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Franklin Legal Issues Blog

How contractors can prevent fraud accusations

The world of construction frequently relies on word-of-mouth referrals. Your contracting company’s reputation can either catapult your business to new opportunities or financial ruin. Even if you haven’t committed fraud, news of an accusation can travel fast throughout the industry.

Therefore, contractors must plan ahead to protect their business from allegations of fraud. The Tennessee Department of Transportation (TDOT) lists several warning signs of construction fraud. Mitigating these risks through responsible business practices can shield you from complicated legal disputes and keep your work flowing.

The bad boy of the construction industry

One of the risks that most construction projects have involves getting paid. It’s a fact of life that we all want to get paid for the work we perform. But what happens when someone doesn’t pay? The resulting situation causes a domino effect of sorts. The owner can’t or won’t pay, which means the general contractor then can’t pay their sub-contractors.

The bad boy mentioned in the headline is the pay-if-paid clause that is often written into construction contracts. What this clause does is shift the risk from the general contractor to the subcontractor. For example, if the owner of the project lost their construction financing and the contractor wasn’t paid, they could legally refuse to pay the sub-contractors for their work.

Why should you work with a registered agent?

When you started your business you may have known about the requirement limited liability companies and corporations have of working with a registered agent.

You may not have known the reasons for this requirement - and how it ultimately benefits your business.

Study: New condo developments lead the way for construction defect claims

Developers, contractors, subcontractors and others in the construction industry may be well aware that any new construction or remodeling project may eventually lead to some form of construction defect claim. As the size of a project increases, the cost of litigation can also quickly rise. Large-scale developments, condominium projects and other multi-functional properties bring different economies of scale to bear in any potential litigation.

A recent study looked into claims of construction deficiencies and concluded the majority of disputes occur related to the construction of new condominium projects as compared to townhome associations and single family homes, according to Builder News. Obviously, condominium associations often have more pooled resources than the buyer of a single family home. However, the research, conducted by the Community Associations Institute, did not address the increased resources that condo groups may have to pursue a construction defect claim.

Contact

Robertson Law Group
1896 General George Patton, Suite 600
Franklin, TN 37067

Phone: 615-656-1729
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