Ͳ opportunity to explore less costly options
Ͳ verification of quantities and costs
ClaimNotice&Prejudice
$200,000inrockexcavati
$200,000inRockExcavation
Effectof“LienRelease”on
ChangeOrders
Whyisa
LienRelease
notalways
JustaLienRelease?
Effectof“LienRelease”on
ChangeOrders
PartialLienRelease
Inconsiderationofthisprogresspayment,
Contractorherebyreleasesallmechanic’sliens
andanyotherclaims whichitmayhave
throughthedateofthisrelease.
IssuesRegarding
TheChangeOrderForm
SimpleChangeOrderForm
Scope+Price
Contractoragreestoperformthefollowing
changeorderworkforthefollowingprice.
IssuesRegarding
TheChangeOrderForm
ChangeOrderFormwithScheduleChange
Scope+Price+ScheduleChange
p
g
Contractoragreestoperformthefollowing
changeorderworkforthefollowingprice.
Thescheduleshallbeextendedby__days.
IssuesRegarding
TheChangeOrderForm
AggressiveChangeOrderForm
Scope+Price+ScheduleChange+Impacts
p
g
p
Contractoragreestoperformthefollowing
changeorderworkforthefollowingprice.
Thescheduleshallbeextendedby__days.
Alldelayandotherimpactcostsareincluded.
TheCardinalChange
Whatisit?
TheCardinalChange
• TypicallyappliestoGovernmentcontracts
• Issubjective
• Achangeinthework
g
whichisSODRASTIC
thatitrequirestheContractor
toperformdutiesMATERIALLYDIFFERENT
fromthoseoriginallybargainedfor.
TheCardinalChange
• PermitsContractortorefuseperformance
• Extracontractualremedyifperformed
Ͳ CourtinlieuofMSBCAorarbitration
Court in lieu of MSBCA or arbitration
Ͳ Quantummeruit
Ͳ Harshcontracttermswouldnotapply
Ͳ NoͲdamagesͲforͲdelayclause
Ͳ Claimnoticeandwaiverclauses
WorkNow,FightLater
ContractoragreesthatadisputewithOwner
shallnotinterfere
withtheprogressofthework
andthatContractorshallproceed
withtheworkasordered,subjecttoclaim.
Failuretodosoisamaterialbreach
justifyingtermination.