Womble Carlyle Construction Industry Blog

Following the construction industry and related legal topics in the United States.

Friday, August 24, 2007

Changes to Georgia Contractor License

As Georgia’s implementation of its new residential and general contractor licensing statute progresses, this year’s General Assembly made several changes – among the most significant being:

  • The statute’s final implementation date was extended by six months – to July 1, 2008. Beginning that date, licenses are required to obtain building permits on virtually all Georgia building construction projects, including residential and commercial construction.

  • Demolition work was removed from scope contained in the statute’s definition of “contractor.”

  • The requirement that qualifying agents be engaged by their businesses on a “full-time basis” was removed; and language was added to allow a person to serve as qualifying agent for more than one business concurrently, if that person meets the statute’s other qualifying agent requirements.

  • Language was added to permit “inactive status” for licensees.

  • Language was added making it clear that the statute is not meant to apply to “construction or installation of manufactured homes as defined in OCGA § 8-2-131.”

Every year since passage, the General Assembly has modified this statute. The 40-day 2008 session will begin in January and end before the statute’s current July 1, 2008 implementation date, so more changes are possible (and likely). (This entry was published by David Roberts of Womble Carlyle's real estate and construction practice group.)

Sources: SB 115

Wednesday, August 22, 2007

Shifting Tides of New Contractor Retainage Legislation - North Carolina Public Projects

On June 12, 2007, my colleague Culley Carson posted a blog entry entitled "Public Owners Beware: Legislation in North Carolina General Assembly Will Cap Retainage in Public Construction Projects." A variation of this legislation was recently ratified and signed into law by the Governor on August 17, 2007. To see the new legislation, click here. Bottom line, the original very pro-subcontractor legislation has been watered down by influence from owner and design professional interest groups.

In summary, the legislation, which takes effect on public projects with contracts entered into after January 1, 2008, revised § 143-134.1 of the NC. General Statutes as follows:
  • § 143-134.1(b1) – No retainage on public projects which cost less than $100,000 (diluted: original draft was $300,000).
  • § 143-134.1(b1)(1) – For public construction projects over $100,000, retainage is capped at 5%.
  • § 143-134.1(b1)(2) – If contractor performs satisfactorily, no more retainage may be withheld after the project reaches 50% completion.
  • § 143-134.1(b1)(4) – Full retainage less 2.5 times (diluted: original draft was 1.5 times) the value of work to be completed or corrected due to contractor within 60 days (diluted: original draft was 45 days) of substantial completion or when "owner receives beneficial occupancy or use of the project" (diluted: original draft included when certificate of occupancy issued).
  • § 143-134.1(b2) – Early finishing trades (i.e., structural steel, piling, caisson, demolition, etc.) that satisfactorily complete 100% of their work by 50% completion of the job get line item release of full retainage less (the following are new dilution terms) 0.5% of the subcontract amount contingent on architect/engineer approval of acceptability of subcontractor’s work.

For public owners that are accustomed to retaining 10% until final completion, this sea change takes away much of their leverage. But thanks to lobbying efforts by the American Institute of Architects, the following caveat provision was added at the end of the revised § 143-134.1:

(e) Nothing in this section shall prevent the owner from withholding payment to the contractor in addition to the amounts authorized by this section for unsatisfactory job progress, defective construction not remedied, disputed work, or third-party claims filed against the owner or reasonable evidence that a third-party claim will be filed.

This caveat provision inserted into the legislation at the last minute allows owners to stem the tide and maintain leverage on public projects. (This entry published by Ken Michael, a member of Womble Carlyle’s real estate and construction law practice group.)

Saturday, August 18, 2007

Florida Researchers to Huff, Puff, and Blow Houses Down

The Wall Street Journal reports that Florida International University and a reinsurer (providers of insurance for insurance companies) are finding ways to help buildings survive hurricane season. They have developed a tool, dubbed the Wall of Wind, to test the effects of hurricane force winds and rain on full-scale, low-rise residential buildings. The Wall of Wind is nothing more than six gigantic fans, each 8 feet tall, set in a two by three array. When powered they can create wind gusts in excess of 130 mph (equal to a category three storm). Florida International intends to eventually expand the Wall of Wind to an array of 18 fans with high-speed cameras and monitoring equipment, and install it in a structure similar to an airplane hanger.

The project is part of an effort to change the public's perception of building safety during hurricanes, and to find the least expensive way to shore up older homes and commercial structures (those built before the advent of stricter building codes) against the effects of hurricanes. Specifically, researchers are looking at the performance of roofing materials, roof uplift pressures, wind load on roof top equipment (e.g. air conditioner), and roof to wall connections.

Researchers liken the Wall of Wind to shake table testing, which revolutionized performance-based earthquake engineering, and believe these tests will lead to developments that will cut the number of deaths associated with hurricanes and reduce property damage (about $35.5 billion over the last five years).

Sources: WSJ, International Hurricane Research Center @ Florida International University, Air Currents