Construction | Rembaum's Association Roundup

December 13, 2021January 17, 2022

Deconstructing the Construction Contract | A Plain English Explanation

If your community association has engaged the services of a contractor, engineer, architect, or other construction or design professional to perform a maintenance, repair, replacement, or capital improvement project, you know the process can be overwhelming. No matter the mad rush to execute the contract as soon as possible, when beginning such projects, no matter how big or small, the board needs to ensure the contract adequately protects the association. Even the smallest of projects can have unexpected, disastrous consequences. A few of the more common provisions which every board member should understand follow.

The Indemnity Provision

In today’s extremely litigious world, it is important that your association does what it can to protect itself against unforeseen claims that can arise out of the contractor’s performance of the work. For example, assume a crane fell on the building being repaired, the contractor accidentally damaged the elevator shaft, or worse still, a life is lost. An indemnity provision provides that the contractor will indemnify, defend, and hold harmless the association from and against claims arising out of or resulting from the performance of the work by the contractor or any of its employees, subcontractors, suppliers, etc.

Indemnification provisions can be tricky to understand. The general contractor, engineer, and design professionals (aka the architect) may seek to avoid and/or cap their overall liability. Even a small contract can have significant consequences if the negligence of the contractor causes significant damage or injury.

Rarely does the inclusion of a single word have disastrous consequences; however, a recent trend we have seen in many contracts is the contractor requiring the indemnity obligation to be limited only to damage caused by the contractor’s “sole” negligence. As events which cause loss or damage rarely occur by the “sole” actions of an individual, this provision significantly diminishes the contractor’s responsibility to indemnify the association. The association should look out for any indemnity provision which provides that the contractor is only responsible to indemnify for its “sole” negligence. Without getting into too much complexity, Florida is a “contributory negligence” state. This means each party is responsible to satisfy a judgment against them in proportion to their responsibility for the blame. So, if the contractor is found to be 33 percent responsible for an accident, then it pays 33 percent of the final judgment award. But, if the contract indemnity provision required sole negligence, the contractor would pay nothing at all because the accident was not “solely” caused by the contractor. Youch!

Another trend we see is the contractor limiting its liability to damage caused by its “gross negligence,” which by definition excludes “simple negligence.” As a brief explanation, simple negligence is when a person fails to take reasonable precautions that any prudent person would take in similar circumstances and their actions cause harm (for example, a driver who runs a stop sign and causes an accident). Gross negligence is extreme indifference or reckless disregard for the safety of others (for example, driving 100 mph in a parking lot and injuring a pedestrian). As any claims arising out of the work are likely to result from the contractor’s simple negligence, this heightened standard is not favorable to the association.

If the contractor is insistent on limiting its liability, the association may consider limiting the contractor’s indemnification obligation to the maximum payable under the contractor’s insurance policy. This way, the contractor is not on the hook for unlimited liability, but the association has some decent protection as claims can be covered up to the maximum amount payable under the insurance policy. However, in the event of a catastrophic loss or casualty event, even the amount payable under the insurance policy may not be enough to protect the association.

In addition to these limitations, “design professionals” have the added benefit of statutory authority to further limit their liability in a contract (they must have better lobbyists). Section 558.0035, Florida Statutes, provides a procedure by which a design professional can exclude any “individual liability” for damages resulting from negligence occurring within the course and scope of a professional services contract. In other words, the design professional will not be personally liable to the association for any negligence in its design if the contract includes a provision that excludes such personally liability. Section 558.002(7), Florida Statutes, defines a “design professional” as a person who is licensed in the state of Florida as an architect, landscape architect, engineer, surveyor, geologist, or a registered interior designer. Therefore, if your association is contracting with any of the foregoing design professionals, you will likely need to negotiate this provision.

You should also be aware that disputes over the enforceability of the indemnification clause do not automatically include prevailing party attorneys’ fees unless the indemnification provision specifically provides that, in the event of a dispute concerning the applicability of the indemnification, the prevailing party must be indemnified for their attorneys’ fees, costs, and expenses incurred in enforcing their right to be indemnified.

Insurance Provisions

To ensure there are sufficient funds to satisfy an indemnity judgment in favor of the association, it is important that the association require the contractor to carry certain minimum insurance. Therefore, the contract should contain a clause which provides that the contractor will maintain such general liability insurance as will protect the contractor and the association from claims that may arise out of or result from the contractor’s operations under the contract documents in the amounts set out in the contract. Additionally, the association should ensure that the contractor obtains sufficient workers’ compensation coverage.

