State and Federal Regulatory Changes
Florida Changes Building Permit and Inspection Rules
Florida recently enacted CS/CS/HB 803, a construction-related law that changes several building permit and inspection rules. The law takes effect July 1, 2026. Among other things, it requires a local government that issues building permits to exempt an owner of a single-family dwelling, or the owner’s contractor, from obtaining a building permit for work valued at less than $7,500 on the owner’s property. The exemption does not apply to work on property located partially or entirely in a flood hazard area. It also does not apply to electrical, plumbing, structural, mechanical or gas work performed on property containing a single-family dwelling. A construction project may not be divided into more than one project to evade the permitting requirements. To qualify, the owner or contractor must submit a written exemption request with a copy of the contract or other documentation showing the nature and value of the work.
The law also creates a separate exemption for temporary residential hurricane and flood protection walls or barriers that meet specific conditions. The barrier must be nonhabitable and non-load-bearing. It must be installed on property of a single-family dwelling, two-family dwelling or townhouse. It must be constructed to mitigate or prevent storm surge or floodwaters from entering a structure or property. It must be installed by a properly licensed contractor and comply with applicable local zoning, drainage, easement and setback requirements. This exemption also does not apply to work on property located partially or entirely in a flood hazard area.
👉 Takeaway: Florida contractors should update their permitting checklists before July 1, 2026. Do not assume that every small or temporary residential protection project is exempt. Confirm the scope, location, flood-zone status and the type of work before proceeding.
Case Law Update
Court Limits Excessive Completion Costs in Construction Dispute
Corotoman, Inc. v. Central West Virginia Regional Airport Authority
Supreme Court of Appeals of West Virginia, May 21, 2026
Facts
The Airport Authority operates Yeager Airport in Charleston, West Virginia. It decided to remove a large knoll located at the end of the runway. After receiving grants to acquire the affected property, the Authority sought to purchase land from Corotoman. When Corotoman rejected the purchase offer, the parties instead entered into an agreement under which the Airport Authority would remove the knoll. The agreement also contained a clause addressing breach.
The Airport Authority was later found to be in breach for failing to perform the removal properly. The issue on appeal concerned the proper damages. Because the cost to complete the work exceeded $4 million, the district court found that the cost of completion as estimated by the experts would be grossly disproportionate to the actual value of the land. Accordingly, the court awarded Corotoman only diminution-of-value damages (loss in value).
The Fourth Circuit then certified to the West Virginia Supreme Court the question of whether to apply cost-to-complete or diminution-of-value damages.
Holding
The West Virginia Supreme Court held: (1) the gross disproportionality rule may apply in breach-of-construction-contract disputes; (2) gross disproportionality is measured using the diminution-in-value approach, which calculates the difference between the property’s value without the contracted work and its value if the work had been performed; (3) the breaching party bears the burden of invoking and proving gross disproportionality; and (4) if the breaching party fails to prove gross disproportionality, the non-breaching party’s proven measure of damages applies.
👉 Takeaway: In plain English, the cost to complete a project is the measure of damages for a breach of a construction contract, unless the cost is grossly disproportionate to the value of the property. In that case, the loss in value of the property is used as the measure of damages.
Contract Provision of the Month
AI-Assisted AAA Initial Decision Maker Provision
Context: Construction projects move quickly. Payment disputes, order disputes, and scope issues often need a prompt interim decision before they damage the project schedule or increase claim costs. That is the purpose of an Initial Decision Maker. The IDM provides an early project-level decision so the parties can continue performance while preserving their right to later dispute resolution.
AAA’s new AI Arbitrator process offers a potential fit for this role in appropriate document-based construction disputes. AAA describes the process as AI-assisted, not AI-decided. The AI tool helps summarize submissions, identify issues, organize evidence, prepare analysis and draft a proposed award. A human AAA arbitrator then reviews, revises, finalizes and issues the decision. AAA has also stated that the process was initially made available for two-party, documents-only construction cases.
Using AAA’s AI Arbitrator process as the IDM may help parties obtain faster initial decisions on routine project disputes while maintaining human neutral oversight. The goal is not to replace mediation, arbitration or litigation. The goal is to create a faster first decision that keeps the project moving.
