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May 15th – Texas Mechanic’s Lien Deadlines

May 5, 2010 By Kelly M. Davis Esq. Leave a Comment

1st Tier Commercial Claimants:

  • 1st notice letter to the GC is timely for work done any time after March 1, 2010.
  • 2nd notice letter to the GC & Owner is timely for work done any time after February 1, 2010.
  • Your mechanic’s lien is timely for work done any time after January 1, 2010.

Residential – 2nd Tier Commercial – Specially Fabricated Claimants:

  • Notice letter to the GC & Owner is timely for work done any time after March 1, 2010.
  • Your mechanic’s lien is timely for work done any time after February 1, 2010.
Filed Under: Construction Law, Mechanic's Lien Reminders Tagged With: Lien Notice, Mechanic’s Lien, Texas Mechanic’s Lien

Oral Versus Written Contracts

May 3, 2010 By Kelly M. Davis Esq. 2 Comments

Last month we talked about constitutional liens,what are they and what type of contractors qualify to file a constitutional lien. This month I would like to answer the question that I get often, can I file a lien if I only have an oral contract as opposed to a written contract?

Obviously, any attorney would tell you that all contracts should be in writing. However, it is possible in Texas, even though it is more difficult, to enforce a lien based on an oral agreement. However, if the property involves a homestead, a lien is not enforceable unless a written agreement is signed by both the husband and wife and filed in the appropriate property records department where the property is located.

So, if you happen to have not been paid on a project which involved an oral contract or agreement, don’t give up all hope of being paid. The best bet is to contact your attorney to see whether or not this property is considered a “homestead” in accordance with the Texas Property Code and whether you meet the other requirements for a valid lien.

Filed Under: Construction Law

Texas Constitutional Liens – What are they?

April 7, 2010 By Kelly M. Davis Esq. 1 Comment

Most people in the construction industry have a hard time understanding whether or not they qualify for a constitutional lien.

A constitutional lien is the foundation of Texas lien law and arises from the Texas Constitution, Texas Property Code, and Texas Government Code. However, its scope is limited. The Texas Constitution states that mechanics, artisans and materialmen of every class, shall have a lien upon the buildings and articles made or repaired by them for the value of their labor done thereon, or material furnished thereof; and the Legislature shall provide by law for the speedy and efficient enforcement of the liens.

The constitutional lien applies to original contractors, not to subcontractors or derivative contractors.

  • It is self-executing and acts independently of any legislative act.
  • To avail oneself of the constitutional lien, you must have a direct contractual relationship with the owner.
  • You can assert a constitutional lien by filing a form similar to the statutory lien affidavit.
  • If you have a contract with the owner, you may desire to assert a constitutional lien if the filing time period for the statutory lien has expired.
  • A constitutional lien may be filed under the applicable two- or four-year statute of limitations.
  • A constitutional lien is only binding on an article or building that has been made or repaired by the claimant

There is no constitutional lien on public works, buildings or projects. The real benefit of Constitutional Liens is that you are not required to send a notice letter prior to filing the lien, you don’t have the stringent deadlines, and they are much more difficult to dispute if you truly qualify.

Filed Under: Construction Law Tagged With: Constitutional Lien, Lien, Texas Mechanic's Lien

Are You Going to Get Paid? Ask a Construction Lawyer

March 4, 2010 By Kelly M. Davis Esq. Leave a Comment

We aren’t the biggest construction law firm in the DFW area, but it is funny how in our practice we get to see some industry trends developing first hand and probably even before most analysts do.  I’ve always told clients to keep up with their receivables in order to preserve their lien rights.  I’ve even gone as far as saying hey…if you don’t want to worry about deadlines just give me a monthly spreadsheet with your receivables and I can tell you which ones you have to worry about.  Usually I’m coming at it from the point of view of lien deadlines, but more and more I have another point of view.

Being an Attorney for many clients in the construction industry I get a broader industry perspective than the lone sole contractor, sub-contractor or supplier.  For instance, I usually know if residential construction projects are having more payment problems than commercial projects or vice versa.  I know what bond companies are easy to work with and which are not.

So the other day I was talking to a client about one matter when he just mentioned that he ‘may’ have another one for me.  I inquired more about it and when he was done, I told him that his ‘may’ was actually a ‘sure thing’.  His potential matter related to a specific General Contractor building an anchor store in Houston.  He was ‘promised’ that he would get paid and to just give it a month (which would have put him past his lien deadline).  What he didn’t know is the previous week I had filed a lawsuit to foreclose on a property in Dallas that the same General Contractor had built for the same retail chain.   So the odds that he would give up his lien rights and not get paid were actually pretty high.

So, yes, people can try and do liens themselves or use a online service to preserve their rights, but they give up something important (beyond probably not doing it right).  When you go to a law firm, experienced in the area of construction litigation and commercial collections, you have the added benefit of a wealth of knowledge regarding the financial viability of particular projects and General Contractors, Builders, Subcontractors and Suppliers in and around the DFW area and even in some cases, throughout the State of Texas.   Many times, we know who is paying, who is not, what jobs are having funding problems, which parties are known to be “slow pays,” “no pays,” or even continuously in litigation.  To most clients, this information is almost invaluable and is a benefit you can get from your law firm without having to spend any additional money.

Filed Under: Construction, Construction Law Tagged With: Construction Law, Texas, Texas Mechanic's Lien

Online Corporate Formation – You Get What You Pay For!

February 9, 2010 By Kelly M. Davis Esq. Leave a Comment

Unfortunately, I have noticed in my practice that most of our new clients are not adequately protected from the personal liability associated with their business as they thought. A couple of the most common misconceptions I hear from business owners is that once a Corporation, LLC or other legal entity is formed, the owners are protected from personal liability or that they spent $150 on www.thecheapestllc.com plus the state fee and then magically they are like Teflon.

If your company is already set up as a legal entity, you have taken the first step to protect yourself and your assets personally in the event of a lawsuit. However, many business owners believe that forming a Corporation or LLC guarantees protection from that point forward, if you only spent $150 online I’m still talking to you too. On the contrary, maintaining your company as a separate entity, including exercising proper formalities, such as regular corporate meetings with corresponding minutes, is essential to personal liability protection.

Another common misconception I hear from business owners is that a small business, or a businesses with sole ownership, doesn’t need a corporate entity.  All businesses, regardless of size, have the potential for legal liability. It may be through contracts with customers or vendors, or being accused of a wrongful act. Regardless of the size of the business, defending against a lawsuit can create hardship on the company. However, it can be devastating for the owners personally if there is not proper liability protection, because the person suing you can go after not only your business and its assets, but you personal assets and property as well. Additionally, you can personally be liable for your business’s debts.

Do you fall under one of these  scenarios?  Do you have a corporation but don’t know what a corporate book is?  Don’t know what corporate minutes are?  Know about them but haven’t done them for 10 years?  Or have you never registered your company as a formal Inc or LLC with the Texas Secretary of State?  Perhaps you ordered your corporation online and they sent you some documents or a corporate book to fill out but you either didn’t do it or don’t know if you filled it out properly.

Surely you would agree that it is not wise to not have health insurance or automobile insurance, right?  Then why would you own a company in which the liability of owning the company could devastate your family for countless years simply because you failed to understand and follow simple guidelines to protect your business.  Don’t let this happen to you!

Here is a document that contains some of the reasons that you could Lose Corporate Protection

Filed Under: Construction Law, General Business Tagged With: asset protection, corporate formation, LLC
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