There are a couple of terms with which you should be familiar:

Certificate Holder: The certificate holder is merely entitled to the proof of insurance, nothing more. When the policy holders have their insurance agents issue a certificate of insurance to the entity that hired the contractor to do the work, that entity becomes a certificate holder. It is simply the contractor’s way of saying, “I have insurance.” Certificates show that the contract has the insurance policies in the limits shown on such certificate. It also provides that the certificate holder is entitled to know if the policy lapses.
Additional Insured: An additional insured is provided the same coverage and rights under the policy as the named insured. In other words, when you become an additional insured, you are entitled to the same insurance protections as the original policy holder. Therefore, in the event of loss, the association may file a claim on the contractor’s policy through its status as an additional insured.

Thus, the contract should not only require that the contractor carry insurance but also provide that the contractor is obligated to provide a certificate of insurance evidencing the insurance coverage and containing an endorsement listing the association as an “additional insured.”

In addition to the insurance requirements for the contractor, your association may consider purchasing builder’s risk insurance for the project. Builder’s risk insurance is designed to protect the owner of a construction site from loss and damage. This should be further discussed with the association’s insurance agent.

Paying the Contractor

During a major construction project, the association’s contractor will likely be working with several subcontractors to complete the work. The process for payments in such projects is set out in §713.13, Florida Statutes. (For a more detailed discussion on the construction payment process, you can read my prior article, “Construction Progress Payments: The Hidden Trap,” at rembaumsassociationroundup.com, originally published in the Florida Community Association Journal, February 2020 edition.)

By way of brief explanation, when the project commences, the association records a “Notice of Commencement” identifying the contractor and the legal description of where the work is being performed. The purpose of the Notice of Commencement is to inform all subcontractors and suppliers that if they intend to provide goods and/or services to the property, and if they want to have proper legal standing to record a lien against the property in the event they are not paid, the subcontractor and/or supplier must serve a “Notice to Owner” to the association. The Notice to Owner informs the association of all subcontractors working under the general contractor and all suppliers who provide suppliers and materials to the job site.

In exchange for payments to the general contractor, the general contractor provides the association with “partial payment affidavits” for each payment and a “final payment affidavit” upon conclusion of the work at hand. The subcontractors and suppliers provide the association “partial releases” for the payment received from the general contractor using the general contractor as the delivery conduit to deliver the partial release to the association. This method ensures that subcontractors and suppliers cannot later claim that they were not paid. However, in order to ensure this protection, it is important that the contract requires the contractor to provide the subcontractors’ and suppliers’ partial releases contemporaneously with the association’s progress payment. With the partial releases in hand, in the event the contractor does not pay the subcontractors and suppliers, the association is fully protected.

Some general contractors insist on providing the association with the partial releases from the subcontractors and suppliers one payment behind. This should be a red flag to your association because it means if the contractor fails to pay the subcontractors and suppliers after receiving payment from the association, the association will still have to pay the subcontractors and suppliers. In such event, the association will end up having to pay twice for all or part of the same work.

Prevailing Attorney’s Fees

Another important consideration is the prevailing party attorneys’ fees provision of the contract. An attorneys’ fee provision generally provides that in the event of litigation to enforce the terms of the contract, the prevailing party is entitled to recover their attorneys’ fees. However, this provision must be carefully worded to ensure that your association will be able to recover its attorneys’ fees.

Termination

Most contracts provide that the association may terminate the contract for cause. The termination for cause provision should include examples of conduct by the contractor which would entitle the association to terminate the contract for cause. In addition to termination for cause, we recommend the inclusion of a “without cause” termination provision. This provision gives the association an out in the event the contractor is not working out, but the contractor’s conduct does not rise to the level which would allow dismissal for cause.

Generally, if an association terminated an agreement without good cause, and unless otherwise spelled out in the contract, the contractor would likely be entitled to approximately 15 to 22 percent of the contract price for its anticipated lost profit and overhead.

Payment and Performance Bonds

Another way the association can protect itself is by requiring the contractor to obtain “payment and performance bonds,” which are most often purchased together as a set. While doing so typically adds three to five percent to the total contract price, it is well worth it. In addition, if the contractor is not able to provide such a bond because the bonding companies will not bond the contractor, it is very telling because not every contractor is bondable.

