As noted in my March 2, 2009 post, the Texas Residential Construction Commission is set to expire in September 2009 by operation of the very laws that created it, absent the legislature passing legislation that would save it. The Sunset Commission, which reviews state agencies, recommended the termination of the TRCC, and Representative Todd Smith proposed legislation that would actively eliminate the agency.
However, the TRCC may not be dead quite yet. State Senator Glenn Hegar recently introduced SB 1015 which would continue the TRCC’s existence. Under this bill, the Commission would be allowed to continue for another four years until 2013. The bill would modify the procedure for the administration of the inspection and dispute resolution process (including when litigation could be brought) and make the TRCC process generally more accessible to the general public.
One unique feature of Sen. Hegar’s proposed legislation would be the creation of a Homeowner Recovery Fund. This would be a fund, maintained by the Commission, which would be available to reimburse claimants who obtain a judgment against a builder for a violation of the TRCC Act. A practical effect of this fund would probably be an increase in litigation against "judgment-proof" or insolvent builders, since it would be a source of funding for what might otherwise be uncollectible judgments.
Just as with HB 1635 (which would abolish the TRCC), SB 1015 is in its early phases and still has to work its way through committee. With multiple pending bills that call for both the abolition and the maintenance of the TRCC (but with substantial changes), one thing that is certain is that the landscape of the Texas residential construction industry will look very different at end of this legislative session.
Check back to this blog regularly for the latest updates on significant actions out of the Capitol.
Wednesday, March 25, 2009
Tuesday, March 24, 2009
The Limits of Limitation of Liability Clauses
Design professionals, among many others, have used limitation of liability clauses ("LOL") for years to limit the amount of damages they might be potentially liable for. Though they can vary, a typical LOL clause looks something like this:
Texas law requires LOLs to comply with the "fair notice" requirement, which means that the clause should be conspicuous. A term is conspicuous if it is written, displayed, or presented such that a reasonable person should notice it. The test for a court is whether attention can reasonably be expected to be called to the provision. Things that make a provision conspicuous include larger type, all capital letters, bold font, and contrasting colors.
Texas courts tend to uphold limitations of liability if they meet the conspicuousness requirement and there is nothing otherwise unconscionable about the contract. When enforced, these clauses are extremely effective at limiting the amount of a party’s liability.
However, while LOLs are an effective may to mitigate risk and liability, they will not limit a party’s damages for every potential claim (even if they are worded to do so).
In 1973, Texas enacted the Deceptive Trade Practices–Consumer Protection Act ("DTPA") in an effort to protect consumers. The Act essentially outlaws anything your mother told you not to do (such as providing misleading information about the character of goods or services, advertising goods and services with no intent to sell them, rolling back the odometer on a car or truck, etc.). It also allows for a separate DTPA cause of action for breach of express and implied warranties (this is in addition to common law breach of warranty claims).
The DTPA contains an explicit "no waiver" provision, which essentially sets out that any waiver by a consumer of their DTPA rights is unenforceable and void (unless it is writing, the parties have equal bargaining power, and the waiving party is represented by legal counsel). This no waiver provision can also apply to limitations of liability.
One of the major cases on the non-applicability of limitation of liability clauses on DTPA claims is Arthur’s Garage, Inc. v. Racal-Chubb Security Systems, Inc. 997 S.W.2d 803 (Tex.App.–Dallas 1999). There, a commercial customer brought an action against an alarm company with which it had contracted for the installation, service, and motoring of an alarm system following a fire. Investigators eventually discovered that the smoke detector was improperly wired. The fire resulted in over $450,000 worth of damage; however, the contract between the parties contained a limitation of liability clause that limited liability to $350.
The plaintiff in that case sued for breach of contract, negligence, breach of implied and express warranties, and violations of the DTPA. The DTPA violations included misrepresentation, breach of express and implied warranties, and unconscionable conduct.
