Newport Beach And Palm Springs Construction Lawyer Discusses The Construction Industry

If you are connected with the construction industry and work in any of the hard hit areas of Southern California such as Riverside, CA, San Bernardino, Fontana, Fullerton, Temecula, Rancho Cucamonga, Ontario, Redlands, Moreno Valley, Palm Springs, Palm Desert, Desert Hot Springs, Cathedral City, Rancho Mirage, Indian Wells, Indio, Coachella, Thermal, Yucca Valley, Victorville, Hesperia, Apple Valley, Big Bear, Corona or Joshua Tree, the bad news from construction industry attorneys and real estate lawyers is there may be worse to come on the horizon.

California's Construction Industry could be facing a perfect storm of monumental proportions as the credit crunch and delinquent construction and commercial real estate loans threaten to produce even less construction and more construction defect litigation.

It's being reported with greater frequency, higher and higher rates of delinquency in payments of construction and commercial real estate loans. Now with the credit crisis and bank failures, it is being reported that banks are cutting off credit to builders and more and more contractors are being forced to declare bankruptcy or to go out of business.

As builders and subcontractors cut corners to make a profit on losing propositions, construction defect litigation is almost certain to rise. If the possible scope of this economic crisis comes to fruition, fewer of the contractors and subcontractors responsible for defects may be around to fix the problems.

Liability insurance for builders and contractors in California has already been tight and some contractors have looked at their policies only to complain that despite the higher deductible, they still offer spotty protection.

A spot check of defendants in construction lawsuits filed over the past few years finds a significant percentage of the defendants in such lawsuits may no longer in business. Whether it is the result of such lawsuits or the economic crisis and the housing slump can't be determined. What can, however, be said, is that homeowners can no longer count on their contractor or subcontractors to be in business when problems are found in the construction of their homes.

While such builders may still have insurance which covers them for their defects, it can be hard for a homeowner's attorney to find that insurance when the builder is no longer around.
When a subcontractor or his insurer is no longer around to stand up for their mistakes, general contractors worry.

In the Coachella Valley, construction spending fell 41.4 percent in the second quarter of 2008 from a year ago. Home prices dropped 22.7 percent. New construction starts are off by 90 percent since the peak of market activity in the third quarter of 2004. Unemployment in the Inland Empire of California was at 9.2 percent in August 2008. The construction industry that at one point employed nearly a third of the Coachella Valley's work force has seen its jobs cut almost in half.

Contractors who see the economic storm coming are cutting costs, selling the trucks and equipment they no longer need and just trying to hunker down until conditions improve. It is probably wise to cut back as much as they can because at last check, the wind speed of problems for this industry was increasing and as far as anyone can tell, the eye of the storm hasn't even come close.

If you have construction law issues and need help, whether you are a general contractor, a subcontractor, a homeowner or connected in any manner to the construction industry or the real estate market, we invite you to call us for a consultation.