It’s A Beautiful Day In This LEED Neighborhood

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Mister Rogers’ Neighborhood is my 2 year old’s favorite show.  Since she could talk, she has looked up at me and asked for, “Rogers?”  If you have children, you know, what a 2 year old wants, a 2 year old generally gets.  So, I watch Mister Rogers, every day, twice a day.  After literally watching hundreds of episodes (most of them at least twenty times) I’ve relearned old songs (“Shoo Turkey Shoo”) and found out that Mister Rogers is just as relevant now as he was when I little.  In fact, he was ahead of his time.  (In one favorite episode, Mister Rogers test drives an electric car, complete with 15 car batteries linked together to run the car.)  After spending many hours in Mister Rogers’ neighborhood, I wondered whether Mister Rogers’ neighborhood is the type of neighborhood that the LEED Neighborhood Development Certification strives for, an integrated neighborhood of smart locations, neighborhood design, and green infrastructure and building.

A seldom discussed LEED certification area is the LEED-ND Certification.  By integrating LEED Neighborhood Development polices, profit and non-profit developers, builders, city and neighborhood planners can build a more sustainable, attractive and vibrant community.  Here is a brief overview of what the USGBC looks for and the general process for certifying a neighborhood project.  Visit the USGBC site () for more information regarding getting your project plan certified LEED-ND. 

Projects that qualify for LEED for Neighborhood Developments can range from small infill projects to large master planned communities.  Existing communities may also be retrofitted using LEED standards and policies. 

The following credit categories are included in the rating system:

Smart Location and Linkage assesses location, transportation alternatives, and preservation of sensitive lands and discouraging sprawl.

Neighborhood Pattern and Design assesses overall design for vibrant neighborhoods that are healthy, walkable, and mixed-use.

Green Infrastructure and Buildings assesses the design and construction of buildings and infrastructure that reduce energy and water use, use of sustainable materials, and renovating existing and historic structures.

Innovation and Design Process recognizes exemplary and innovative performance reaching beyond the existing credits in the rating system, as well as the value of including an accredited professional on the design team.

Regional Priority encourages projects to focus on earning credits of significance to the project’s local environment.

There are three stages of certification, which relate to the phases of the real estate development process.

Stage 1 – Conditionally Approved Plan: provides the conditional approval of a LEED-ND Plan available for projects before they have completed the entitlements, or public review, process.

Stage 2 – Pre-Certified Plan: pre-certifies a LEED-ND Plan and is applicable for fully entitled projects or projects under construction.

Stage 3 – Certified Neighborhood Development: completed projects formally apply for LEED certification to recognize that the project has achieved all of the prerequisites and credits attempted.    

The rating system can be downloaded for review by interested parties.  If you are developing a project its worth taking the time to review the rating system for possible incentives or as an evaluation tool.

Mister Rogers believed strongly in living a deep and simple life.  He invested in our future and community. He taught us all to make the same investment.  His legacy will always live on through his good work on television.  In fact, the Fred M. Rogers Center building officially opened on the Saint Vincent College Campus in October 2008.  It’s only fitting that the facility was awarded the LEED gold rating. 

We live in a world in which we need to share responsibility. It’s easy to say ‘It’s not my child, not my community, not my world, not my problem.’ Then there are those who see the need and respond. I consider those people my heroes.  -Fred Rogers

Tis the season … for mechanic’s lien priority cases

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I hope everyone is having a nice holiday season.  After digging out from a pile of work, and dusting the Christmas cookie crumbs off my keyboard, I was able to catch up on a few recent decisions from the Indiana Court of Appeals.  And wouldn’t you know, the court left two decisions addressing the priority of mechanic’s liens under my tree.  So I wanted to take a moment to update you on these two decisions before returning to the last of my Christmas cookies (if I can find where my wife hid them!).