The court stated that the LOL was void as to the plaintiff’s DTPA claims based on misrepresentation and unconscionable conduct. The limitation of liability was applicable to the DTPA breach of express warranty claim, but it was void as to the DTPA implied warranty claim (the implied warranty at issue was the implied warranty to repair or modify existing tangible goods or property in a good and workmanlike manner). The court noted, however, that DTPA rights on some implied warranty claims could be waived, depending on the implied warranty.
What is the lesson to be learned from this? It is that even valid limitation of liability clauses are not invincible. Knowing potential theories of liability to which LOLs do not apply should provide guidance in the drafting of contract documents and at least partially guide the relationship between parties.
LIMITATION OF LIABILITY
THE LIMIT OF LIABILITY OF ARCHITECT/ENGINEER TO THE CLIENT FOR ANY CAUSE OR COMBINATION OF CAUSES SHALL BE, IN THE TOTAL AMOUNT, LIMITED TO THE FEES PAID UNDER THIS CONTRACT OR $50,000, WHICHEVER IS GREATER. INITIALLED:____ ARCHITECT/ENGINEER; ____CLIENT
Texas law requires LOLs to comply with the "fair notice" requirement, which means that the clause should be conspicuous. A term is conspicuous if it is written, displayed, or presented such that a reasonable person should notice it. The test for a court is whether attention can reasonably be expected to be called to the provision. Things that make a provision conspicuous include larger type, all capital letters, bold font, and contrasting colors.
Texas courts tend to uphold limitations of liability if they meet the conspicuousness requirement and there is nothing otherwise unconscionable about the contract. When enforced, these clauses are extremely effective at limiting the amount of a party’s liability.
However, while LOLs are an effective may to mitigate risk and liability, they will not limit a party’s damages for every potential claim (even if they are worded to do so).
In 1973, Texas enacted the Deceptive Trade Practices–Consumer Protection Act ("DTPA") in an effort to protect consumers. The Act essentially outlaws anything your mother told you not to do (such as providing misleading information about the character of goods or services, advertising goods and services with no intent to sell them, rolling back the odometer on a car or truck, etc.). It also allows for a separate DTPA cause of action for breach of express and implied warranties (this is in addition to common law breach of warranty claims).
The DTPA contains an explicit "no waiver" provision, which essentially sets out that any waiver by a consumer of their DTPA rights is unenforceable and void (unless it is writing, the parties have equal bargaining power, and the waiving party is represented by legal counsel). This no waiver provision can also apply to limitations of liability.
One of the major cases on the non-applicability of limitation of liability clauses on DTPA claims is Arthur’s Garage, Inc. v. Racal-Chubb Security Systems, Inc. 997 S.W.2d 803 (Tex.App.–Dallas 1999). There, a commercial customer brought an action against an alarm company with which it had contracted for the installation, service, and motoring of an alarm system following a fire. Investigators eventually discovered that the smoke detector was improperly wired. The fire resulted in over $450,000 worth of damage; however, the contract between the parties contained a limitation of liability clause that limited liability to $350.
The plaintiff in that case sued for breach of contract, negligence, breach of implied and express warranties, and violations of the DTPA. The DTPA violations included misrepresentation, breach of express and implied warranties, and unconscionable conduct.
The court stated that the LOL was void as to the plaintiff’s DTPA claims based on misrepresentation and unconscionable conduct. The limitation of liability was applicable to the DTPA breach of express warranty claim, but it was void as to the DTPA implied warranty claim (the implied warranty at issue was the implied warranty to repair or modify existing tangible goods or property in a good and workmanlike manner). The court noted, however, that DTPA rights on some implied warranty claims could be waived, depending on the implied warranty.
What is the lesson to be learned from this? It is that even valid limitation of liability clauses are not invincible. Knowing potential theories of liability to which LOLs do not apply should provide guidance in the drafting of contract documents and at least partially guide the relationship between parties.
Wednesday, March 11, 2009
The End of Indemnity (in Construction Contracts)?
