Crossman Communities v. Harleysville Mutual Insurance Company

By Scott Bradley, Esq., Gallivan White & Boyd

On January 7, 2011 the SC Supreme Court issued its opinion in the matter of Crossmann Communities of North Carolina, Inc. v. Harleysville Mut. Ins. Co., Op. No. 26909 (S.C.Sup.Ct. filed Jan. 7, 2011). As you may be aware, the ruling created a significant change in the law with respect to the potential obligations of insurance companies to provide a legal defense and indemnity to builders and contractors for construction defects under a commercial general liability (CGL) policy of insurance. The Crossmann case involved alleged property damage to a condominium project resulting from ongoing and continuous water intrusion caused by allegedly improper siding installation.

In plain terms, the Court in Crossmann ruled that where the property damage at issue "is no more than the natural and probable consequence" of the faulty workmanship, it does not constitute an "occurrence" necessary to trigger coverage under a CGL policy. The Court reasoned that water intrusion is just such a consequence of faulty siding installation, thus, it did not constitute an occurrence. No occurrence means no coverage, whether the faulty workmanship was performed by you or a sub-contractor. The Court's opinion is not limited to water intrusion.

While faulty construction was not considered an occurrence under the pre-Crossmann law, the resulting damage to non-defective components of the construction was. Under the previous caselaw, using the facts of Crossmann, there would have been no occurrence/no coverage for the faulty siding installation, but the damage to the remaining parts of the structure from the resulting water intrusion would constitute an occurrence and trigger coverage. That was significant in that it would not only provide coverage for the policyholder for the resulting water damage, but would also trigger the duty of the carrier to provide a legal defense. In the vast majority of the construction defect scenarios, however, that is no longer the case. In most construction defect situations, the builder or contractor will be left totally exposed, as the insurance carriers should be able to rely on the Crossmann decision to conclude that the defective work and any resulting damage no longer constitutes an occurrence under the law in SC. As noted above, when there is no occurrence there is no coverage or duty to defend.

It should be noted that the final word on Crossmann has not yet been written. There will be a re-hearing of the case in front of the SC Supreme Court. Additionally, there have been bills introduced in both the SC Senate and the House of Representatives seeking to legislatively define "occurrence" in a manner that would provide coverage to builders and contractors for construction defects in certain situations. The ultimate success or failure of the re-hearing or legislative process is unknown.

To register for a briefing on this issue, click here.
To read an article in Charleston Regional Business Journal providing further details of this issue, click here.

Briefing on changes to general liability insurance policies

HBA members Scott Bradley, Esq., Gallivan White & Boyd, Howard Cox, Palmetto Insurance, and Jason Freeman, ChFC, J. Freeman and Associates, will brief members on the implications of a recent Supreme Court ruling that impacts contractor general liability insurance. Refreshments will be provided. Sponsored by Gallivan White & Boyd.

When: February 22, 4 p.m. until 5 p.m.
Where: HBA of Greenville Office

To register for the briefing, click here.

To read more about this issue, click on this link to read the article "Crossman Communities v. Harleysville Mutual Insurance Company."

Fallon Research Poll Shows Public Opinion Still Strong in Support of Homeownership

By Paul Fallon, Fallon Research

Recent newspaper articles and editorials have raised intriguing questions about whether the faltering housing market foreshadows a fundamental shift in cultural values about the importance of homeownership and if it remains an integral aspect of the American Dream. Survey topics from a recent nationwide poll of adults in the United States conducted by Fallon Research & Communications, Inc. explored some attitudes that current homeowners and renters have toward homeownership.

Mixed Signals
Despite the current malaise of the housing market, a narrow majority (54%) of U.S. residents that were surveyed said they disagree with the assertion that being a homeowner is not as important as it used to be. Looking at the results by sub-groups, the ones most likely to disagree are 18 to 29 year-olds (59%) and 30 to 44 year-olds (61%), which suggests that, as they foresee changes in their lives, homeownership is an integral part of the futures to which they aspire. Other groups with high proportions who disagreed were homeowners (58%) and those with annual household incomes of more than $100,000 (63%). Although all the aforementioned sub-groups are vital parts of the housing industry, the fact that, overall, one-third of the respondents agreed that being a homeowner is not as important as it used to be paints a sobering picture which suggests that attitudes among some segments of the U.S. culture are changing or, possibly, that conventional wisdom about the importance of homeownership should, in some way, be re-considered. Those who were more likely to agree with the assertion that being a homeowner is not as important as it used to be (33% overall) were respondents with incomes of between $60,000 and $100,000 (40%), and, perhaps not surprisingly, renters (45%). The latter finding suggests that, contrary to popular beliefs, a substantial proportion of the people in the U.S. who rent their homes make such decisions based on their lifestyles and needs, rather than necessity.

