This week, Shannon talks to Kevin Kartak of AAA KARTAK Glass & Closet about his 28 years as an MBA member.

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A home is more than bricks and sticks. Under the law and project documents summarized below, a complex bundle of rights and obligations are imposed upon the buyer and builder.

Why is disclosure a buyer’s best friend? The best consumer protection the law can provide is ensuring an opportunity to acquire an understanding of the products being purchased. This is difficult to achieve, however, because of the complex bundle of rights and obligations being obtained.¹

A builder wants a buyer to buy—but only what the builder is selling; not what a buyer mistakenly hopes or believes is being sold. To avoid post-closing disputes, a builder needs clear guidance to describe what is being sold (the complex bundle of rights and obligations).

The Washington Condominium Act (WCA, RCW 54.34, for condominiums) and Land Development Act (LDA, RCW 58.19, for subdivisions) require a Public Offering Statement (POS) containing mandatory specific information. The objectives fostered by this approach include: providing guidance for POS contents; promoting clear and concise POS’s; encouraging buyers to read and understand; avoiding irrelevant, ambiguous, and confusing disclosures; avoiding a false sense of security that lengthy POS’s contain all relevant information; promoting uniform POS’s; facilitating project comparison; enabling POS preparation at reasonable cost; facilitating obtaining legal opinions; and decreasing the need for state agency review. The WCA-POS is mandatory. The LDA-POS is often not required because of various exemptions (e.g., lot is improved with, or builder is under contract to build, a house). But, an LDA-POS may be given voluntarily. ^{1, 2}

The WCA/LDA disclosures involve three components: cautions to buyers, topics covered, and documents delivered. To avoid post-closing disputes, WCA/LDA POS’s provide the following cautions: buyer has a cancellation period; buyer may only rely on seller representations and express warranties contained in the POS or a writing signed by seller; buyer may not rely upon agent’s promises; POS is only a summary of some significant aspects of the home; documents are complex, contain other important information and create binding obligations; and buyer should seek legal counsel assistance. ²

The topics covered by the POS include: community name and address; developer and management company name, address and relationship; nature of interest being purchased; permitted and restricted uses; number of homes; principal amenities; limited common areas; land the owners and others may access; construction status; association and owner maintenance; owner's assessments; other dwelling fees; governmental assessments; blanket encumbrances; developer’s rights; model homes; association liens; physical hazards; construction warranties; building code violations; association litigation; association insurance; documents delivered; insulation data; and Form 17 environmental disclosures. ²

The documents delivered with the POS include: public offering statement; declaration; plat/survey map; HOA articles; HOA bylaws; HOA rules; HOA balance sheet; HOA annual budget; and construction warranty. ²

The Form 17 Seller Disclosure Statement (provided for under RCW 64.06) creates problems for sellers— the questions are subjective, subject to multiple interpretations, provide grounds for litigation, and are not well designed for builder project sales. Buyers may waive, and builders need not provide, a Form 17. Builders should give either a WCA or LDA POS in lieu of a Form 17—builders are not avoiding disclosures, but are providing disclosures more appropriate for project sales. However, the builder must provide in the POS the Form 17, Section 7 Environmental Disclosures if any question would be answered YES. ³

A single Disclosure Book, with Acknowledgement Addendum, should be used, and contains: POS and documents; delivered when PSA signed; makes disclosures a part of buyer’s contract; avoids document delivery hassles; assures that buyer gets disclosures; and makes proof of delivery easier.

The builder’s Addendum to the Purchase and Sale Agreement should provide for buyer’s waiver of the Form 17 and acceptance of the builder’s alternative Disclosure Book.

Endnotes: ¹ WCA Comments; ² RCW 64.34.400, 405 & 410 and 58.19.030, 045 & 055; ³ RCW 64.06.

Author: James C. (Pete) Middlebrooks, owner of the Law Office of James C. Middlebrooks, provides comprehensive services to individual, corporate, and institutional clients on residential and commercial real estate development, land use, acquisition, investment, and financing.

423.252.2693  |  pete@jcmiddlebrooks.com

By Brooks Powell, Powell Homes & Renovations

Q: What's the difference between a design-build remodeler and a regular remodeler?

A: Home-remodeling projects don't begin with hammers and saws. They begin with dreams and ideas. But those dreams and ideas need to be developed into concrete plans.

Remodelers need plans (or designs) to turn your dreams and ideas into reality. How can you make sure that the ideas you have for your home remodel are reflected in the design—and the completed project you envision?

That's where using a design-build remodeler can be a huge advantage. What's the idea behind design-build remodeling? It's when the person designing your home remodeling project is part of the same team that builds it.