Sample Provision: The Parties designate the American Arbitration Association’s AI Arbitrator process as the Initial Decision Maker (“IDM”) for Claims arising out of or relating to the Contract, if available for the Claim at issue.
The AAA AI Arbitrator process shall mean AAA’s AI-assisted dispute resolution process in which artificial intelligence assists with document review, issue identification, dispute summarization, analysis, and proposed decision preparation, subject to review and issuance by a human AAA arbitrator.
Either Party may submit a Claim to the IDM. The Parties shall submit position statements and supporting documents in accordance with AAA’s AI Arbitrator procedures.
The IDM decision shall be binding on an interim basis unless modified by settlement, mediation, arbitration, litigation, or other final dispute resolution procedure allowed under the Contract. Pending final resolution, the Parties shall continue performance. Owner shall pay undisputed amounts.
A Party may object to the IDM decision by providing written notice within fourteen days after receipt. If timely notice is given, the Claim may proceed under the Contract’s dispute resolution procedures. If no timely notice is given, the IDM decision shall become final and binding as to the Claim decided.
If AAA’s AI Arbitrator process is unavailable, declined by AAA, or unsuitable for the Claim, the IDM shall be a single neutral appointed by AAA under its applicable construction dispute procedures.
California’s Construction Laws Continue to Burden Contractors
California remains one of the most difficult states in the country for contractors. The state has a massive construction market. It also has a legal and regulatory environment that creates high compliance costs, litigation risk, and operational uncertainty. For contractors trying to build projects, manage labor and control margins, California law often makes the job harder than it needs to be.
The Private Attorneys General Act is one of the biggest examples. PAGA allows an aggrieved employee to pursue civil penalties for alleged Labor Code violations on behalf of the state. In practice, this can turn a wage-and-hour issue into representative litigation involving many current and former employees. That risk is especially severe in construction. Crews move between projects. Start times vary. Foremen may track time differently. Meal periods may depend on site conditions. A technical payroll issue can become a major lawsuit.
California adopted PAGA reforms in 2024, and those reforms created some opportunities to cure violations and reduce penalties. But the reforms did not eliminate the underlying problem. Contractors still face an enforcement model that encourages litigation over cooperation. A contractor that makes a good-faith mistake can still face expensive claims, attorney fee exposure and pressure to settle.
AB 5 creates another problem. California’s worker classification rules make it harder to use independent contractors. AB 5 generally applies the “ABC test” when a company claims a worker is an independent contractor rather than an employee. Construction has certain exceptions, but those exceptions require careful compliance. The subcontract must be properly structured. Licensing must be correct. The work must fit within the scope of the license. Business registration and independence issues must be addressed.
For construction, this can be impractical. The industry relies on specialty trades, project-based work, and flexible staffing. California law tries to force that model into a rigid employment framework. That increases administrative cost. It also increases the risk that a relationship the parties treated as a subcontract will later be challenged as employment.
Cal/OSHA adds another layer. Safety regulation is necessary, and contractors have an obligation to protect workers. But California often goes beyond federal OSHA. Cal/OSHA has detailed requirements that apply to construction employers. These include construction safety, electrical safety, and general industry safety orders. Contractors working in multiple states may struggle because California’s rules are not always aligned with the federal baseline.
The result is a difficult operating environment. Contractors must comply with demanding safety rules. They must navigate aggressive wage-and-hour laws. They must structure subcontractor relationships with precision. They must prepare for litigation even when they are trying to comply.
California’s approach may be well-intentioned, but it often ignores jobsite reality. Construction does not occur in an office. It occurs in changing field conditions with multiple trades, compressed schedules, and significant safety risks. Laws that do not account for that reality increase costs and reduce efficiency.
👉 Takeaway: Contractors working in California need a proactive compliance strategy. Review arbitration agreements, payroll practices, subcontractor classifications, safety programs, and supervisor training before a dispute arises. In California, prevention is a business necessity.
Upcoming Speaking Engagements & Events
- Roofing Contractors Association of Southern California, State of the Industry, Los Angeles, CA, June 16
- National Women in Roofing, Legal Updates, Dallas, TX, June 18
- Southeastern Insulation Contractors Association, Regulatory and Policy Changes, Palm Beach, FL, June 22
Disclaimer: This newsletter is for educational purposes only and does not constitute legal advice or create an attorney-client relationship.