Still a Good Investment!
Even though there is some ambivalence about the importance of being a homeowner, one aspect that there seems to be little question about is the monetary value of homeownership. Overall, 87% of respondents said that homeownership is a good investment of financial resources. It is a sentiment that is so consistent and widely held across the spectrum that even 72% of renters agreed, suggesting that they believe there is inherent value to owning, even if they do not choose to do so.

Renters Remorse?
Although it appears that some renters choose to rent for a variety of reasons which are predicated upon their preferences, the data indicates many believe that they also are forsaking an improved quality of life by choosing to rent. While an overall total of 81% of respondents agree that people and families who own their own homes experience a better quality of life because they live in more stable communities, and homeowners take greater pride in their neighborhoods, what is astonishing is that 68% of renters share this sentiment, and just 24% disagree. This implies that the decision to rent may be one that is seen as a compromise which results in misgivings that are not unlike the remorse that some homebuyers may initially experience. Interestingly, there also seems to be a strong relationship with age, as agreement with the sentiment steadily increases, ranging from 69% for 18 to 29 year-olds, increasing to 76% for 30 to 44 year-olds, 81% for 45 to 59 year-olds and reaching 86% among respondents 60 and older.

Paul Fallon is a public opinion researcher, political pollster and advisor for interest groups, political candidates and trade associations. He specializes in land-use policy research, referendums and public funding issues. He is the former Director of Public Opinion Research for the National Association of Home Builders. Paul has worked on policy issues and campaigns in more than 34 different states throughout the country. He has served as the pollster for numerous campaigns to get voter approval for new housing and commercial developments, protect and strengthen property rights, defeat growth proposed moratoriums, change zoning designations, urban growth boundaries, impact fees and transfer taxes. His clients include development companies, apartment associations, REALTOR® associations and homebuilding associations.

This information is based on survey research that was conducted through telephone interviews of 1,006 randomly-selected adults in the United States. The interviews were performed over land-line and cellular telephones during the period of February 1, 2011 to February 8, 2011. The overall estimated margin of sampling error is +/- 3.1%, based on a confidence level of 95%, although it varies for each individual question. This means that if this survey was repeated, 95 times out of 100 the results would be within plus or minus 3.1% of those provided herein. Adjustments were made to proportionately weight the results to ensure each area of the country is represented in proportion to its percentage of the U.S. population.

Special Promotions, Prizes Part Of Home Show’s 50th Anniversary Celebration

By Wayne Moore, 2011 HBA President

Hundreds of exhibits with everything imaginable for inside and outside the home are the headliners of the Southern Home & Garden Show. But the promotions and prize packages put together for the March 4-6 show at Carolina First Center will add an air of excitement to this year’s 50th Anniversary celebration.

Live Broadcasts, Special Appearances

Prior to show opening on Friday, March 4, Your Carolina will give its viewers a sneak preview of what show visitors can expect to see as WSPA-TV’s popular lifestyle program hosted by Kimberly Kelly and Jack Roper broadcasts live from Carolina First Center from 10 a.m. until 11 a.m. On Friday afternoon, News Radio WORD’s Bob McLain will broadcast his show live from the exhibit floor from 3 p.m. until 6 p.m.

On Saturday, WSPA-FM (Magic 98.9) will introduce its new mid-day personality Kaci Kruz to show visitors from 1 p.m. until 2 p.m., and WROQ-FM (Rock 101) will launch its ‘20 Cities In 20 Days’ tour from 2 p.m. until 4 p.m. in celebration of its 20th year in the Upstate market. And broadcasting live from the show throughout the weekend is 107.3 JAMZ.

