I reviewed a risk management outline I drafted years ago for a client considering a multifamily project. What jumped out at me was the number of times I referred to the concept of getting it in writing.
“Carte si face, perche uomo e fallace.” This quote, which goes back to the Florentine Renaissance and means “Cards are faced, because men are fallacious,” has something to teach today’s home builders. To help me identify a topic for this article, I reviewed a risk management outline I drafted years ago for a client considering a multifamily project. What jumped out at me was the number of times I referred to the concept of getting it in writing.
Commercial versus residential documentation
One thing that has struck me throughout my career is the difference in documentation in a commercial project versus a residential project. In the commercial setting, rarely is something not documented. There are few facts about which attorneys can argue when litigating a commercial construction case. Critical issues are often clearly documented, creating a factual record.
When litigating residential cases, it seems like there are exponentially more questions about disclosures and the actual construction. Unfortunately, these gaps are often filled in with witness testimonies. I cannot tell you how many times I have heard a subcontractor testify that “I know I did not follow the plans, but the superintendent told me he knew of the problem and instructed me to do the best I could.” Without written evidence, it is easier to make up a narrative to fit the story you want to tell. Even if that narrative is true, from the subcontractors’ perspective, it would be better to have supporting documents, even if just an email stating “you are instructing me not to build in accordance with the plans, and I will not be held responsible for the result.”
RELATED: Attorneys’ Fee Clauses are Engraved Invitations to Sue
I am not suggesting that residential builders have to adopt all commercial construction practices when it comes to documentation or shoulder the cost of those practices. What I am suggesting is that residential builders should take time to identify those issues, which, if not documented, will serve as an Achilles’ heel during litigation, and create streamlined processes to document those issues. In the example from the previous paragraph, this could be as simple as creating a form for subcontractors to sign, along with their monthly lien waivers, certifying that they have performed their scope of work in accordance with the construction documents and have received no instruction from the builder to the contrary. While I have not seen this approach used yet, I believe it bears consideration.
While there is no perfect answer, perfection should not be the enemy of progress. Start today by identifying the crucial issues that would benefit from documentation and devise systems and processes to efficiently and effectively document them.
Get this in writing
Some crucial steps and processes that builders should document include the following:
- Terms of the purchase and sale agreement
- Warranty terms and process
- Disclosures regarding expansive soils
- Subcontract terms
- Scopes of work for various subcontractors
- Homeowner changes
- QA/QC process
- Pre-closing walkthrough