A “performance bond” is a surety bond issued by a bonding company or bank to guarantee the satisfactory completion of the work by the contractor. It acts to protect the association in the event the contractor fails to complete its contractual obligations.

A “payment bond” guarantees the contractor will pay all laborers, material suppliers, and subcontractors engaged by the contractor for the work. In the event the association pays the contractor, but the contractor fails to pay the laborers, material suppliers, and/or subcontractors, the surety will step in to pay same.

Force Majeure

Many contracts contain force majeure language which provides that the parties will not be responsible to the other if they are unable to fulfil the terms of the contract due to events beyond the control of the parties. Most often, a force majeure event adds delay to the targeted project completion date and avoids claims for breach of contract due to the delay. Such events may be acts of God, flood, fire, hurricanes, war, invasion, terrorist acts, government order or law, actions, embargoes, or blockades, etc. Of late, for reasons that need no explanation, pandemics are added to this list, too.

The above discussion is not meant to be all inclusive. There are so many other important provisions to consider, but space is limited. To ensure your association is protected, the association should always rely on its legal counsel to review the association’s contracts and make the necessary revisions to assist in the protection of the association.

(Reprinted with permission from the December 2021 edition of the Florida Community Association Journal)

July 31, 2021December 27, 2021

The Champlain Towers South Condominium Collapse | Initial Interim Lessons Learned From This Tragedy

Just after midnight on Thursday, June 24, 2021, tragedy struck Surfside, Florida, when 55 of 136 units of the 12-story Champlain Towers South Condominium tragically crumbled to the ground. Just prior, a sleepless sixth floor owner notices a two-finger-wide separation in her drywall and, fearing the worst, scrambles downstairs as the building begins to collapse around her. Miraculously, she barely escapes. So many others were not as fortunate. Today, as this article is being written on June 27, 2021, sadly there are nine confirmed dead and over 150 persons still listed as unaccounted for.

By way of background, a prior building collapse in 1973 led Miami-Dade and Broward Counties to institute a city ordinance requiring a 40-year residential building recertification. The 40-year-recertification requirement is the absolute maximum period of time for the association to inspect the building for structural, electrical, and other critical component failure posing a threat to life safety. Champlain Towers South, built in 1981, was in the process of complying with its building recertification when disaster struck. Likely, months from now the cause will be identified. Do not be surprised if it is discovered that there were multiple causes leading to a perfect storm type of event.

When concrete is subjected to moisture, it causes the steel rebar to rust, which causes further expansion of the concrete surrounding the rebar, which ultimately, if not treated, leads to failure. This is commonly referred to as “spalling.” In addition, when concrete is exposed to moisture, it causes the concrete to separate into its constituent parts, and it will leach lime [calcium-containing inorganics]. Many condominium balconies experience concrete spalling and require repair. So, too, do the support columns and other parts of the foundation responsible to bear and pass the building load on to other structural components. What we know so far, from multiple sources, follows:

An engineering report issued on October 8, 2018, by Morabito Consultants to Champlain Towers South Condominium Association, Inc., concluded in its Structural Field Survey Report that

“[T]he waterproofing below the pool deck and entrance drive… is beyond its useful life and therefore it must be completely removed and replaced. The failed waterproofing is causing major structural damage to the concrete structural slab below these areas. Failure to replace the waterproofing in the near future will cause the extent of the concrete deterioration to expand exponentially… The main issue in this building structure is that the entrance drive, pool deck and planter waterproofing is laid on a flat surface. Since the reinforced concrete slab is not sloped to drain, the water sits on the waterproofing until it evaporates. This is a major error in the development of the original contract documents prepared by the [initial architects and engineers]… It is important to note that the replacement of the existing deck waterproofing will be extremely expensive as removal of the concrete topping slab to gain access to the waterproofing membrane will take time, be disruptive, and create a major disturbance to the occupants of this condominium building. Please note that the installation of deck waterproofing on a flat structure is a systemic issue for this building structure… Regarding the parking garage consultant’s review revealed signs of distress/fatigue as described below: abundant cracking and spalling of varying degrees was observed in the concrete columns, beams, and walls. Several sizable spalls were noted in both the top side of the entrance drive ramp and the underside of the pool/entrance drive/planter slabs, which included instances with exposed deteriorating rebar. Though some of the damage is minor, most of the concrete deterioration needs to be repaired in a timely fashion… Morabito Consultants is convinced that previously installed epoxy injection repairs were ineffective in properly repairing the existing cracked and spalled concrete slabs.”