Ugliest Room In The Upstate Contest

On Saturday, March 5, WSSL-FM Whistle 100 Morning Team Bill Ellis and Beth Bradley will be on hand from 2 p.m. until 4 p.m. to determine the winner of the show’s Ugliest Room In The Upstate Contest. Photos of 10 ugly rooms, selected from online submissions to WSSL-FM, WESC-FM and WMYI-FM websites, will be displayed at the show where visitors will vote for the ugliest. The winner will receive a $3000 room makeover package from BOGARI and Dillard-Jones Renovations.

March Madness Media Zone

AV Innovations and PET Dairy are teaming up to present the March Madness Media Zone where basketball enthusiasts can catch the action of their favorite teams or challenge their friends to games on the Wii. Game watchers and players also can enjoy complimentary PET Dairy product samples.

Hourly Prize Giveaways

Hourly prizes ranging from groceries to gliders will be awarded during the 50th Annual Southern Home & Garden Show. Visitors can enter to win at each show entrance with a winner drawn every hour of the three-day event. No purchase is necessary. Prizes include:

• $500 gift certificate toward a complete shower or bathtub, wall and fixtures installation from Bath Fitter.
• 4-ft Handcrafted Oak Glider from The Wood Shoppe
• $500 Gift Card from BI-LO
• Complete set of outdoor furniture from BI-LO
• Two pallets, plus delivery, of sod of your choice from Carolina Fresh Farms
• $500 Massage/Reflexology package from Greenville Natural Health Center
• $500 Acupuncture Treatments package from Greenville Natural Health Center
• $500 Facial package from Greenville Natural Health Center
• $500 Gift Certificate from Grout Works
• CuddleBag (color of your choice) from AV Innovations
• InSinkErator Evolution Pro Compact Disposal from InSinkErator & Gateway Supply
• Gerber 1.28-Gallon Flush Avalanche Toilet from Gerber & Gateway Supply
• Kohler Wellworth 1.28 Gallon Flush Toilet from Kohler & Gateway Supply (One awarded each day of the show.)
• Grohe Showerhead from Grohe & Gateway Supply
• Brizo Faucet from Brizo & Gateway Supply
• Ten $100 Shopping Sprees from Jeff Lynch Appliance & TV Center awarded throughout the show.
• $25 Gift Certificates for purchase of a Kohler product of $50 or more from Gateway Supply Greenville. (One awarded each day of the show.)

Build The House Canned Food Drive

Visitors who miss buying advance tickets at BI-LO can bring a non-perishable canned good to the show and receive $1 off the price of admission. Visitors will help fill a 10’ x 10’ reverse house built by students in the Building Construction Department of Greenville Tech. At the conclusion of the show, canned goods will be donated to Harvest Hope Food Bank, which distributes food and related products to 71 agencies throughout Greenville County and eight agencies in Laurens County.

Please join us for what promises to be a true Golden Anniversary celebration at the 2011 Southern Home & Garden Show. For more information, visit www.HBAofGreenville.com. And don’t forget to get your $1 off advance tickets on sale at BI-LO through March 3.

Housing may NOT be the cause of the Housing Crisis

What we in the affordable housing arena have known for a long time is suddenly being realized by the rest of the world. The Housing Crisis is not a failure of housing policy over the past 30 years that was designed to give an opportunity and access to housing finance to qualified under served and under represented Americans. We in the industry recognized early on that the key to successful homeownership initiatives was not just access to capital but financial literacy and homebuyer education.

So, it appears that housing may in fact NOT be the cause of the housing crisis. What the data is now starting to reveal is that Americans are drowning under non housing debt.

There was a time when 30/36 meant something not just to banks doling out loans but also to consumers. 30/36 represents what is known as front and back ratios in the lending world. The front ratio is the proportion of a borrower’s income that lenders will allow for principal, interest, taxes and insurance (PITI) on a property. Thus an affordable mortgage is one in which a household is not spending more than 30% of their gross annual income on housing payments. The back ratio is the proportion of a borrower’s income that lenders will allow for PITI plus other monthly debt obligations (car payments, student loans, credit cards, etc.). Lenders in days past would not extend any additional credit to you if your total debt to income ratio exceeded 36% of your gross annual income.

