Real Estate & Construction News Roundup (7/8/26) – Data Centers Negotiate Flexibility for Speed, Hotel Deal Activities Focus on Luxury, and DC Sues Apartment Owners
July 20, 2026 —
Pillsbury's Construction & Real Estate Law Team - Gravel2Gavel Construction & Real Estate Law BlogIn our latest roundup, rail projects gain steam across the U.S., AI optimizes building operations, a modular approach speeds data center construction, and more!
- Hyperscalers want their data centers online, and utilities want to provide interconnections, but both are still looking for common operating guidelines. (Herman K. Trabish, Construction Dive)
- Contractors are taking advantage of multibillion-dollar train and transit contracts, even as funding challenges create hurdles for project execution. (Matthew Thibault, Construction Dive)
- Although hospitality and leisure M&A deal volume was down 2.5% in the first half of 2026 compared to the prior six months, investors are concentrating on the upper end of the market, including luxury hotels, wellness resorts and gaming, or “data-rich,” platforms. (Noor Adatia, Hotel Dive)
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Pillsbury's Construction & Real Estate Law Team
Doctrine of Substantial Performance When It Comes to Payment
July 27, 2026 —
David Adelstein - Florida Construction Legal UpdatesA recent non-construction case touches upon the doctrine of substantial performance when it comes to payment. In this case, a club was to make two payments to secure a rapper’s attendance. The first payment was made. The second payment was made but was a few hundred dollars short of the agreed amount. The rapper did not show up. The club claimed it substantially performed its obligations. At first glance, the argument makes sense because the second payment fell only a few hundred dollars short. But that wasn’t the case when it comes to pre-commencement payment obligations:
Substantial performance applies only when the variance from the contract terms “is inadvertent or unintentional and unimportant so that the work actually performed is substantially what was called for in the contract.” However, when one party agrees to pay the other on or before a specific date, time is of the essence, and the payor is required to pay the payee on or before that date. “There is almost always no such thing as ‘substantial performance’ of payment between commercial parties when the duty is simply the general one to pay. Payment is either made in the amount and on the date due, or it is not.”
Big Gate Records, LLC v. Washington, 51 Fla.L.Weekly D1281a (Fla. 2nd DCA 2026) (internal citations omitted).
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David Adelstein, Kirwin NorrisMr. Adelstein may be contacted at
dma@kirwinnorris.com
Managing Rising Costs and Shifting Legal Risk for Florida High-Rise and Condominium Projects
May 05, 2026 —
Stephen Hauptman - Ball Janik LLPFlorida's construction defect landscape is experiencing a major shift. The convergence of material and labor cost volatility, regulatory tightening, and increasingly complex litigation strategies is forcing associations, developers, and their counsel to rethink how they approach risk management and dispute resolution. For those managing large-scale condo and high-rise projects, the stakes have never been higher.
The Cost Volatility Trap
Construction material prices rose at a "staggering" 12.6% annualized rate during the first two months of 2026, according to
recent industry analysis. Tariff impacts are projected to lead to more increases of 5.4% to 6.8%, depending on property type. For associations facing construction defect claims, this volatility creates a cascading problem: repair scopes defined two years ago are now dramatically underpriced, and damage calculations that appeared reasonable at discovery are obsolete by the time of settlement.
Courts and mediators are increasingly scrutinizing how cost estimates were developed and whether they account for existing market circumstances. Associations must now commission updated repair assessments more frequently, a practice that increases investigation costs but strengthens the credibility of damage claims. Conversely, defendants are weaponizing cost inflation as a defense, arguing that claimed damages are speculative or inflated. The practical result: repair sequencing and phasing strategies have become critical litigation tools. Associations that can demonstrate a rational, cost-effective repair plan tied to current market data are more favorably placed in settlement negotiations.
Regulatory Pressure and Deliberate Timing
Florida's 2026 condo compliance regime has significantly changed the defect claims landscape. Elevated transparency requirements, stricter reserve funding mandates, and tightened building safety inspection protocols mean that associations now face dual pressures: Comply with new regulations while simultaneously handling construction defect exposure.
This regulatory environment is changing investigation and documentation strategy. Associations that delay defect investigation to avoid triggering reserve funding obligations or disclosure requirements are taking on considerable legal risk. Recent case law such as the Third District Court of Appeal's reaffirmation of Chapter 558's pre-suit mediation requirements, underscores Florida's intent to resolve disputes early. Associations that move deliberately and record carefully during the pre-suit phase gain leverage in mediation and reduce the risk of expensive litigation.
Timing also intersects with repair sequencing. Associations must now balance the urgency of compliance inspections against the strategic advantage of phased repairs. Some associations are using compliance deadlines as a forcing mechanism to accelerate settlement discussions, while others are sequencing repairs to demonstrate good-faith remediation efforts before litigation commences.
The Emerging Risk Transfer Challenge
As construction defect claims grow more complex and costly, the traditional risk transfer systems, such as design-build warranties, contractor bonds, and insurance, are proving inadequate. Developers and general contractors are increasingly shifting risk to subcontractors and material suppliers, fragmenting liability and complicating recovery efforts for associations. Permitting and approval friction is also creating new litigation pressure points. Delays in municipal approvals, changes to building code interpretations, and disputes over remedial work compliance continue to spawn collateral claims that go beyond the original defect. Associations must now anticipate not only defect liability but also regulatory compliance disputes with municipalities, creating a dual-front legal challenge.
For large communities, this means reconsidering the entire risk architecture. Insurance carriers are tightening coverage, and traditional indemnification chains are breaking down. Forward-thinking associations are engaging counsel earlier in the development process to negotiate clearer risk allocation provisions and more robust insurance requirements.
