Architect Messed Up
December 17, 2009 11:18 AM Subscribe
My architect's omission will cost me an extra $25 grand. Do I have any recourse?
What would you do?
This past summer I hired an architect to determine what kind of addition I could put on my house given lot size, set backs, town codes, and what ever other restrictions might apply. He came back with an answer and drew up the specs. Based on the drawings I obtained a loan and hired a general contractor.
The GC applied for permits last week and the town said I have to raise my house at least two feet to be in compliance with FEMA regulations in effect since 2005. The house raising will cost $25 to $30 grand on top of the $275 grand I was already budgeted for. In short, the Architect never looked to see what the FEMA regulations were and because of the mistake I will have to incur these extra costs. I have been assured from another architect, from an attorney and from my GC that my architect’s omission was his fault and not something that should have been missed.
Had I known from the beginning that a house raising was required, I might not have moved to obtain the loan and contractor. Between the loan closing costs and other expense I am already about $50,000 into the project.
Question: Does anyone think I could recover the extra costs to raise the house from the architect?
What would you do?
This past summer I hired an architect to determine what kind of addition I could put on my house given lot size, set backs, town codes, and what ever other restrictions might apply. He came back with an answer and drew up the specs. Based on the drawings I obtained a loan and hired a general contractor.
The GC applied for permits last week and the town said I have to raise my house at least two feet to be in compliance with FEMA regulations in effect since 2005. The house raising will cost $25 to $30 grand on top of the $275 grand I was already budgeted for. In short, the Architect never looked to see what the FEMA regulations were and because of the mistake I will have to incur these extra costs. I have been assured from another architect, from an attorney and from my GC that my architect’s omission was his fault and not something that should have been missed.
Had I known from the beginning that a house raising was required, I might not have moved to obtain the loan and contractor. Between the loan closing costs and other expense I am already about $50,000 into the project.
Question: Does anyone think I could recover the extra costs to raise the house from the architect?
Nthing talking to a lawyer.
That being said, I think that you likely would only be able to receive the cost of the architect's services, not the $25-$30 for the house raising (as if he hadn't made the mistake you still would have had to pay for the house raising).
posted by mcroft at 11:32 AM on December 17, 2009
That being said, I think that you likely would only be able to receive the cost of the architect's services, not the $25-$30 for the house raising (as if he hadn't made the mistake you still would have had to pay for the house raising).
posted by mcroft at 11:32 AM on December 17, 2009
I'm in construction, but not residential construction. Wow an architect fucked up and they admitted it? You, the owner, need to go after them. Listen to your lawyers carefully as what happens next can have serious consequences. Consider the following:
1. Your contract with the GC is separate from the architect's contract. Legally speaking, the architect is the agent of the owner (e.g., you).
2. Because of this the GC will issue a "Request For Information," this is where the Change Order section is important, this is probably the most important section of any construction contract.
3. Keep in mind the GC contract is with you not the architect. You are required to fulfill your end of the contract with the GC to build the house. This is where you will need to listen to your lawyers as right now you're time is ticking. You're in a situation where there's an Owner caused delay (bad specs and drawings). The GC can come after you* and get damages for the delay, in which in theory you'd be able to get from the architect. That does not change the fact that if you're not liquid $25k you can't really pay the GC, can you? People and development firms go bankrupt over things like this.
4. The architect will definitely carry professional liability insurance, the question is how are they going to pay you. Usually architects don't pay unless they really fuck up, and minor things like this are just eaten by the owner as the cost of doing business (and they'd never use that design firm again). Your contract with the architect should have provisions for mediation, and if you have as good a case as you think you have, this should be a fairly straightforward process. In fact I would not be surprised if this were required to get the insurance company to pay. This usually involves someone with years of experience in the construction industry (usually retired), coming in and looking at everything. This is much quicker than litigation, but will still take forever. If the architect doesn't agree with the ruling in mediation that means you now have to sue them and go to court (usual but this is a worst case scenario). As you can imagine having lawyers go over everything is expensive and will eat up any litigation fees.
* Except for jurisdictions where delay has to be fraud and the like, so again, it depends on where you are.
That's assuming your contract is a classic design-bid-build contract and you didn't do something "fancy," though most laws are setup to default to design-bid-build if a contract is confusing, so it gets even more complicated.