(The entire 2018 Morabito Consultants report can be found at kbrlegal.com. Click “resources” at top of the page, then click “links” from the dropdown menu.)

Reports from local and national news indicated the following information. The swimming pool built atop a parking garage was leaking for an unknown period of time into the garage area below. Ocean water often intruded into the below-grade parking structure. At least one owner on the ninth floor was experiencing repeated pipe leaks. A report from the 1990s indicated the building was sinking approximately two millimeters per year. Significant roof repairs were underway for at least one month prior to the collapse. Lime was leaching out of the concrete deck causing damage to the cars in the parking garage below. Just south of the Champlain Towers South Condominium, a new building was being constructed that caused residents of the Champlain Towers South Condominium to complain about the constant shaking of their condominium building caused by blasting and digging activity. The concrete waterproofing associated with the foundation was failing as noted in the 2018 engineering report. Naturally, all of this combined could eventually lead to a weakened overall support structure.

Based on this information, ask yourself this important question: Was the Champlain Towers South Condominium collapse foreseeable? While some people, most especially with the benefit of hindsight, may believe that to be the case, bear in mind that there are also reports that the board had meetings with City of Surfside officials after the 2018 Morabito Consultants report was issued. If so, this may be very telling and bear on the board’s decision-making process. Details of such meetings are not presently known. Are there other engineering reports not yet discovered that bear on this issue? All of this may be very telling and bear on the board’s decision-making process. In any event, it is too early to reach conclusions.

Notwithstanding this horrible tragedy, there are interim lessons that can be gleaned from this disaster that every board member and manager of a high-rise condominium should heed, as follows:

If your county does not have a 40-year-recertification requirement, and even if it does, obtain a recertification engineering report every 25 to 40 years, anyway. Remember that the 40-year requirement set out in the Miami-Dade and Broward ordinances is a maximum period that the association can go without having complied with the re-certification process. The 40 years is not a minimum, meaning an association can certainly have the recertification-type studies performed as often as reasonably necessary under the circumstances.
When it comes to building maintenance and repairs that are life-safety recommendations, should the association’s retained engineering expert make recommendations regarding the building’s foundation, implement them in a timely manner. Do not consider making temporary patch repairs in lieu of proper repair. In other words, do not be penny wise and pound foolish. Do not let the need to obtain unit owner votes to either approve the work and/or the needed assessments or loans to fund the project be a factor in any way. There is a long line of Florida appellate case law that supports the board’s right to effectuate repairs and take out loans when necessary for protection of life and property. Your association’s attorney will be a necessary component of this process to provide legal opinions based on the controlling appellate cases.
Fund the reserves appropriately and make sure the association has a specific reserve for concrete repair and restoration. If the association is pooling reserves, be sure to include concrete repairs in the pooled reserve. Do not even consider waiving or reducing reserves until a considerable nest egg is saved up.
Update the association’s reserve schedules at least every five years. It should be based on empirical and objective evidence.
Do not be afraid or otherwise hesitant to special assess the membership for required maintenance and repairs. Remember, the units have more financial value when the building is properly maintained.

Oddly, Florida Statutes have three significant failures that could help prevent a residential building collapse similar to the Champlain Towers South Condominium.

The relevant statutes do not specifically require condominium associations to have a concrete restoration reserve though it should be easily included as a required reserve pursuant to “catch all” language set out in §718.112 (2)(f)(2), Florida Statutes (see below).
Despite what you may hear on the news, there is not a statewide mandatory residential building recertification required after a certain number of years.
There is no statutory requirement to have a reserve study or engineering study performed on a regular basis.

Regarding reserves, §718.112 (2)(f)(2), Florida Statutes (2020), provides, in relevant part, that

In addition to annual operating expenses, the budget must include reserve accounts for capital expenditures and deferred maintenance. These accounts must include, but are not limited to, roof replacement, building painting, and pavement resurfacing, regardless of the amount of deferred maintenance expense or replacement cost, and any other item that has a deferred maintenance expense or replacement cost that exceeds $10,000. The amount to be reserved must be computed using a formula based upon estimated remaining useful life and estimated replacement cost or deferred maintenance expense of each reserve item. The association may adjust replacement reserve assessments annually to take into account any changes in estimates or extension of the useful life of a reserve item caused by deferred maintenance. [Emphasis added.]