Taking a Data-Driven Approach
Managing rising costs and shifting legal risk in Florida's high-rise and condo market requires a more sophisticated, data-driven approach. Associations must commission frequent cost updates, move deliberately through pre-suit investigation and mediation, and challenge traditional assumptions about risk transfer. Developers and their counsel should view regulatory compliance not as a burden but as an opportunity to demonstrate good-faith risk management and strengthen settlement positioning.
The firms and associations that succeed in 2026 will be those that treat cost volatility, regulatory change, and litigation strategy not as separate challenges but as linked elements of a coherent risk management framework.
Stephen Hauptman is special counsel in Ball Janik LLP’s Fort Lauderdale office. He may be reached at shauptman@balljanik.com.
Contractor Entitled to Defense Under Subcontractor’s Policy
March 10, 2026 —
Tred R. Eyerly - Insurance Law HawaiiThe appellate court affirmed the trial court’s grant of summary judgment to the contractor’s insurer finding that the sumcontractor’s insurer had a duty to defend the contractor. Navigators Specialty Ins. Co. v. TBR Construction, LLC, et al., 2025 Ill. App. Unpub. LEXIS 2177 (Ill. Ct. App. Dec. 3, 2025).
Greenscape Homes, LLC was the general contractor for a residential development. Greenscape hired TBR Construction, LLC as a carpentry-framing subcontractor pursuant to a “Trade Contractor Agreement.” The Trade Agreement required TBR to name Greenscape as an additional insured. TBR was insured by Utica. Greenscape was insured by Navigators.
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Tred R. Eyerly, Damon Key Leong Kupchak HastertMr. Eyerly may be contacted at
te@hawaiilawyer.com
New York Moves to Tighten Third-Party Practice: Key Changes to CPLR 1007
March 31, 2026 —
Sophia L. Cahill - SheppardEffective April 18, 2026, the New York Legislature enacted the Avoiding Vexatious Overuse of Impleading to Delay (“AVOID”) Act, amending CPLR 1007—the statute that governs third-party practice. The amendment sharply limits when and how defendants can commence third-party actions, curbing the expansive discretion they previously enjoyed and targeting the late-stage impleaders that often upend case schedules.
What Changes
Before the AVOID Act was signed into law on December 19, 2025 (and subsequently modified by Chapter Amendments A9502 and S8809, signed by Governor Hochul on February 13, 2026[1]), CPLR 1007 gave defendants broad latitude to implead “any person who is or may be liable” for all or part of the plaintiff’s claim. CPLR 1007 specified no outside time limit for the initiation of a third-party claim; courts assessed only whether a defendant’s delay was undue—such as impleading months after the note of issue—and whether the plaintiff would suffer prejudice if the third-party action were not severed.
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Sophia L. Cahill, SheppardMs. Cahill may be contacted at
scahill@sheppard.com
GRSM Secures Illinois Appellate Victory for Architectural Firm in Implied Warranty Dispute
May 14, 2026 —
Gordon Rees Scully MansukhaniGordon Rees Scully Mansukhani Partner Jonathan Federman, Partner Thomas Cronin, and Senior Counsel Garrett Lee recently secured a victory in the Illinois Appellate Court, Fifth District, on behalf of the firm’s client, an architectural firm, in a liability dispute.
The case arose following an entity’s purchase of a 111-unit building for use as an investment or rental property. The plaintiff made claims against the architect of the building, alleging that there were design defects that breached an implied warranty, as well as a negligence claim.
GRSM argued that an architect could not be liable for implied warranties, particularly for an implied warranty which no Illinois court has ever recognized. GRSM further argued that Illinois law bars an architect from liability for negligence arising from a duty pursuant to contract under the economic loss doctrine.
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Gordon Rees Scully Mansukhani
Suit Limitation Provision Eliminates Wind Loss Claim
July 27, 2026 —
Tred R. Eyerly - Insurance Law HawaiiThe insurer’s motion for judgment on the pleadings was granted after the insured failed to file suit against the insurer within the policy’s two-year suit limitation provision. Interstate Investments, LLC v. Mt. Hawley Ins Co., 2026 U.S. Dist. LEXIS 98108 (S.D. N. Y. May 4, 2026).
On or before June 27, 2023, a wind, hail and rainstorm damaged Interstate’s property in Oklahoma. Interstate filed a claim under its policy with Mt. Hawley. The policy provided that New York law applied and contained a two- year suit limitation provision.
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Tred R. Eyerly, Damon Key Leong Kupchak HastertMr. Eyerly may be contacted at
te@hawaiilawyer.com
The Deadline to File Suit on a Public Works Payment Payment Bond is Triggered by a Claimant’s Work on a Project Not by a Claimant’s Work Under a Contract
June 02, 2026 —
Garret D. Murai - California Construction Law BlogCalifornia law requires that prime contractors furnish a payment bond – providing for payment to lower-tiered subcontractors and suppliers – on state and local public works projects with a value in excess of $25,000. There are three conditions that must be satisfied when a claimant makes a claim against a payment bond on a public works project in California:
- First, generally, the claimant must have served a preliminary notice, unless the claimant is a first-tier subcontractor or supplier;
- The claimant must have “ceased to provide work” on the project; and
- The claimant must file suit against the payment bond no later than six (6) months after the period in which a stop payment notice must be given or, in other words, the earlier of 270 days after completion of the public works project or 210 days after a notice of completion or cessation was recorded on a public works project.
In
Tarlton & Sons, Inc. v. Great American Insurance Company, 111 Cal.App.5th 376 (2025), the 2nd District Court of Appeal examined whether a subcontractor timely filed a claim against a payment bond when a prime contractor was terminated and replaced by another prime contractor who the subcontractor continued to perform work for.
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Garret D. Murai, Nomos LLPMr. Murai may be contacted at
gmurai@nomosllp.com
