After a year in business, Rob Adler, a licensed architect, wanted more control over his designs. He opened a new construction company and subbed out work. He worked so often with one particular firm, Socha Builders, that the two owners decided to merge. Adler shelved his company and became a partner in Socha Builders. But the partnership couldn't work both ways because in New Jersey, where Socha is located, a partner in an architectural practice must have an architectural license. So Adler owns 50% of the construction business and 100% of his architectural practice. This protects him from liability issues and is a plus for the remodeler who has no liability for design and construction documents.
“In construction, a corporate veil can protect your personal assets,” says Adler. “In architecture, it doesn't.” An architectural license is granted to an individual, not to a corporation, so Adler is personally liable in regard to errors or omissions. “You don't want to have everything at risk for that.”
Each state has its own laws regarding architectural seals. For example, in Maryland, single-family residential work doesn't require one for a new home. But New Jersey is highly regulated. In New Jersey, you need an architect's seal to do “a single-family home or anything else,” says Adler. He cautions design-build remodelers not to create a single contract for both services. “The builder absorbs the liability of the architectural work without having the ability to get insurance since they don't have a license to practice architecture.”
Adler even uses different letterhead than his construction partner. There is a clause in the construction contract stating that one of the partners is a licensed architect, but no such service or liability is included in the construction agreement. When clients sign a document they are aware that they are dealing with two separate corporations, and that the two don't perform the same work.