Remember, too, the board is absolutely required to pass the budget each year with reserves fully funded. Only then can the board decide to present to the owners the opportunity to waive or reduce reserves. Ask yourself, are our condominium association’s reserves properly funded?

As a result of this horrific tragedy, the 2022 Florida Legislature should consider requiring a recertification engineering report for all high-rise residential condominiums every 30 years or so and should require all community associations to update the reserve schedules at least once every five years.

Also remember that each board member should exercise his or her own individual reasonable business judgment when rendering decisions, except for the purchase of insurance, where the much higher standard of “best efforts” is applied as required by §718.111(11), Florida Statutes (2020). With the reasonable business judgment standard in mind, ignoring advice of engineers and other requisite professionals could be considered by others to be negligent or even rise to a reckless act or an omission conducted with bad faith, with malicious purpose or in a manner exhibiting wanton and willful disregard of human rights, safety, or property, any one of which can lead to exposure to liability. But, if the association received two different reports where the opinions drastically differ, then in that situation, each board member should use his or her reasonable business judgment to decide which report should be relied upon. The fact the board chose to follow one expert’s guidance over the other, whose guidance turned out in the end to be wrong, is not too likely to result in an award for damages as a result of legal challenge.

If you live in a high-rise condominium and are fearful of collapse due to the Champlain Towers South Condominium tragedy, please remember that this building’s failure was certainly not an everyday occurrence and is best described, for the time being, as a tragic anomaly.

(Reprinted with permission from the August 2021 edition of the Florida Community Association Journal)

February 9, 2020

CONSTRUCTION PROGRESS PAYMENTS: The Hidden Trap

originally published in the Florida Community Association Journal, February 2020 edition

The owner of real property can end up paying twice when they pay their general contractor who, in turn, fails to pay the subcontractors and suppliers. However, this very real consequence can be avoided, too. While drafted to protect contractors and suppliers, Florida law also provides substantial protection in favor of the consumer (a.k.a, the “property owner”) from having to pay twice for construction supplies and for the work itself. However, the property owner only has the protection if the process outlined in section 713.13, Florida Statutes (2019), is strictly followed. While the statutory regime can be difficult for the layman to interpret, it is not an overly complicated process to follow once understood. That said, even if an owner strictly follows the statutory regime to protect themselves from having to pay twice, many general contractors and their attorneys have found a way to dilute the consumer protection afforded by the statute and, thus, still expose the the owner of the property to the risk of having to double pay for the work. To understand the problem at hand, the overall payment process from the owner to the general contractor as contemplated by Florida’s legislation must be understood.

To start the process, the owner is required to file what is referred to as a “Notice of Commencement.” Amongst other things, the Notice of Commencement identifies the general contractor and the legal description of where the work is to be performed. It is recorded with the local county clerk’s office so that it is a part of the county’s official records. The purpose of the Notice of Commencement is to inform all subcontractor’s and suppliers that if they intend to provide goods and/or services to the property, and if they want to have proper legal standing to record a lien against the property in the event they are not paid, that the subcontractor and supplier must serve a “Notice to Owner” to the owner.

Most importantly, the Notice to Owner informs the property owner of all subcontractors working under the general contractor and all suppliers who provide supplies and materials to the job site under the direction of the general contractor or a subcontractor. In this way, the owner is informed of all of the subcontractors and suppliers working under the direction of the general contractor.

In exchange for payments to the general contractor, the general contractor provides the owner with partial payment affidavits for each payment and a final payment affidavit upon conclusion of the work at hand. The subcontractors and suppliers provide the owner “partial releases” for the payments received from the general contractor using the general contractor as the delivery conduit to deliver the partial release to the owner.

Because the owner enters into contractual “privity” (meaning, “a close connection”) with the general contractor, but not the subcontractors and suppliers, the owner provides all payments due to the subcontractors and suppliers to the general contractor who is responsible to pay all subcontractors and suppliers. But, how does the owner have assurances that the money paid to the general contractor is properly provided to the subcontractors and suppliers? Well, that is where the Notice to Owners received by the owner come in very handy. Since the Notice to Owner informs the owner of all subcontractors and suppliers hired by the general contractor expecting payment, the owner can, and most certainly should, contractually require that the general contractor provide the owner with partial releases from those subcontractors and suppliers as proof of payment. In fact, section 713.06(3)(c)2., Florida Statutes (2019), provides that “[l]ienors [referring to and meaning the subcontractors and suppliers] receiving money shall execute partial releases… to the extent of the payment received.”

