The California Bay Area experienced an influx of billions of dollars into its real estate industry over the past few years and there are numerous predictions that the construction and real estate industries stand to reap the benefits. The skyline changed over the past year as high-rise residential developments and commercial buildings rose to the heavens. Numerous California news sources list reasons for the optimistic home construction forecast:
- Existing home prices continue to rise, in some areas of California by as much as 30 percent.
- As home values rise, the math for new construction begins to pencil out and homebuilders can expect to see an increase in business.
- As condominiums and townhomes become more cost-effective with rising single-family home prices, the demand for multi-family dwellings will also rise.
- The number of foreclosures, short sales and other distressed properties took a dive, reducing the number of overall properties on the market.
One of the biggest reasons is an influx of new residents. Numerous tech companies from Silicon Valley either relocated or expanded their operations in the Bay Area, bringing and hiring new employees. The population of San Francisco now tops out at one million and counties surrounding San Mateo are reporting record numbers of new residents. The good news for construction companies is that all of these people need homes.
Avoiding construction disputes
With the increase in production comes an increase in potential headaches. Construction projects are not immune to legal disputes and building contractors, real estate developers, owners and subcontractors should take preventative steps to avoid litigation. Some of the most common construction disputes include the following:
- Misunderstandings: Not everyone has the same level of construction expertise and some people fail to acknowledge that they do not really understand what a building expert is telling them. A simple misunderstanding may lead to a dispute that is resolvable only through litigation.
- Oral modifications: All people in the construction industry know the importance of obtaining written change orders. However, some still orally commit to requested changes, opening the door to miscommunication and errors.
- Ill-defined scope of work: When a contractor asks for bids, the scope of the work to be performed must be carefully defined to avoid receiving a bid that only covers part of the work needed. Additionally, an owner may not understand the parameters of what the builder has contracted to perform.
There are numerous construction issues - such as bidding, insurance, defects, nonpayment and breach of contract - that can cause disagreements during the building process. Fortunately, an experienced lawyer can help you avoid potential disputes or provide guidance for resolving those that arise. Consult a California attorney knowledgeable about real estate and construction law for assistance.