Since it is legislative season in Austin, the Texas Construction Law Blogger is going to continue the discussion of the Legislature’s recent activities. One of the most significant pieces of legislation to the construction industry is SB 555 (and its identical companion in the Texas House of Representatives, HB 818). In a nutshell, these bills would essentially eliminate indemnity and additional insured provisions in construction contracts.
The bills provide that a provision in a construction contract is void and unenforceable if it requires one party (the "indemnitor") to indemnify or defend another party (the "indemnitee") against a claim to the extent that the claim is caused by the negligence or fault of the indemnitee. An "additional insured" provision would also be void to the extent it requires insurance for this same scenario (the indemnitee’s own negligence).
If passed, this legislation would basically eliminate indemnity clauses in construction contracts. It would mean that I can’t require you to indemnify me for my own mess-up (or you can’t make me indemnify you for your own blunders). At first glance, this may not sound like much–but it would actually be an enormous change in insurance and indemnity law.
To understand the potential impact of this legislation, a brief primer on indemnity law is needed. Because indemnity provisions seek to shift the risk of one party’s future negligence to another party, Texas law imposes a fair notice requirement before it enforces such agreements. There are two parts to this "fair notice." The first is a conspicuousness requirement–something must appear on the face of the contract to attract the attention of a reasonable person to the indemnity clause when he looks at it (such as larger type, all caps, bold font, contrasting colors, etc.).
The second part of the fair notice, and the part that is affected by SB555, is the "express negligence" doctrine or test. Under the express negligence doctrine, an intent to indemnify one of the parties from the consequences of its own negligence must be specifically stated within the four corners of the document. In other words, if you want to be indemnified by another party, the indemnity clause must explicitly state that the indemnity extends to cover your own negligence in order for it to be enforceable (in most cases).
The following is an example of an indemnity provision that did NOT satisfy the express negligence test. (See Gilbane Bldg. Co. v. Keystone Structural Concrete, Ltd., 263 S.W.3d 291 (Tex.App.–Houston [1st Dist.] 2007))
Contractor agrees to indemnify and hold harmless the Owner, the Architect/Engineer, and all of their agents and employees from and against claims, damages, losses and expenses, including but not limited to attorney’s fees, arising out of or resulting from the performance or failure in performance of Contractor’s work under this Agreement provided that any such claim, damage, loss, or expense (1) is attributable to bodily injury, sickness, disease, or death, or to injury to or destruction of tangible property including the loss of use resulting therefrom, (2) is caused, in whole or in part, by any negligent act or omission of Contractor or anyone directly or indirectly employed by Contractor, or anyone for whose acts Contractor may be liable, regardless of whether caused in part by a party indemnified hereunder.
To satisfy the express negligence test and be an enforceable indemnity clause, the language should sound more like this (Note: this is simply boilerplate; each contract should have an indemnity clause specially tailored for that document.)
This is the type of language that is needed to make an indemnity clause valid and enforceable. However, that same language would also cause it to be unenforceable under the new legislation proposed in S.B. 555. So at the end of the day, this bill could bring about the end of indemnity provisions in construction contracts.Contractor agrees to hold harmless and indemnify Owner for all claims, damages, and causes of action arising out of the work. It is expressly understood that the contractor’s agreement to indemnify Owner is intended to indemnify and hold harmless Owner for Owner’s own liability and negligence, including, but not limited to, their comparative, proportionate and/or joint liability and/or negligence, including liability for gross negligence and strict liability, whether that liability and/or negligence is the sole or concurring cause for the assertion of any such claims, demands and/or causes of action.
How you feel about this legislation probably depends on the nature of your business. Upstream parties who tend to receive the indemnification are probably against it; downstream parties who usually provide the indemnification are probably more in favor of it.
Either way, this legislation, if passed, would represent a tremendous change in contract law as it applies to the construction industry because it would virtually eliminate the long-standing practice of risk-shifting. Because of its impact on insurance coverage, it could also have an impact on project pricing.
The bill is currently in committee and was considered in a public hearing. Be sure to check back on this blog for updates on its status.
