April 28, 2008

EDITOR'S NOTES

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.

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