Sounds simple, right? Pay the general contractor and receive partial payment releases (a.k.a, a receipt) from the subcontractors and suppliers so that they cannot later claim they are unpaid and thus, be in a position to record a lawful lien against the owner’s property. The question is when should the subcontractors and suppliers provide their partial releases? Should the subcontractors’ and suppliers’ partial releases be provided by the general contractor to the owner contemporaneously with a progress payment, or should the subcontractors and suppliers provide their partial releases only after payment is received meaning the partial releases will only be at least one progress payment behind.

In order to be fully protected from the risk of double payment, the general contractor must obtain the partial releases from the subcontractors and suppliers in advance of payment from the owner. It is as though the statutory process at hand contemplates that either the subcontractors and suppliers trust the general contractor to the extent that they provide their partial release to the general contractor in advance of payment so that the partial releases can be provided to the owner in immediate exchange for payment from the owner. Or, the statutory process implies that the general contractor has sufficient funds to pay the subcontractors and suppliers prior to payment from the property owner so as to be in a position to obtain the partial releases from the subcontracts and suppliers to provide to the owner in exchange for a partial payment. With the partial releases in hand, in the event the general contractor does not pay the subcontractors and suppliers, the owner is fully protected. It is important to understand that without the partial releases in hand, even if the owner paid the general contractor and received a partial payment affidavit from the general contractor, if the general contractor did not pay the subcontractors and suppliers, then they have a lawful right to demand payment from the owner and to record a lien against the owner’s property. Hence, without the partial releases from the subcontractors and suppliers, the owner remains in danger of paying twice for some or all of the work.

Some general contractors insist on providing the owner with the partial releases from the subcontractors and suppliers one payment behind the payments from the owner to the general contractor. Right off the bat, that should be a significant concern to the owner because it means if the general contractor fails to pay the subcontractors and suppliers for any reason whatsoever, be it due to bankruptcy, closing up shop, or running off to the Canary Islands with the money, the owner will still have to pay the subcontractors and suppliers and thus pay twice. In fact, the legislature has even gone so far as to warn the public of this danger.

Section 713.06(3)(c)1, Florida Statutes (2019), provides in relevant part that, “…[t]he owner may require, and, in such event, the contractor shall furnish as a prerequisite to requiring payment to himself or herself, an affidavit as prescribed in subparagraph (d)1., on any payment made, or to be made, on a direct contract, but the furnishing of the affidavit [by the general contractor] shall not relieve the owner of his or her responsibility to pay or cause to be paid all lienors [a.k.a., the subcontractors and suppliers] giving notice.” [Emphasis added.]

There are three methods to protect the owner from this problem:

The safest method is to ensure that the contract between the owner and general contractor contains a provision that the owner is to be provided the contemporaneous and immediate partial release of lien from the subcontractors and suppliers in immediate exchange for payment to the general contractor.
Hire a different general contractor.
Purchase a payment and performance bond which act as an insurance policy where, among other protections, the insurer will pay the subcontractors and suppliers in the event payment was made by the owner to the general contractor but the general contractor failed to pay the subcontractors and suppliers. If the general contractor is not bondable, that should serve as a warning in and of itself to look for a different contractor. The performance and payment bonds will add three to five percent to the overall project cost and are, one way or the other, paid by the owner. If this route is selected, the owner must make absolutely certain the policy will provide the necessary coverage for this concern as not all insurers may provide this coverage.

Whether an owner decides to enter into contractual privity with a general contractor who insists on providing the subcontractors’ and suppliers’ partial releases only after the owner pays the general contractor and then the general contractor pays the subcontractors and suppliers is risky because there will always remain financial exposure of paying for all or part of the work, twice. If you, your company or community association are considering hiring a general contractor then you need to be aware of this issue. It is suggested that an owner never ever put themselves into a position where there is risk of paying more than once for the same work. Ask yourself this: if the general contractor cannot not afford to pre-pay their subcontractors and suppliers or the subcontractors and suppliers will not trust the general contractor with their partial releases to be provided to the owner upon payment, then should you be doing business with that general contractor in the first place?

Personal experience has demonstrated that some general contractors will tell property owners that delayed receipt of the partial releases is customary and quite ordinary. If you find yourself in that position be sure to tell the general contractor of the beachfront property for sale in Arizona, and go find yourself a different contractor.