On December 22, 2010, the court handed down

The facts:  Grand Innovations borrowed money to construct a single family residence pursuant to a mortgage that was properly recorded.  Neises was hired to help construct, and, yadda, yadda, yadda, filed a mechanic’s lien against the real estate and a complaint to foreclose the lien.  The bank then filed to foreclose the mortgage.

Issue 1:  The bank asserted that Neises “left the property in jeopardy of being destroyed or subject to significant damage due to the weather,” including a lack of roof and wrapping the exposed framing.  The bank paid another contractor to install a roof and otherwise protect the structure.  The bank sought priority over the mechanic’s lien for the expenses to protect the partially-constructed house.  Neises opposed, citing the lack of any provision in the statute for such “super prioritization.”

The court noted that an action to foreclose on a mortgage is essentially equitable in nature and that the bank’s actions were for the “benefit of all” the lienholders and not unreasonable or ill-advised.  Thus, because all parties were engaged in a “common enterprise” and each benefited from the measures, the preservation expenses properly received priority over Neises’ mechanic’s lien. 

Issue 2:  Neises also argued that its mechanic’s lien, filed in July, should have a higher priority than the mortgage lien because it began construction in April, which it argued should be the effective date of the lien.  The court rejected because “the plain language of the statute provides that the lien is created when the statement and notice to intention to hold a lien is recorded.”  Further, the “relation back” provisions of the mechanic’s lien statute apply to obtaining compensation for work done since the project began, not lien priority.   Regardless, the court also found that it is well-settled that a mortgage lien for the construction of a house has the same priority as all mechanic’s liens.  Thus, pro-rata distribution was appropriate.

On December 27, 2010, the court handed down    

The facts:  The Hendersons owned commercial property in Indiana that was destroyed by a fire.  McIntyre has hired to clean up the debris and construct a new building on the property, and, yadda, yadda, yadda, filed a mechanic’s lien against the property.  Subsequently, a bank loaned money to the Hendersons to pay off two mortgages that pre-dated the filing of the mechanic’s lien.  The bank, however, failed to discover the mechanic’s lien held by McIntyre.  In subsequent foreclosure proceedings, lien priority was disputed.

The issue:  The bank claimed that the doctrine of equitable subrogation (lawyerese for “step in the shoes” of the mortgagee refinanced) granted priority to its mortgage lien, to the extent the funds were used to pay off one of the pre-existing mortgages.  McIntyre countered that the bank was not entitled to equitable subrogation because of its culpable negligence in not discovering the lien when refinancing.  The court, relying on Bank of New York v. Nally, found that the proper inquiry was not whether the bank had notice, but whether the intervening lienholder was prejudiced, (although “culpable negligence” on behalf of the bank was still relevant, although none existed in the case).  Thus, since the mortgage existed prior to McIntyre’s work and McIntyre would have expected it to be superior, there was no prejudice and equitable subrogation applied.

Happy New Year from Law under Construction!  Now… where are those cookies….

Guards? Moats? Indiana court addresses jobsite protection

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And I quote: “Lee could have protected himself from liability only by stationing a guard upon the premises to insure that neither Rider, nor anyone else entered upon the inherently dangerous worksite.”  A guard?  Complete with a shack and taser?  Is that the rule?  Let me explain.

The facts…

On December 6, 2010, in , the Indiana Court of Appeals addressed the duties owed by both a general contractor and an independent subcontractor to the purchaser of a home when she visited the construction site, without permission, and suffered serious injuries.

The purchaser, Rider, entered into a contract to buy a house from a general contractor.  The general was also the landowner, as possession would be transferred at closing.  The general hired Lee, a sub, to perform most of the labor.  Importantly, the contract required that any visitor needed permission from the general or the real estate agent to enter the premises. 

Although Rider obtained permission once, she visited 30-35 other times without anyone’s permission.  On the ill-fated visit in question, Lee and his crew were working on the deck.  When rain set in, they split from the site for an early lunch, leaving an unfinished deck.  Rider subsequently arrived, leaned on the unattached railing, fell, and suffered severe injuries.  Lee and his crew returned, discovered the incident, and nonetheless, finished the deck.