What does that mean for you as a homeowner?

One benefit is that there's less room for confusion about what's to be done. The designer and the builder are working together to achieve your goals.

It also means that you'll eliminate finger pointing between the designer and the builder. They're on the same page. Because they've worked together, the designer knows what the builder can build. They aren't going to create a plan that looks great but can't be built. And if an issue arises, the builder and the designer can work together to create a solution.

That means you—as the homeowner—aren't caught in the middle of a he-said-she-said situation. You can have confidence that your dreams and ideas will be turned into workable, buildable plans that the craftsmen can complete. In fact, what often occurs with design-build firms is that the designer and builder will confer about the best way to approach a unique situation before the plans are even drawn up.

Another reason that a design-build remodeler can be an advantage is that with a home remodel, you're not starting with a blank piece of paper. Your designer and your builder must take the current structure into consideration. And sometimes what you can't see (as a homeowner or a designer) is just as important to a successful remodel as what you can see. That's when it's nice to deal with a builder who isn't just dealing with drawings but understands how those drawings and designs will be impacted by what already exists in your current home.

Whether you're looking to add a room, add a whole floor, remodel your kitchen, add outdoor living space, or remodel your master bathroom and bedroom, working with a design-build remodeler can help you ensure that the new elements in your home work in concert with the existing structure of your home and deliver a result you'll be happy with for years to come.

Brooks Powell is the general manager of Powell Homes & Renovations and a member of the Master Builders Association of King and Snohomish Counties. HomeWork is the MBA's weekly column. If you have a home improvement, remodeling or residential homebuilding question you'd like answered by one of the MBA's more than 2,800 members, write to homework@mbaks.com.

Washington, DC—(RealEstateRama)—Juli Bacon, owner of JB Consulting Systems LLC and Bacon Maintenance Services LLC in Woodinville, Wash., was recently sworn in as the 2017 chair of the National Association of Home Builders (NAHB) Professional Women in Building (PWB) Council.

“Ensuring that women understand they have a place at the table and helping them find a way to get to that place at the table in construction is really important to me,” said Bacon. “We have a lot of young women wanting to know how to get there and my goal as the PWB chair is to help them in the most efficient way possible.”

By Mike Pattison, Snohomish County Manager

In December 2016, the Washington state Supreme Court struck a blow to vesting rights when it ruled that newly adopted stormwater regulations do not vest. The Court let stand a window for certain projects to remain vested. The new stormwater regulations will apply to all applications submitted after July 1, 2015 and projects approved prior to July 1, 2015 which have not started construction by June 30, 2020.

The case, Snohomish County, et al. v. Pollution Control Hearings Board, will severely impact applications that have been submitted to a jurisdiction but are not yet approved. The opinion eliminates vesting for environmental regulations mandated by the state, including stormwater.

An editorial by MBA President Mike Walsh was recently published in The Herald discussing the case and explaining why vesting is so important to the homebuilding industry.

While there is no ability for local government to overcome the decision with local legislation, King and Snohomish counties are currently petitioning the Court to reconsider and clarify some of the opinion.

Further, there is a proposal before the Washington State Legislature, Senate Bill 5212, that would restore vesting rights.

For more information, contact Snohomish County Manager Mike Pattison, 425.460.8203.

By MBAKS Senior Policy Analyst Allison Butcher

Low Inventory Driving Home Prices Up

The latest Builder's Bulletin for February 2017 shows a continued decline in the inventory of homes for sale in King and Snohomish counties and prices still on the rise. According to the Northwest Multiple Listing Service, in December 2016, both counties had less than a months' supply of inventory, far below the four to six month level considered by many industry analysts as an indicator of a healthy market. Meanwhile, the December median home price for single-family homes and condos was up 12.2 percent year-over-year in King County and 12.4 percent in Snohomish County.

The Builders' Bulletin is intended to provide a convenient way to track housing in our market and includes information from the Northwest Multiple Listing Service, U.S. Census Bureau, Office of Financial Management and the Washington State Employment Security Department.

Download this month's report:

By Leah Missik, Built Green Program Manager

Lately, every year seems to be a big year for Built Green and 2016 was no exception! We acquired data for an innovative post-occupancy electricity use study (stay tuned!), put on a fun and successful conference, secured three new or improved city or utility incentives, had bus ads based on our silly indoor weather reports zooming around, and much more. In addition to these achievements, Built Green experienced a lot of certification growth. Let’s take a look at the numbers and see how we did in detail!

