Risky Business + Code Recap

Poste by: Andrea Goldman, Esq. and Von Salmi, ASLA

Andrea and Von have worked together for a number of years over a wide variety of construction-related cases involving homeowners and construction companies. Andrea as legal counsel and Von as an Expert Witness.

There is one common theme in our work, something went wrong!

It is much easier to prevent an issue than it is to work to correct one. So how does one go about preventing issues in the relationship?

Andrea does an extensive amount of work with contractors developing contracts that protect them as much as possible. This includes adding the right to legal fees and the costs of collection, ‘Cost Acceleration’ and ‘Right to Repair’ clauses, and making sure in the case of remodeling work that your contracts are up to date and contain the state requisite items that make your contract valid.

Andrea is available to assist anyone who would like her to review your contract.

The approach that Von has recommended is to view your projects through the lens of Risk Management. Looking at those portions of the project that could expose your company to serious financial peril if they are not executed properly.

There is a requirement in the Administrative section of the IRC 2015, Section R105.8 Responsibility where anyone performing work for installation or repair of building structure, electrical, gas, mechanical, or plumbing systems, for which the Code is applicable, to comply with the Code.

Therefore, whoever is performing any of this work has to ensure the work follows the requirements of the Code. (IRC 20015, Section R105.8)

If you are a CSL or a HIC Registrant, you become the responsible individual when you pull a permit and place your license or registration number on the building permit. As Andrea pointed out, if you urge a client to pull the permit for the work you may inadvertently deprive the owner of their rights to pursue an issue through the Home Improvement Contractor Statute, which can subject you to double or triple damages, attorney’s fees, interest, and costs under the Consumer Protection Statute.

In terms of managing risk, water is probably found to be an issue in 70% of the cases that Von is called in to investigate. The main points of water intrusion come in through improper foundation installation and the components such as waterproofing and footing drain systems.

Improper backfilling with improper materials and a lack of compacting those materials can lead to settling around the foundation and development of water collection pockets allowing surface water to migrate down through cold joints at the footing/foundation connection.

Foundation drains should be installed primarily in daylight to void by gravity. In the instances where this cannot be done, a robust mechanical system should be installed on the exterior of the building. Do not rely on simple interior sump pumps to carry groundwater and intruding surface water away. (IRC2015, Section R405.1 and Section R406.1)

Roofing assemblies are the next important point of risk management in water exposure.

An integral part of the requirement is to follow the “manufacturer’s installation instructions.”

In other words, if you do not follow the manufacturer’s installation instructions, you are violating the code! (IRC2015, Section R905.1) Furthermore, in not following the manufacturer’s installation instructions you can void the manufacturer’s warranty and you may now be liable for the product warranty. Read the directions!

If you are facing a claim for water infiltration or defective roofing, make sure to consult with your insurance company to see if they will provide you with a defense and/or cover the alleged damages.

The final point in the presentation concerns the direction of the new codes. The subsequent codes to the IRC2015 are focusing on energy efficiency and the eventual development of Net Zero Energy consumption homes. Look for more prescriptive requiring higher energy efficiency in the systems that you are installing.

Climate change is also affecting the development of the code.

In closing, looking at your contracts and focusing on those items in your build-outs that can have serious repercussions on your company’s fiscal health should be reviewed constantly to keep you financially sound and in business for years to come.

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