Know Them: Provisions That Protect You in Contracts with Building Contractors
Greenstein
Oct. 31, 2013 — Virtually all cooperative and condominium buildings in New York City at some point will be required to perform façade work to repair damages, and when such time arises, they must enter into agreements with contractors and other professionals. Here are essential provisions that should be included in agreements with contractors and architects.
Buildings more than six stories tall must also comply with Local Law 11, which mandates an inspection every five years by a licensed architect or engineer. It also requires a report to be filed by the architect or engineer with the New York City Department of Buildings (DOB). If Local Law 11 is applicable, the agreement with the architect or engineer (the "professional") must state, among other things, that the professional will be complying with the DOB reporting requirements.
Who Files Site-Safety Plan?
Further, in agreements between the board and its professional, for all work relating to façade or other exterior repairs, I would recommend that the agreement state whether the professional will be responsible for filing a site-safety plan in connection with the construction. I have reviewed a number of agreements already entered into between boards and professionals that have failed to clearly define the responsibility of professionals to request from the DOB that the number of site safety inspectors be reduced.
This is a critical point because it can cost a building tens of thousands of dollars to continue to have unnecessary site-safety personnel on the construction site.
Many boards fail to have their attorneys review the proposed form of construction contract. I have reviewed poorly drafted warranty and insurance provisions in contracts already signed. For example, the amounts of insurance coverage may be woefully low or the types of coverage inadequate.
Added Fees When You Act Too Late
If the bid were based on such provisions and the attorney reviews it after the bid has been accepted and recommends an increase in the insurance coverage or changes in the warranty, the contractor will probably insist on raising the contract sum to cover the added insurance and/or warranty requirements.
Boards should contact their attorneys before they have (a) retained a professional to inspect the building, (b) obtained a report detailing the results of the inspection, and (c) granted a bid to a contractor to perform the façade work. If they do so, their attorneys can guide the board and managing agent through the process, review documents, and provide comments to each of the prospective agreements the board will be signing and avoid potential liability and costs.
Dennis H. Greenstein is a partner at Seyfarth Shaw.
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