Really I think this is going to come down to whether or not you can pay the $25,000 or exit the contract with the GC. if the GC understands your situation, doesn't want damages and is willing to just leave with what you've paid them, you're okay. Then focus on the architect and getting your money back. If you want to move forward on the project you'll have to eat the $25k and try to get it from the architect at a later date. There's no way around it. There's a good chance any option you take you're going to end up losing money.
Construction is expensive and even with sophisticated clients, it takes deep pockets to get projects done. Listen to your lawyers as everything I said could be thrown out the window in light of different information.
I actually have what's known as a "Brownbook" which is construction management from an Owner's perspective. It has a commercial construction slant, but the same principles will apply. I'll be happy to send it to you. Here's what it says on change orders:
"Change Orders, which can be issued unilaterally, allow you to compensate the contractor based on your determination of an equitable adjustment (time and money) when agreement cannot be reached. The contractor may elect to continue to pursue additional compensation, but the incentive to do so is diminished considerably because of the amount already paid. Amendments should be used for contract modifications outside the general scope of work of the contract, or to change the basic provisions of the contract (i.e., outside the operation of the Changes clause) and require bilateral agreement."
PS Typically a change outside of scope like this would be an amendment or a addendum and not really a change order, but that's quibbling, you're going to have to pay for the changes either way. Your remedy is to seek damages from the architect, the architect would never pay the gc directly. Your ability to obtain remedy for the architect is not the gc's concern.
posted by geoff. at 12:23 PM on December 17, 2009 [5 favorites]
1. Your contract with the GC is separate from the architect's contract. Legally speaking, the architect is the agent of the owner (e.g., you).
2. Because of this the GC will issue a "Request For Information," this is where the Change Order section is important, this is probably the most important section of any construction contract.
3. Keep in mind the GC contract is with you not the architect. You are required to fulfill your end of the contract with the GC to build the house. This is where you will need to listen to your lawyers as right now you're time is ticking. You're in a situation where there's an Owner caused delay (bad specs and drawings). The GC can come after you* and get damages for the delay, in which in theory you'd be able to get from the architect. That does not change the fact that if you're not liquid $25k you can't really pay the GC, can you? People and development firms go bankrupt over things like this.
4. The architect will definitely carry professional liability insurance, the question is how are they going to pay you. Usually architects don't pay unless they really fuck up, and minor things like this are just eaten by the owner as the cost of doing business (and they'd never use that design firm again). Your contract with the architect should have provisions for mediation, and if you have as good a case as you think you have, this should be a fairly straightforward process. In fact I would not be surprised if this were required to get the insurance company to pay. This usually involves someone with years of experience in the construction industry (usually retired), coming in and looking at everything. This is much quicker than litigation, but will still take forever. If the architect doesn't agree with the ruling in mediation that means you now have to sue them and go to court (usual but this is a worst case scenario). As you can imagine having lawyers go over everything is expensive and will eat up any litigation fees.
* Except for jurisdictions where delay has to be fraud and the like, so again, it depends on where you are.
That's assuming your contract is a classic design-bid-build contract and you didn't do something "fancy," though most laws are setup to default to design-bid-build if a contract is confusing, so it gets even more complicated.
Really I think this is going to come down to whether or not you can pay the $25,000 or exit the contract with the GC. if the GC understands your situation, doesn't want damages and is willing to just leave with what you've paid them, you're okay. Then focus on the architect and getting your money back. If you want to move forward on the project you'll have to eat the $25k and try to get it from the architect at a later date. There's no way around it. There's a good chance any option you take you're going to end up losing money.
Construction is expensive and even with sophisticated clients, it takes deep pockets to get projects done. Listen to your lawyers as everything I said could be thrown out the window in light of different information.
I actually have what's known as a "Brownbook" which is construction management from an Owner's perspective. It has a commercial construction slant, but the same principles will apply. I'll be happy to send it to you. Here's what it says on change orders:
"Change Orders, which can be issued unilaterally, allow you to compensate the contractor based on your determination of an equitable adjustment (time and money) when agreement cannot be reached. The contractor may elect to continue to pursue additional compensation, but the incentive to do so is diminished considerably because of the amount already paid. Amendments should be used for contract modifications outside the general scope of work of the contract, or to change the basic provisions of the contract (i.e., outside the operation of the Changes clause) and require bilateral agreement."