The majority’s view…

Rider filed a complaint for negligence against the general and sub.  The court first addressed the liability of the general.  As a threshold issue, the court noted that since the general still owned the property and was in possession, its duties are judged based on its status as the landowner.  The court ultimately relied on the fact that the general/landowner was neither in actual possession or control of the deck when the accident occurred nor was in control of the premises because he did not perform any actual work.  Since the sub did all of the immediate work, Rider’s negligence claim against the general failed.

The court next addressed the sub’s liability.  Since the independent contractor had worked on the deck right before the incident and a short time after, the court first held that it was in control for purposes of establishing a duty to Rider.  The court then held that the sub’s liability was dependant on whether Rider was rightfully on the premises or whether it was foreseeable that she would visit and be harmed.  Although there were unanswered questions of fact, foreseeability was the key issue. 

The dissent…

One judge disagreed with the majority’s analysis of the sub’s liability.  The judge noted that the construction process is fraught with peril and involves many inherent dangers.  To him, the key fact was that the contract required permission to enter.  End of story.  She didn’t follow the protocol and the sub was not present when the injury occurred.   Therefore, it was not foreseeable that she would be there.   The dissent felt the issue is more properly the risk incurred by Rider in entering a dangerous site, rather than the duty owed.  The dissent stated that the majority’s view “places an impossible burden on contractors” and added the statement I initially quoted. 

The moral…

  • Don’t wander around dangerous construction sites.  Everyone loves watching their dream house as it’s built.  However, I think everyone also loves actually moving into that dream home.  Take the time to follow the procedure specified in the contract when you want to visit.   
  • Despite the dissent’s strong rhetoric, the majority is the law.  Thus, if you are in control of the construction, and it is foreseeable that a homeowner (or similar party) will come on the site, take the necessary precautions.  (consult a qualified attorney for such precautions). 
  • Kudos to the sub for finishing the deck.

Caveat emptor . . . now just an old latin phrase.

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Having recently purchased a home built the same year the yo-yo was invented (1929), I was especially interested in a recent opinion of the Indiana Court of Appeals discussing the doctrine of caveat emptor.   In Kent and Elizabeth Hizer v. James and Rebecca Holt, No. 71D06-0907-PL-176 (Oct. 27, 2010), the Court addressed liability where a seller fails to disclose certain items AND a buyer fails to independently inspect those same items. 

In 2008, the plaintiffs entered into an agreement with the defendants to purchase a home and reserved the right to conduct an inspection.  As you may expect, they did not conduct an independent inspection of the home itself.  The sellers reported that a prior inspection by a prospective buyer had revealed virtually no problems.   The sellers completed the Sales Disclosure Form, as required by I.C. 32-21-5-7, at closing.  They disclosed only that the microwave oven and ice maker did not work.

Lo and behold, after the closing, the buyers discovered numerous problems, including faulty mechanical items, extensive mold, recalled pipe, and a leaking crack in the basement wall.  They contacted an inspector, who, coincidentally, was the same inspector that had inspected the house for the prior potential buyers.  He reported that he had previously discovered the mold, the recalled pipe,  and indications of water flow into the basement.   A lawsuit was born. 

Basically, the dispute concerned whether fraudulent statements made on the Sales Disclosure Form are negated when an inspection would have revealed the alleged defects.  The sellers cited a 2009 opinion, Dickerson v. Strand, wherein the court held that sellers could not be liable for fraud in misrepresenting the quality of the property when the buyers had the opportunity to inspect.  The Court rejected this earlier case, holding that it failed to account for the statutory disclosure requirements under Indiana law, and that there would be no purpose for such forms if sellers cannot be liable for fraud.  Thus, the Court rejected any interpretation of the common law that might allow sellers to make written misrepresentations with impunity regarding items that must be disclosed on the Sales Disclosure Form.

The Court did not address whether the microwave and ice maker were fixed in time for football season.

For the full text of the opinion, see .

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