The lot on a bluff in Laguna Beach, Calif., had a to-die-for view and a million-dollar price tag. A buyer materialized. Architects were hired. Contractors came aboard. And after spending more than $4 million, in 1992, the owners had a three-story Mediterranean-style dream house overlooking the Pacific.
Less than a year had passed when the rains came. The roof leaked like cheesecloth. Ceilings collapsed. Floors buckled. Water poured down a staircase, and seeped through walls, windows and light fixtures.
Who was to blame? The general contractor? The subcontractors? The architect? The owner? And, most important, who would cover the estimated $1 million in damage?
Those questions, which will be addressed in an upcoming trial, demonstrate the delicate relationship between the owners of high-end homes and the people who build them, especially architects. And they suggest a lesson as well: Choose carefully.
Few people can hire a world-class architect. But when prospective new-home owners first visit an architect they often are searching for more than a professional to perform a service. They are looking for someone to translate dreams into reality. The architect often becomes psychologist, confessor, mind-reader and mechanic. And, unless an owner understands the architect’s job from the outset and the architect understands the owner’s needs, problems can arise.
“The owner often goes into a project thinking the architect is his champion, his knight,” says Kenneth Menendez, an Atlanta construction lawyer. “And that’s true, but only up to a point.”
Architects and construction lawyers agree that while shoddy or even dangerous design mars some projects, most conflicts stem from crossed signals. Owners don’t appreciate design and structural issues at the core of the architect’s profession. Architects don’t fathom how deeply personal the experience of building a home can be for clients.
“They come with all of their pictures. `I like this window and I like this and I like that.’ The first thing you have to tell them is `you put all this stuff together and you don’t have a design,”‘ says John Ciardullo, a New York architect who has designed more than 20 high-end homes.
“When it’s under construction it’s even worse,” he says. “Suddenly they’re seeing what’s there, and they take their friends there. They talk to everybody, and they’re insecure. They want to change things. And they don’t understand that the ramifications are incredible.”
One way to avoid conflict is to agree on what each party can expect from the other. For starters, owners should interview several architects, set a strict budget and negotiate the architect’s role from design through construction. It’s also a good idea to check an architect’s professional-liability insurance, known as errors and omissions insurance.
Problems also develop because of the relationship between owner, architect and contractor. Typically, an owner has separate contracts with each, while the architect and contractor have no contractual relationship. So if, for instance, an architect and contractor blame each other for cost overruns, the owner gets stuck in the middle. The same occurs when an architect designs something a contractor says can’t be built.
“The homeowner has a very hard time determining who’s at fault, the architect or the contractor,” says James Acret, a construction lawyer in Los Angeles.
In a recent case in suburban Philadelphia, an architect designed an elaborate cathedral ceiling and roofing system on a $1 million home. After construction began, the contractor determined that the roof and ceiling couldn’t be built according to the design plans. The owner authorized modifications, which busted the budget by about $20,000.
The owner took the case to arbitration to try to recover the additional costs, and a three-member panel ordered the design engineer on the project to pay. The lesson, says Philadelphia lawyer Joseph Battipaglia, an arbitrator in the case, which was heard earlier this year, is to make sure your architect and contractor work closely together.
The American Institute of Architects advocates a standard contract for owners and architects. Critics say the contract favors the architect. It mandates arbitration to resolve disputes, precluding an owner from suing. The institute contract’s provisions “give the architect a tremendous amount of authority,” says Menendez, the Atlanta lawyer. “They give the architect very little responsibility.”
For instance, the contract doesn’t require an architect to perform continuous on-site inspections of the work site, only to be “generally familiar” with the construction and to “endeavor to guard” against defects and deficiencies. That, lawyers say, is far too loose a standard for owners, many of whom would probably like to have the architect present around the clock.
Lawyers advise negotiating that or any other section of an owner-architect contract, including the provision for mandatory arbitration, if it is unacceptable. If a problem develops, local institute chapters have ethics committees that assist homeowners, mediate disputes and discipline architects. Many states have architectural examiners, mediation boards or state-run arbitration for out-of-court resolutions.
Fees also can trigger disagreements. Architects bill in various ways, and it’s important to be clear about the payment method. “You get what you pay for,” warns Edward Takahashi, a Los Angeles architect who testifies as an expert witness in construction disputes.
To design a residence, most architects charge a fee based on a percentage of construction costs, ranging from about 10 percent to as much as 25 percent for a big-name architect.
Despite the potential pitfalls, very few private homebuilding projects wind up in the legal system. Last year, only 96 arbitration cases administered by the American Arbitration Association were brought by an owner against an architect or engineer and 135 by an architect or engineer against an owner. Cases involving the contractor are more common.
Nonetheless, misunderstandings are common, even if lawyers don’t get involved. For instance, property owners often think they are buying an architect’s drawings, but under the architect institute’s standard contract, the drawings belong to the architect.
In high-end homes, part of the market value is in the design. Owners of luxury homes should negotiate the architect’s rights to reuse elements of a particular design. An owner who wants a house to remain unique needs to buy the ownership rights to the documents and the intellectual copyright to the drawings and designs.
And that’s representative of the dance that owners and architects play. “It’s an art and a science,” notes Mark McCallum, associate counsel at the architect institute. “You have the art of the architect but they also have to account for the desires of the client.”