PS Typically a change outside of scope like this would be an amendment or a addendum and not really a change order, but that's quibbling, you're going to have to pay for the changes either way. Your remedy is to seek damages from the architect, the architect would never pay the gc directly. Your ability to obtain remedy for the architect is not the gc's concern.
posted by geoff. at 12:23 PM on December 17, 2009 [5 favorites]
I disagree with mcroft that you will only be able to recover the cost of the services, but I'm not your lawyer, and this isn't legal advice, so find a local lawyer who can help you.
Right, legally speaking you'd be able to get all damages back. In reality if their services cost $20k and they're willing to refund you the services and you'd just have to eat the $5k, do it. It would be way less than the legal fees arising from the other contracts. It is very unusual to go after an architect because all they carry is insurance and their assets aren't much beyond a few desktops.
posted by geoff. at 12:26 PM on December 17, 2009
Right, legally speaking you'd be able to get all damages back. In reality if their services cost $20k and they're willing to refund you the services and you'd just have to eat the $5k, do it. It would be way less than the legal fees arising from the other contracts. It is very unusual to go after an architect because all they carry is insurance and their assets aren't much beyond a few desktops.
posted by geoff. at 12:26 PM on December 17, 2009
No idea what you should do about the architect -- talk to your lawyer and all that. But I do have experience with the process of getting building permits. From your description, since the town is requiring you do to this modification to your existing house (not just the addition), it sounds like something that would have had to be done with any sort of renovation (basically, you are agreeing to bring your house up to code in exchange for the town letting you do the renovations). So perhaps if the architect had informed you of this you may have decided not to do any work at all...? If not, and if you were going to do the work regardless, you might have to accept that the extra cost is just part of the process. Have you looked into the possibility of getting a variance from this regulation?
posted by Jemstar at 12:30 PM on December 17, 2009
posted by Jemstar at 12:30 PM on December 17, 2009
"because of the mistake I will have to incur these extra costs"
Nope. These are not extra costs, these are costs that would have to be paid if he had found this fema regulation out on day 1. Yah, now you are in a tough spot, but try to figure a way out of it with the architect before everyone gets all legal finger pointy.
It looks like you should sit down with your architect and figure out what to do, if there is an additional 25K you need to spend to raise the house and your 275K budget cannot expand to accommodate it you need to sit down with your architect and try and find 25k to take out of the budget somewhere else.
Also, how are you 50k into a 275k project without a building permit? Don't banks usually want to see permits before they close on the loan?
If you go down the legal path the most you can expect to recoup from the architect are the fees you paid to him. Figure out how much time / effort you will need to spend on a lawyer to make this happen and figure that into the equation as well.
posted by outsider at 12:34 PM on December 17, 2009 [1 favorite]
Nope. These are not extra costs, these are costs that would have to be paid if he had found this fema regulation out on day 1. Yah, now you are in a tough spot, but try to figure a way out of it with the architect before everyone gets all legal finger pointy.
It looks like you should sit down with your architect and figure out what to do, if there is an additional 25K you need to spend to raise the house and your 275K budget cannot expand to accommodate it you need to sit down with your architect and try and find 25k to take out of the budget somewhere else.
Also, how are you 50k into a 275k project without a building permit? Don't banks usually want to see permits before they close on the loan?
If you go down the legal path the most you can expect to recoup from the architect are the fees you paid to him. Figure out how much time / effort you will need to spend on a lawyer to make this happen and figure that into the equation as well.
posted by outsider at 12:34 PM on December 17, 2009 [1 favorite]
"Right, legally speaking you'd be able to get all damages back."
The damages are not 25K, this is not a cost that the architect incurred on the owner. The damages is whatever $$$ the architects missing of the FEMA requirements caused to the owner in terms of schedule / timing, which is much harder to define.
If the owner had the 25K to spend and there was zero impact to the design other than raising the house 2 feet there would be no damages to recover...
If the owner has to raise the house 2 feet and it requires extensive design rework from the architect then I agree that they should do this without any additional fees.
posted by outsider at 12:41 PM on December 17, 2009
The damages are not 25K, this is not a cost that the architect incurred on the owner. The damages is whatever $$$ the architects missing of the FEMA requirements caused to the owner in terms of schedule / timing, which is much harder to define.
If the owner had the 25K to spend and there was zero impact to the design other than raising the house 2 feet there would be no damages to recover...
If the owner has to raise the house 2 feet and it requires extensive design rework from the architect then I agree that they should do this without any additional fees.
posted by outsider at 12:41 PM on December 17, 2009
Response by poster: Original questioner here.
The money I spent consists of:
$10,000 for the architect.
