The number one thing that a contractor bidding on a condominium project should know is actually two things:
- your client will not occupy the structure you are building; and
- is trying to divest itself of ownership of what your are building as quickly as possible.
There is probably no other project that you will build where these two elements exists.
Why should you care? Risk. This unique factor has a tremendous impact on your risk analysis. Risk impacts your bid – the higher the risk the higher the bid – and your construction contract, which is a series of risk shifts and allocation.
The risk that you might not be considering in a condominium project comes from the condominium buyer, who is not your client and who you will have no contact with. Most states recognize that builders of condominiums give an implied warranty to the buyer of the condominium that the unit and structure are fit for habitation and the construction was performed in a workmanlike manner. This is true even if you do not have a contract with the buyer (otherwise known as lack of privity) and, in some states including Pennsylvania, courts extend the implied warranty to subsequent purchasers. Therefore, your risk is increased on a condominium project by a rather large – and unknown — class of potential plaintiffs.
Bottom line – plan (or bid) accordingly.
Wally Zimolong
Wally represents contractors (and subcontractors) and developers. His clients build and develop residential, commercial, and industrial properties nationwide. Wally enjoys working with the owners of the businesses he represents because they tend to be entrepreneurs and all around interesting people.
