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Focus on (all) details in complex mixed-use projects

Greg Shelton featured guest columnist for the Charlotte Business Journal Charlotte Business Journal 2/26/2018

The special report in Friday's issue of the Charlotte Business Journal focuses on structures — specifically, it offers an inside look at the complicated development process for one of the key pieces of the Stonewall Street corridor's ongoing transformation. This guest column by Greg Shelton, a construction law attorney with Horack Talley in Charlotte, appears in that section.

I’ve litigated construction disputes involving high-rise hotels, manufacturing facilities, roads, wastewater treatment plants, nuclear power plants, you name it.

I’ve found multifamily and mixed-use developments face as much risk of litigation as any of those, especially considering the pace of construction in Charlotte. “Risk” is a tough concept to grasp. The best way to identify and understand risk is to identify the people who may touch the project in some way, and then to identify the potential harm to those people. For example, an owner may fail to pay the construction lender. A pedestrian may be injured by a falling hammer. A subcontractor may not be paid. A tenant may complain of construction defects.

If you understand the risks you face, you’ll be better prepared to avoid or lessen them. Here are issues I see frequently in the design and construction of multifamily and mixed-use developments, with ideas on how to avoid trouble.

  • Water can be devastating. Let’s say you have a 30-unit stick-built condo building. If water gets trapped between the outer cladding and the drywall, the bones of the building will eventually be eaten away. Water can be a greater challenge in interesting architecture. Today’s mixed-use and multifamily buildings feature a variety of exterior cladding materials. Keeping water from migrating through the places where these materials meet requires special attention. Then you have balconies and windows, some inset, some not. All these features create avenues for water.
  • The solution to water risk is attentive design and construction. Water will win every time if you’re not careful.
  • In uptown, contractors have to work in tight quarters. Where will the roof trusses be stored? How will the concrete trucks get to the site? You get the idea. If the subcontractors can’t get to their stored materials, they can’t work. Sometimes organized chaos becomes disorganized chaos, and that is when accidents and delays are most likely to happen. Be thoughtful about the size, safety and security of your staging space where materials are stored and be realistic about how long you’ll need it.
  • Noise can make a racket in court. An art gallery today may become a sports bar tomorrow. How many sleepless nights will it take before the tenants sue someone? Architects, engineers and building owners need to have clear conversations about the uses for every space in a building to help ensure soundproofing is sufficient. This is particularly important in mixed-use buildings.
  • Don’t focus on the sales trailer to the detriment of the construction trailer. Plenty of litigation results when people cut corners to save money. Crews get overworked. Experienced construction workers are becoming harder to find. Certain construction techniques or materials may satisfy minimum code requirements but are not in the best interests of the building long term. Have a good superintendent on site who makes sure workers are properly trained. Slow down the construction schedule if needed for the project’s long-term health.
  • People can get litigious about ownership rights. Single-family homes typically have one individual owner or couple per lot. Multifamily and mixed-use development often involves many owners divvying up the same parcel, or even the air space. One developer owns the space up to 20-feet high, another developer owns the space from 20- to 35-feet high, and so on. Multiple owners mean more chances for litigation. Create documents that clearly define ownership rights over various parts of the development. Otherwise, you will have lenders, owners and title insurance companies suing over who owns what.

Be aware that courts are especially protective of homeowners. Judges will create new law or make exceptions to settled law to favor homeowners. Courts reason that the home is the biggest investment most people will ever make.

Spending the time to do things right in design, engineering and construction is the best way to steer clear of trouble. And having a strong contract never hurts.



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