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Volume 6 - Number 17 | April 28, 2008

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Recent Issues

  EDITOR'S NOTES | Issue 6-17
As contractor fraud has increased in the residential market, many states have stepped up to help protect homeowners from these not-so-honorable builders and handymen. The problem is particularly prevalent in areas affected by Hurricane Katrina. In addition to state and municipal licensing requirements, states are establishing laws, call-in hotlines and websites that specifically protect homeowners from remodeling fraud and scams. With those laws come disputes over legislative intent. The Illinois Supreme Court is the latest venue to address such laws. In this case, however, it was the unpaid subcontractor that sought restitution from the homeowner.

Negligence does not automatically translate to liability, ruled a state appeals court when it considered a church’s appeal regarding a defaulted project and a bankrupted unlicensed contractor. Losses must be proven before liability sets in, the court said. Unfortunately for the church, its parishioners paid for a project that was never completed.

The last case this week required a state high court to consider a vaguely worded indemnity stipulation in a flow-down clause for a school construction project that encountered flawed structural steel drawings.
  FLOW-DOWN CLAUSE IN AIA ARCHITECT-CONSULTANT AGREEMENT RULED AMBIGUOUS
When a contract’s flow-down clause can have two differing yet reasonable interpretations regarding indemnity, a state high court must decide the level of indemnity due for ensuing disputes.
  ILLINOIS SUPREME COURT INTERPRETS HOME REPAIR STATUTE
Subcontractors are exempt from a state home repair and remodeling statute aimed to protect homeowners from fraudulent contractors, rules a state high court. The sub does not typically make representations to the homeowner, so the statute does not apply.
  SUBCONTRACTOR’S NEGLIGENT MISUSE OF LICENSE DID NOT HARM PROJECT OWNER
An unlicensed contractor on a church project sidesteps city ordinances and obtains a building permit through its subcontractor, but defaults on the project and files for bankruptcy, leaving its sub with a legal mess.