Monday, March 2, 2009
Texas Residential Construction Commission: Is the End in Sight?
For the last several years, the Texas Residential Construction Commission ("TRCC") has been the topic of plenty of commentary and opinions (both positive and negative) in the residential construction industry. But all that discussion may become moot in the near future.
The legislation that created the TRCC also stated that, unless continued through further legislation, the TRCC would automatically be abolished as of September 1, 2009. As a result, the Texas Sunset Advisory Commission (an agency created to identify and eliminate waste, duplication, and inefficiency in government) reviewed the TRCC to determine whether it should be continued.
In January 2009, the Sunset Commission issued its report and recommended that the Texas Residential Construction Commission be abolished and the Texas Residential Construction Commission Act be repealed. According to the report, the TRCC was never completely effective at any of its purposes.
During the current legislative session, State Representative Todd Smith of Tarrant County proposed legislation that took the demise of the TRCC a step further. On February 23, 2009, Representative Smith introduced HB 1635, a bill that would abolish the Texas Residential Construction Commission as of February 10, 2010 (if enacted). You can see the bill, as introduced, here.
This legislation would also exempt from liability a builder hired by a lender to complete the construction of a foreclosed home. This exemption would apply to construction defects of which the builder had no knowledge that existed prior to the acquisition of the home by the lender. The builder would, however, still be liable for work performed for the lender after the acquisition of the home by the lender.
Of course, HB1635 is in its infancy and it remains to be seen what, if any changes are made, whether it will gain enough votes to pass, and whether the governor will sign it into law. It also remains to be seen if another representative or senator will propose legislation that would attempt to continue the existence of the TRCC. In any event, this is definitely something to watch, as the fate of the Texas Residential Construction Commission will have a significant impact on everyone in the residential construction industry.
The legislation that created the TRCC also stated that, unless continued through further legislation, the TRCC would automatically be abolished as of September 1, 2009. As a result, the Texas Sunset Advisory Commission (an agency created to identify and eliminate waste, duplication, and inefficiency in government) reviewed the TRCC to determine whether it should be continued.
In January 2009, the Sunset Commission issued its report and recommended that the Texas Residential Construction Commission be abolished and the Texas Residential Construction Commission Act be repealed. According to the report, the TRCC was never completely effective at any of its purposes.
During the current legislative session, State Representative Todd Smith of Tarrant County proposed legislation that took the demise of the TRCC a step further. On February 23, 2009, Representative Smith introduced HB 1635, a bill that would abolish the Texas Residential Construction Commission as of February 10, 2010 (if enacted). You can see the bill, as introduced, here.
This legislation would also exempt from liability a builder hired by a lender to complete the construction of a foreclosed home. This exemption would apply to construction defects of which the builder had no knowledge that existed prior to the acquisition of the home by the lender. The builder would, however, still be liable for work performed for the lender after the acquisition of the home by the lender.
Of course, HB1635 is in its infancy and it remains to be seen what, if any changes are made, whether it will gain enough votes to pass, and whether the governor will sign it into law. It also remains to be seen if another representative or senator will propose legislation that would attempt to continue the existence of the TRCC. In any event, this is definitely something to watch, as the fate of the Texas Residential Construction Commission will have a significant impact on everyone in the residential construction industry.
Tuesday, February 24, 2009
Construction Contingent Payment Act–The Legislature’s Modifications to the Rules of the Game
Contingent payment clauses (also known as "pay when paid" or "pay if paid" clauses) have long been a tool used by contractors to shift the risk of nonpayment. In short, the payor's payment to the payee is contingent on the payor itself being paid by another party (usually the owner). Under these clauses, if the payor is not paid, it has no obligation to make payments to the payees (subcontractors). These clauses effectively shift the risk of nonpayment from the general contractor to the subcontractor (or from subcontractor to sub-subcontractor).
For more on crafting enforceable contingent payment clauses, see my previous blog article.