$6,000 prepaid rent to another home for the construction period.
$2,000 surveys.
$32,000 loan fees, points, interest, etc. (I borrowed the money already and incurred these costs. The FHA program that lent me the money relied on the architects specs.)
Total out of pocket so far = $50K.
How about this:
I halt the project and threaten to sue the architect for $50,000 spent so far and likely more as interest and penalties on my loan accrue.
Alternatively, instead of suing I ask the architect to cover some or all of the cost of the extra work. In other words, pay me $20k now and I wont sue you for $75k in a few months.
posted by otto42 at 12:57 PM on December 17, 2009
The money I spent consists of:
$10,000 for the architect.
$6,000 prepaid rent to another home for the construction period.
$2,000 surveys.
$32,000 loan fees, points, interest, etc. (I borrowed the money already and incurred these costs. The FHA program that lent me the money relied on the architects specs.)
Total out of pocket so far = $50K.
How about this:
I halt the project and threaten to sue the architect for $50,000 spent so far and likely more as interest and penalties on my loan accrue.
Alternatively, instead of suing I ask the architect to cover some or all of the cost of the extra work. In other words, pay me $20k now and I wont sue you for $75k in a few months.
posted by otto42 at 12:57 PM on December 17, 2009
How about this:If this is what your lawyer has suggested you do, then it may be a reasonable approach in your jurisdiction. If it is simply something you pulled out of thin air, it may or may not be reasonable. Furthermore, it may or may not damage your legal position if you have to go beyond this settlement proposal.
I halt the project and threaten to sue the architect for $50,000 spent so far and likely more as interest and penalties on my loan accrue.
Alternatively, instead of suing I ask the architect to cover some or all of the cost of the extra work. In other words, pay me $20k now and I wont sue you for $75k in a few months.
You really should lawyer up. That doesn't mean "sue everybody, let the judge sort it out!" It means, find out what all the likely and possible scenarios are, and choose an approach that gives you the best chance for a favorable outcome, while avoiding the worst of the unfavorable outcomes.
Hiring a lawyer now is likely to be cheaper than hiring a lawyer later.
posted by spacewrench at 1:15 PM on December 17, 2009 [1 favorite]
I assume you've got a contract that includes a fairly detailed scope of work. I'd have a lawyer go back and read it carefully to make sure they were really, really 100% responsible for this. I assume they were, but they may have an out.
Are you saying that raising the house will cost $25K and that puts you $25K over your $275K budget? Did the original $275K not include any contingencies? Going 10% over budget isn't exactly unheard of and if that's all it takes to sink the project then that $50K loss is more your fault than the architect's.
Get a lawyer, but I really suspect this is going to be cheapest if you can find a way to eat the $25K. I know you're angry, but trying to fix this with the courts is likely going to cost you A LOT.
I'd also second trying to get around the FEMA requirements. Consult a land use lawyer. Those FEMA maps are subject to protest, or you might be able to work out a variance of some sort, but that might be the easiest route. It also helps that this is an addition to an existing structure, if I read you correctly.
posted by paanta at 1:33 PM on December 17, 2009
Are you saying that raising the house will cost $25K and that puts you $25K over your $275K budget? Did the original $275K not include any contingencies? Going 10% over budget isn't exactly unheard of and if that's all it takes to sink the project then that $50K loss is more your fault than the architect's.
Get a lawyer, but I really suspect this is going to be cheapest if you can find a way to eat the $25K. I know you're angry, but trying to fix this with the courts is likely going to cost you A LOT.
I'd also second trying to get around the FEMA requirements. Consult a land use lawyer. Those FEMA maps are subject to protest, or you might be able to work out a variance of some sort, but that might be the easiest route. It also helps that this is an addition to an existing structure, if I read you correctly.
posted by paanta at 1:33 PM on December 17, 2009
as everyone has noted, the only advice that really matters now is your lawyer's. however, a few points:
- architects are held to a standard of reasonable care, meaning they aren't expected to be perfect but ARE expected to perform as well as any other licensed architect. If your contract for services with the Architect specifies that they are responsible for discovering all applicable regulations and restrictions, then yes, it sounds to me (not a lawyer!) like they failed to meet that standard. This is reinforced by the opinion from the other architect you consulted.
- Look in the contract for language like the following: "Architect will rely upon property information provided by the Owner, and is not responsible for inaccuracies or omissions arising from use of this information". This is certainly not universal but still common contract language, especially in commercial construction where the Owner does a lot of the due diligence themselves. If you paid the Architect to obtain this information from his own consultants, then you still have a case.