The Calculated Risk blog points to an alarming statistic from the latest Home Affordable Modification Program (HAMP) report. As shown in the table above, the median borrower who received a permanent modification had a back-end debt-to-income ratio of 77.5 percent before the modification. That means 77.5% of their gross income is spent making debt payments! Even after receiving the modification, this ratio drops only to 61.3 percent, which is still a large burden to sustain and could continue to lead to more foreclosures.

The question has been asked and we will gladly answer that the challenge to modifying more delinquent borrowers through the HAMP program is that many households actually have an affordable mortgage with a front ratio of 31% or less thus making them ineligible for the program. Most Americans did not buy more house than they could afford…they bought more stuff in addition to their homes that they could not afford. The question then becomes what is the lifeline for those drowning under non housing debt. Unfortunately, for far too many Americans that lifeline seems to be bankruptcy court.

So, it appears that we housing enthusiasts have come full circle…financial literacy, homebuyer education, and most importantly debt management may be the keys to unlocking the housing crisis door and preventing us from ever going down this path again in the future.

Source: Low Income Housing Trust Blog

Todd Usher named NAHB Certified Graduate Builder of the Year

During last month’s International Builders Show in Orlando, a HBA of Greenville member was awarded the NAHB Certified Graduate Builder of the Year Award. Congratulations to Todd Usher, CAPS, CGB, CGP, GMB, president of Addison Homes in Greer, SC, for receiving this prestigious national award.

As the 2008 president of the HBA of Greenville, Usher mentored and encouraged fellow NAHB members to pursue designations. He also worked with the David E. Shi Center for Sustainability at Furman University, advising students on energy conservancy, and with local builders and student volunteers with Greenville’s Habitat for Humanity group.

Usher promotes NAHB designations in all of his professional capacities and makes education a priority at his company.

Southern Home & Garden Show Delivers Exhibits, Expert Advice, Education, Entertainment

By Wayne Moore, 2011 HBA of Greenville President

Recent reports from around the country say that attendance at 2011 trade and consumer shows is up compared with the past couple of years. According to Tradeshow Insight, the Consumer Electronics Show experienced a 10% increase in attendance and an 8% increase in exhibitors. And, public attendance at the North American International Auto Show in January was up nearly 20,000 compared with 2010.

More good news comes from Discover Business Watch, which reported that confidence among small business rebounded in January, with 30 percent of small business owners surveyed saying they will increase spending on business development such as advertising, inventories and capital expenditures in the next six months.

All of this is great news for area consumers and for the Southern Home & Garden Show, which will bring buyers and sellers together under one roof for the 50th time March 4-6 at Carolina First Center. At the Home Builders Association of Greenville, we are happy to report that exhibit sales are ahead of this same time last year, with new and returning exhibitors adding to the air of enthusiasm. With just a few weeks until show time, we are putting together an event to deliver the exhibits, expert advice, education and entertainment about which the Southern Home & Garden Show has become known.

Designed for all lifestyles and life stages from first-time homebuyers to downsizers and everything in between, this annual event produced by the Home Builders Association of Greenville covers every aspect of home building, remodeling, landscaping and decorating. The show includes hundreds of exhibits with merchandise for sale, product demonstrations, and educational seminars conducted by several participating exhibitors. Seminars lined up for the three-day Southern Home & Garden Show include grass growing tips, floral arranging, accessorizing your home, kitchen safety, green building and remodeling, selecting the right countertops, and kitchen design.

With a combination of new products and expert advice from the pros, the Southern Home & Home Show inspires homeowners with endless ideas on enhancing their home's comfort, functionality, aesthetic appeal and overall value. Whether you are a new homeowner or someone who has lived in your house for years, anyone with an interest to update, enhance, and create a new look or amenity for his or her home will enjoy the show.

If you have interest in exhibiting in the 50th Annual Southern Home & Garden Show, please call (864) 254-0133 or visit www.HBAofGreenville.com. If you are planning to attend, $1 off advance tickets are on sale at area BI-LO stores through March 3.

To see what companies are exhibiting at the 50th Annual Southern Home and Garden Show, click here.