In 2007, the Texas Legislature stepped in and placed some additional rules on these clauses through Section 35.521 of the Texas Business & Commerce Code (you can read about the Legislature’s labor here, or you can just see the "baby" here--to borrow a line from Bill Parcels). In a nutshell, the Act established certain situations where a contingent pay clause cannot be used as a defense for not paying subcontractors. A payor may NOT avoid payment in the following situations:
For more on crafting enforceable contingent payment clauses, see my previous blog article.
In 2007, the Texas Legislature stepped in and placed some additional rules on these clauses through Section 35.521 of the Texas Business & Commerce Code (you can read about the Legislature’s labor here, or you can just see the "baby" here--to borrow a line from Bill Parcels). In a nutshell, the Act established certain situations where a contingent pay clause cannot be used as a defense for not paying subcontractors. A payor may NOT avoid payment in the following situations:
- When the owner’s nonpayment to the GC is the result of the GC not meeting its own obligations, unless the non payment is the result of the subcontractor’s failure to meet its requirements.
- When the owner fails to pay the GC because of the work of another subcontractor, the contingent pay clause is not effective as to the innocent subcontractor.
- When, after a subcontractor has not been paid for past work, it gives notice to the GC objecting to the further enforceability of the contingent pay clause, the GC may not then enforce the clause on work or materials provided after the notice.
- When the owner and GC are essentially the same.
- When enforcement of the clause would be "unconscionable."
- A contingent pay clause may not be used as a basis for invalidation of the enforceability or perfection of an otherwise valid lien.
The requirements of the Act cannot be waived. However, the Act does allow for the assertion of a contingent pay clause as an affirmative defense to a lawsuit for payment under a contract. Finally, the Act does not apply to design services, civil engineering construction (roads, utilities, water supply projects, etc.), and most residential construction.
What is the lesson to be learned from this statute? First, good faith is generally required on the part of the general contractor to avoid one of the exceptions to enforceability of an otherwise valid contingent pay clause. Second, it is evidence that the Legislature has made increased efforts to protect subcontractors from heavy handed contractual provisions. A contingent pay bill was first introduced (unsuccessfully) in the 2003 Legislative session. Four years later, in 2007, the current version was passed. It will be interesting to see if this year’s legislative session results in any new measures.
Monday, February 16, 2009
Personal Liability Under the Texas Construction Trust Fund Act: The 800 Pound Gorilla You Never Knew Existed
Most people in the construction industry have at least some awareness of the Texas Construction Trust Fund Act. For an overview of the Act, I recommend my blog article here.
What many contractors may not realize is the potential personal liability that the Trust Fund Act creates. It is very important to be aware of this fact in advance to avoid potentially serious mistakes down the road.
In a nutshell, the Act deems construction payments and loan receipts "trust funds." The corollary is that a "contractor, subcontractor, or owner or an officer, director, or agent of a contractor, subcontractor, or owner, who receives trust funds or who has control or direction of trust funds, is a trustee of the trust funds." What does that mean? It means that the individual owner, officer, director, or agent may personally be a trustee. Trustee status does not simply stop at the corporate veil.
If an individual is a trustee, he or she owes the beneficiary of the trust funds a fiduciary duty. This means a duty of loyalty, and the utmost good faith, candor, integrity of the highest kind, and fair and honest dealing. The fiduciary duty is basically the highest standard of care in our legal system.
Because the Act confers "trustee status" on individuals and not just companies, personal liability can also fall to the individual–even if they were acting solely in the course and scope of their employment and in furtherance of their employer’s business.
In Herbert v. Greater Gulf Coast Enterprises, Inc., 915 S.W.2d 866 (Tex.App.–Houston [1st Dist.] 1995), the Houston Court of Appeals found personal jurisdiction for Trust Fund Act violations over someone who had no individual contact with Texas. In that case, the plaintiff, a subcontractor, sued the Connecticut general contractor and its president individually. The court rejected the defendant’s argument that he individually had no contact with Texas. In its ruling, the court noted that the Legislature enacted the Construction Trust Fund Act as a special protection for contractors and subcontractors "to avoid the injustice of owners and contractors refusal to pay for work completed."
