All Forum Posts by: Sean Coppom

Hi all,

I'm looking for answers to a couple questions and any overall advice people have to share as we try to navigate through the nightmare of recovering from a fire. Some quick background. Our project started with buying a SFR, scraping it, working with an architect, submitting SDPs etc., in order to build 4 townhomes in Denver. Like most projects seem to go, we spent more and took way longer than planned to get them built. We were at the final stages of the project, with all of them under contract, and about a month or less left to finish them up and obtain COs for all units. Then one Saturday morning we got a call that there had been a fire and significant damage, apparently caused by a few homeless guys sheltering in a semi-enclosed space between the garages and the back units. We completely lost the four single car garages, one of the back units, a significant portion of the other back unit, had holes cut in the party walls by the firefighters and moisture damage to the floors in the front units. This occurred in mid-November, and fire remediation took until the beginning of this year. Insurance handled that part of the claim fairly well, as we used one of their preferred vendors and they were paid out directly.

At that stage we had our contractor start putting the budget together for the rebuild, which took a little while with getting bids from subs etc.  We have a replacement cost policy, and after starting this project in 2018, costs have gone up significantly on the rebuild.  Insurance has requested more and more details, which we have provided, but has told us that their numbers are significantly different from ours and recently brought one of their preferred rebuild vendors to the site to provide a different quote.  Before that, they gave us a number which is ridiculously low.

The fire couldn't have happened at a worse time with the construction loan fully drawn and ongoing high monthly interest payments that are bleeding money out of the project.  I wake up everyday with a stomach ache just thinking about all this.  So I'm looking for some help with a couple things.

One, advice on insurance and how to handle them.  We can't spend months looking to come to an agreement on the rebuild cost. At what point do we hire a lawyer and proceed down that path?  If the quote from their preferred vendor comes back low as well, which I'm assuming will happen, how should we proceed?  Get another quote, lawyer up at that point, do something else?

Second, we've had issues with our GC on the original build, and some hesitation about using him for the rebuild which we would try to address with a more bulletproof contract, but would anyone actually consider using the preferred vendor that insurance is getting a quote from?  One of my main concerns is how the builder's warranty would be handled by having two builders in the process.  Does anyone know how this would work?  Other potential problems we could face down the road by switching contractors?

Third, I'm grateful for any other advice from people who have been down this road or can provide helpful guidance or points of consideration.  Navigating this to the end is going to be a long road and the loss we'll eventually take is a hard pill to swallow.  

Thanks in advance.

Jim, 

Thanks very much for your comments. 

Nik,

I really appreciate the time you took to respond. It's very valuable info and I love opening up to new ways of looking and thinking about things. I'll put some of this to use right away. 

I'm supposed to be a limited partner in this deal but I have taken on a bigger role after the fire due to some of the things I believe were lacking regarding contracts and planning/preparation of the original project that led to delays and cost overruns. Things would have been alright if the fire didn't occur, but could quickly spiral out of control if we're not on top of it now. 

Cheers.

Nik,

Thanks for your comments.  I agree that if the majority of claims and/or disputes are related to the design of the structure than the architect is the most likely person to be able to settle those equitably.  in this case, the reason to use someone other than the architect is that we foresee that the majority of claims/disputes are going to be related to additional time and cost. I.e. weather related or material delays that affect cost and schedule, that ultimately have an effect on liquidated damages or bonuses.  I'm not sure that it's necessary to involve an architect in those types of decisions and I'm trying to explore our options.

I didn't want to post the sob story behind this whole mess necessarily, but it will provide some context for the discussion.  In mid-November we were less than a month from gaining CO on all four units, had them all under contract at or above asking price, and were looking to close by mid-December.  On a Saturday morning in late November we got a call that there had been a fire, presumably started by a few homeless people sheltering in a cove created by the garages and the rear units, and the garages along with the back units had been burned down.  We've been dealing with the aftermath ever since with insurance, remediation and new budgets for the rebuild.  We're carrying a $1M+ loan and the holding costs continue to add up, on top of the long, slow process to get these built in the first place.  So we've built these once already and the plans are solid at this point, but we need to really watch out and protect ourselves from claims and disputes regarding working days and delays in schedule.  If the contractor submits a claim for an additional two weeks due to weather, and we disagree with that length of time, we need someone to arbitrate that for us.  Not so worried about claims for additional cost as those will go through insurance.

Thanks for your time.

Josh,

No, this is a new contract. 

Hi all,

Looking to get some feedback on who to use as an Initial Decision Maker (on an AIA contract) for dispute resolution for a construction project in Denver, CO.  For various reasons we don't want to use the architect.  This project consists of 4 townhomes on a single lot, but it would be valuable to hear of others experiences regardless of the type of project.  Specific recommendations or general advice are both appreciated!  Thanks for your time.