Total Certifications

In 2016, Built Green certified a total of 1,003 projects. That’s the first time we’ve hit over a thousand certifications since before the recession, back when Built Green did not require third-party verification at all levels and wasn’t as vigorous as it is now. This is quite an achievement for the program! In fact, the program has been steadily growing since the recession and we expect this progress to continue.

The graph above not only demonstrates the program’s growth, but also a shift to more certifications at the 4-Star, rather than the easier 3-Star level. We attribute much of this shift to the city and utility incentives that start rewarding builders whose projects meet the 4-Star level. One of the most popular incentives is Seattle’s Priority Green. Once enrollments in the Priority Green incentive picked up, the shift to more 4-Star Built Green projects was right behind.

Star Levels

In 2016, 4-Star made up a whopping 84% of all certifications. Now, let’s see if we can get more projects at the 5-Star and even Emerald Star levels. These projects are really special and ones that Built Green loves to highlight (we’ll have a report on the outcomes of Dwell’s Ballard Emerald Star out soon!). Which builder will achieve the next Emerald Star certification?

Project Types

Let’s take a closer group at Built Green’s 2016 numbers. What types of projects were being certified and where? Built Green certifications are given out by building, so one project receives one certification, but it may contain more than one unit. For example, an apartment building would account for one certification, but perhaps 100 units. The below graphs show the types of projects that were certified in 2016, both by number of certifications and by number of units certified.

As you can see, single-family and townhome projects accounted for the vast majority of 2016 certifications. However, when you look instead at the number of living units certified, multi-family units account for two-thirds of certifications.

Location

By far most Built Green projects in 2016 were certified in Seattle. Kirkland had the second highest number of projects, though all other cities trailed far behind Seattle in numbers. We would love to see more geographical diversity next year and are making plans on how to encourage more builders doing projects outside of Seattle to join Built Green.

Enrollments

Certifications aren’t the only activity going on, of course – new projects are always popping up, which means we’re steadily enrolling projects that are aiming for Built Green certification. In total, 1,105 projects were enrolled with Built Green last year, accounting for 2,120 units. Based on these numbers, we’re expecting our progress to continue.

This year, we plan to continue Built Green’s growth while trying to expand our reach, both by certifying more remodels and multi-family projects and by growing outside of Seattle as well. We’re thankful to the amazing builders and others in the green building sector who have made our successes and growth possible, and we’re looking forward to a great, green 2017!

By Mike Walsh, Terrene Homes

Q: Building our own home: smart or not smart?

A: In today's competitive marketplace, it might start looking attractive to simply buy a vacant lot and build your home. How hard could it be, right? In the process, you could also avoid the builder markup and put the savings in your pocket.

While that's certainly possible, there are things to consider before pulling the trigger on this plan.

First, finding land on which to build your home is not as easy as it might seem. Depending on where you're looking, there are not very many building lots available that don't already have a home on them, especially near city centers. You're more likely to find a piece of land in rural areas, but then you have to account for wells and septic systems. Like the housing market, the market for lots is really hot right now; you'd likely be competing against the builder community when negotiating for the land.

Then, there's the design and cost of building. One of the big attractions to building your home is the opportunity to design the exact house you want, creating those cool spaces you've always dreamed about and putting in all the features you've seen on the TV shows. Maybe it's a home theater or a wine cellar. Perhaps it's that grand patio with the outdoor kitchen.

More often than not, when the pencil meets the pad, and after you've spent the money to complete the design, the cost estimate to build your dream is significantly out of balance with your pocketbook. This often requires heading back to drawing board.

To avoid this, it would be wise to set your expectations correctly so that you're not disappointed when the design is complete. Go out and look at new construction homes that you can afford. Take pictures and grab flyers. Notice the finishes, the windows, doors, surfaces, appliances, etc. Count the rooms, fireplaces, and garage bays.

Once you have a good feel for the type of home you could afford if you were buying it from a builder, you'll be in the ballpark for what you can afford when you build it yourself. Feed all this info to your architect before you start the design.

Professional builders get really efficient at building. They develop relationships with their trade partners and vendors to get the best pricing and they're really good at managing schedules. The margin they make is due more to the savings they can find rather than a simple markup. The point is, if you choose to build your home, it should be to get the home you want in the location you love. The chances are that the final cost of the home will likely be very comparable, whether you build your own home or buy a finished home from a builder. But for this to be the case, you'll need to show some real restraint when you head to the design centers.

The last—and probably the most important—strategy is the building of the structure. Flying an airplane is quite easy if you're a pilot. Knee surgery becomes second nature if you're a surgeon. But none of us would try any of these things if we didn't have the training or expertise. Building is no different.