- Other similar contract language attempts to limit damages to the amount of the Architect's fee. Even if they admit liability or accept arbitration, you'd probably have to take them to court to get any more than the $10k you paid them.
- it all comes down to the laws in your jurisdiction and the language in the contract. really.
posted by Chris4d at 2:44 PM on December 17, 2009
- architects are held to a standard of reasonable care, meaning they aren't expected to be perfect but ARE expected to perform as well as any other licensed architect. If your contract for services with the Architect specifies that they are responsible for discovering all applicable regulations and restrictions, then yes, it sounds to me (not a lawyer!) like they failed to meet that standard. This is reinforced by the opinion from the other architect you consulted.
- Look in the contract for language like the following: "Architect will rely upon property information provided by the Owner, and is not responsible for inaccuracies or omissions arising from use of this information". This is certainly not universal but still common contract language, especially in commercial construction where the Owner does a lot of the due diligence themselves. If you paid the Architect to obtain this information from his own consultants, then you still have a case.
- Other similar contract language attempts to limit damages to the amount of the Architect's fee. Even if they admit liability or accept arbitration, you'd probably have to take them to court to get any more than the $10k you paid them.
- it all comes down to the laws in your jurisdiction and the language in the contract. really.
posted by Chris4d at 2:44 PM on December 17, 2009
Outsider makes a good point. The extra $25k aren't damages. You have not incurred this cost because of their negligence. You incurred the cost because of the FEMA regulation. The only thing the architect's error costed you is the knowledge that you would have to pay that extra amount.
Another thing to consider- were the plans for the addition up to FEMA code? Or does the addition also have to be raised? That seems like it could be an important piece of the puzzle. If the plans for the addition are dead-on within code, it is much harder to find fault with the architect than if his work also needs to be changed.
(Also, contact FEMA to make sure the regulation really does apply to you. Wouldn't be the first time a contractor massaged a regulation into seeming worse than it is to get $25k more work.)
posted by gjc at 4:43 PM on December 17, 2009
Another thing to consider- were the plans for the addition up to FEMA code? Or does the addition also have to be raised? That seems like it could be an important piece of the puzzle. If the plans for the addition are dead-on within code, it is much harder to find fault with the architect than if his work also needs to be changed.
(Also, contact FEMA to make sure the regulation really does apply to you. Wouldn't be the first time a contractor massaged a regulation into seeming worse than it is to get $25k more work.)
posted by gjc at 4:43 PM on December 17, 2009
The damages is whatever $$$ the architects missing of the FEMA requirements caused to the owner in terms of schedule / timing, which is much harder to define.
Erm, yes damages was a poor choice of word. I don't think it only applies to schedule, but also labor, materials & overhead costs that to complete the changes.
But again, I've never known an architect to pay up if they were at fault. It is always an issued addendum that the owner pay. Perhaps a reduction in fees, but I've never seen the just straight out pay (even with insurance). Just the way it works, especially considering the architect's fees being small compared to the liability on any given project.
posted by geoff. at 8:51 PM on December 17, 2009
Erm, yes damages was a poor choice of word. I don't think it only applies to schedule, but also labor, materials & overhead costs that to complete the changes.
But again, I've never known an architect to pay up if they were at fault. It is always an issued addendum that the owner pay. Perhaps a reduction in fees, but I've never seen the just straight out pay (even with insurance). Just the way it works, especially considering the architect's fees being small compared to the liability on any given project.
posted by geoff. at 8:51 PM on December 17, 2009
"(Also, contact FEMA to make sure the regulation really does apply to you. Wouldn't be the first time a contractor massaged a regulation into seeming worse than it is to get $25k more work.)"
Also wouldn't be the first time an inexperienced idiot planner or a blowhard inspector with a Napoleon complex ran across a project and insisted on implementing an inane interpretation of a poorly worded and inapplicable section of code.
posted by Xoebe at 1:00 AM on December 18, 2009
Also wouldn't be the first time an inexperienced idiot planner or a blowhard inspector with a Napoleon complex ran across a project and insisted on implementing an inane interpretation of a poorly worded and inapplicable section of code.
posted by Xoebe at 1:00 AM on December 18, 2009
This thread is closed to new comments.
posted by valkyryn at 11:28 AM on December 17, 2009 [1 favorite]