Construction Law vs. Real Estate Law: Differences and Similarities

Differences

Real Estate Law

The fundamental difference betwee "Construction Law" and "Real Estate Law" is that Real Estate Law is primarily - seventy-five percent (75%) - determined by a maze of statutes and regulations, both State and Federal, designed to protect the public from predatory developers and lenders; with a secondary - twenty-five percent (25%) - underlying foundation of British common law concepts of land ownership dating back several hundred years. This hybrid combination can be confusing and difficult to understand at times, but it is pretty much "set in stone."

A good Real Estate Atto ey will be able to guide you through the maze of statutes and regulations, tell you what documentation is necessary and required, and caution you as to pitfalls. Let's put it this way … if you have five Real Estate atto eys in the conference room, and you ask a particular question, the atto eys will only differ slightly in their answers, and they will basically agree on the concepts, if not always on the best path to implement those concepts.

Construction Law

Construction Law, on the other hand, is more practical, determined by the rapidly evolving needs of the Construction Industries. A Construction Contract is - of course - a contract, and all of the statutes and case law conce ing interpretation of contracts will apply. But the over-riding concept is implementing the reality of what it takes to build a structurally sound, safe dwelling or commercial building.

Similarities

In both Real Estate Law and Construction Law, the Ordinances and Requirements of Local Municipalities play an important role. In Real Estate Law, it's the Zoning Ordinances and Codes, which limit the permissible uses for a parcel of real property, and thus greatly affect its valuation. Whether it is new construction, or renovation, you had better know what the local Zoning Ordinances permit. Is the area zoned "commercial," "residential," or mixed-use? Is it possible to obtain a Variance?

Whether it's a question of Real Estate Law or Construction Law, you really do need to know exactly what you are doing, and what the restrictions are. We've all heard the nightmare scenarios of discovering - after the building is built - that it was not built in accordance with the relevant Zoning ordinances. In Manhattan, New York, a few years ago, a 60-story residential skyscraper was built, and completed, only for the Builders to learn that it was "illegal," having exceeded the maximum permissible height by about fifteen (15) stories. At first, New York City ordered the building to be torn down, but I believe that - ultimately - the builders paid a very large fine, but were allowed to leave the building intact!

In Construction Law, it's the Building and Safety Codes, and Construction ordinances. For example, if you want to build a new office building in Los Angeles City, or Los Angeles County, you're going to have to have a Construction Law Atto ey, or consultant, do a good deal of research, and apply for the required permits and certificates.

Many Los Angeles office buildings, built before stricter building codes were instituted in 1974, were subsequently required to do "Retrofitting." Under the Retrofitting requirement, Fire Safety had to be upgraded, with new and more sophisticated Sprinkler systems put in place. Minimum water pressure requirements were enforced, as well as a myriad of requirements for heat-sensors and sprinkler systems. Sometimes entirely new ceilings were required to be installed, so that the Sprinkler system heat sensors would work reliably.

But whether it's a question of Real Estate Law, or of Construction Law, the basic advice is quite similar. As my grandfather, an old-world Russian Tailor by trade, used to say, when you're sewing a winter coat (he worked for the expensive New York department stores … seasonal work, but pretty steady from year to year) … "Measure twice, but cut once!" As applied here, that means research, hire advisors, Real Estate lawyers, Construction Lawyers, hang-out at the Building Department downtown, but know what the issues are, before you buy the house, or build the building!