You should engage a professional builder to help you through the process. I promise you, it will be money well spent. They will be able to develop a schedule, coordinate the trades, identify mistakes, and make game-day plan adjustments that work. Building a house is like a puzzle and your construction manager will typically know how all the pieces fit together.

Do some real diligence in selecting your builder. Contact the Master Builders Association, visit active construction sites, talk to your architect, or ask representatives from the building supply companies. When you've identified a few prospects, call their references and check the state Labor and Industries website to confirm they're licensed and bonded. Have the builder give you a breakdown of how they bill for their services, too.

Building your home can be very rewarding and, if handled correctly, can be a great experience.

Mike Walsh, principal of Terrene Homes, is this year's president of the Master Builders Association of King and Snohomish Counties. HomeWork is the group's weekly column. If you have a home improvement, remodeling, or residential homebuilding question you'd like answered by one of the MBA's more than 2,800 members, write to homework@mbaks.com.

15 Years Green

Jason Lear is principal and co-owner (along with his wife, Holly Batt) of Batt + Lear, a 15-year-old Seattle construction firm, employing a diverse group of 25 employees. Batt + Lear builds and remodels structures to be highly energy efficient, simple, and functional and has won numerous green building awards over the years.

Joined MBA for the Health Insurance Trust

Batt + Lear joined the MBA in 2005, specifically for the MBA Health Trust. "Right from the beginning, it had been our dream to be the kind of company that people wanted to work for," says Jason. "Early on, we offered 20 days of paid time off plus health insurance. The MBA Health Trust was the only plan that would let us insure a minimum of just five employees. We also appreciated the ability to pick our own practitioners."

Staying Insured Through Downturns

Jason's company has made it a priority to maintain health insurance benefits, even through difficult financial periods. "Making it through 2008 was tough. We had to cut our 20-employee team by half. But we did have the good fortune to be vested in remodeling. After the financial crash, people couldn't sell or invest in new buildings, but there were a lot of remodel projects. So we got through. Now we're up to 25 employees and doing well."

Temporarily Lured Away

Jason tried another health insurance program for three years before coming back to the MBA Health Trust. "We were lured away by another insurance trust, which seemed less expensive. And it was cheaper initially because we had a group of young employees who never made claims. But when our employees actually started using the insurance, we were penalized, and our costs were hiked drastically by 45 percent. So we found our way back to the MBA Health Trust."

Modest Increases Are Easier to Plan For

All businesses have seen escalation of health insurance premiums the past couple of years, but Jason says the Trust is keeping them reasonable. "You assume rates are going to go up," he says. "We can handle single-digit increases. They are easier to plan for versus what you see outside of the Trust."

Regence BlueShield Is Very Versatile

Regence BlueShield, the Trust's insurer, provides Batt + Lear many care and provider options. "There is a lot of flexibility. Our staff can select the HSA plan or the preferred provider plan," says Jason. "Personally, for my family, I appreciate that Regence supports alternative care, things like massage, chiropractor, naturopathic doctors, etc." Jason says the plan is also well managed. "The administrators are great; they show us owners different plan options for getting the best coverage for the lowest price. And they present well-explained options to our employees and are always available for consultation."

Built Green

Batt + Lear are highly engaged with Built Green, the MBA's program for setting certification standards of excellence for construction that makes a significant impact on housing, health, and the environment. The program provides consumers with an easy-to-understand rating system that quantifies environmentally friendly building practices and gives builders the resources and support to build high-quality, desirable homes. "We were green builders right from the start," says Jason. "We wanted to be more public about it. So we started to certify projects as green. And now I'm on the executive committee of Built Green."

MBA GRIP Program Delivers L&I Refunds

Jason's firm also takes advantage of GRIP, the local safety incentive program for members of the MBA. GRIP provides Batt + Lear with a team of professionals dedicated to helping them reduce on-the-job injuries, manage workers' comp claims, lower L&I premiums, and maximize refunds. "It's a great, overlooked program that I wish we had known about earlier. We left a lot of money on the table. This is the third year we are getting refunds," Jason says.

The MBA Means Advocacy

The MBA has long been known for lobbying and government relations on behalf of its members and Jason is seeing the benefits directly in Seattle. "There's definitely a new focus from the MBA toward Seattle businesses like mine," he says. "The MBA advocacy groups are partnering with other influential groups to provide the Seattle City Council with a voice representing builders and green builders—which we very urgently need."

Listen: The Dunn Lumber Podcast: How to Protect Yourself From Liability When Hiring Trade Contractors, recorded live March 17 at the Master Builders Association Remodelers Council Dinner. Scott Hildebrand, residential law specialist, presents his list of the top 10 things NOT to do when hiring the tradespeople who are essential to your professional success.

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