The plaintiff in Kelly v. General Interior Construction, 262 S.W.3d 79 (Tex.App.–Houston [14th Dist.] July 3, 2008) sued the two sole shareholders of an Arizona GC individually for breach of contract, violations of the Construction Trust Fund Act, and fraud. The defendants argued that Texas courts did not have personal jurisdiction over them individually because they acted solely in their corporate capacity. The court ruled that there was no jurisdiction on the breach of contract claim because the individuals had, in fact, acted on behalf of their company. However, they found jurisdiction on the Trust Fund Act claim. The court noted that the Trust Fund Act essentially allows subcontractors to pierce the corporate veil. The Act creates personal liability if (1) the party breaches the Act’s duties with the appropriate intent, and (2) the claimants are within the class of people the Act was designed to protect.
C&G, Inc. d/b/a Fox Rental v. Jones, 165 S.W.3d 450 (Tex.App.–Dallas 2005) is a very interesting case (particularly if you want to give yourself a little heartburn). Fox Rental sued CCG supply company, including officers Jones and Duncan under Trust Fund Act. Jones and Duncan had signatory authority on CCG's checking account. Neither of them personally received any trust funds, nor did they "independently" determine to whom the trust funds should be paid. In fact, they simply disbursed such funds as they were directed by the officers of American Eco, which owned CCG. Over time, Jones and Duncan objected to American Eco’s use and direction of the funds; in fact, they were eventually asked to leave their employment in large part because of their objections to the way American Eco handled the funds. By all accounts, these guys were doing the "right thing" and objecting.
Nevertheless, court of appeals held that they participated in both the decision to divert the funds and the actual diversion of the funds. As such, they were held personally liable. Their objections were not a defense, and the court did not accept the "just following instructions" justification either.
The point of this discussion is that construction trust funds are a serious matter that can bring serious personal liability. There are defenses to claims of violations of the Act, but with the potential for personal liability, these defenses should be particularly well documented. In any event, construction trust funds are not something to play fast and loose with. Knowing the Act’s requirements and potential for liability in advance will, however, help minimize liability down the road.
What many contractors may not realize is the potential personal liability that the Trust Fund Act creates. It is very important to be aware of this fact in advance to avoid potentially serious mistakes down the road.
In a nutshell, the Act deems construction payments and loan receipts "trust funds." The corollary is that a "contractor, subcontractor, or owner or an officer, director, or agent of a contractor, subcontractor, or owner, who receives trust funds or who has control or direction of trust funds, is a trustee of the trust funds." What does that mean? It means that the individual owner, officer, director, or agent may personally be a trustee. Trustee status does not simply stop at the corporate veil.
If an individual is a trustee, he or she owes the beneficiary of the trust funds a fiduciary duty. This means a duty of loyalty, and the utmost good faith, candor, integrity of the highest kind, and fair and honest dealing. The fiduciary duty is basically the highest standard of care in our legal system.
Because the Act confers "trustee status" on individuals and not just companies, personal liability can also fall to the individual–even if they were acting solely in the course and scope of their employment and in furtherance of their employer’s business.
In Herbert v. Greater Gulf Coast Enterprises, Inc., 915 S.W.2d 866 (Tex.App.–Houston [1st Dist.] 1995), the Houston Court of Appeals found personal jurisdiction for Trust Fund Act violations over someone who had no individual contact with Texas. In that case, the plaintiff, a subcontractor, sued the Connecticut general contractor and its president individually. The court rejected the defendant’s argument that he individually had no contact with Texas. In its ruling, the court noted that the Legislature enacted the Construction Trust Fund Act as a special protection for contractors and subcontractors "to avoid the injustice of owners and contractors refusal to pay for work completed."
The plaintiff in Kelly v. General Interior Construction, 262 S.W.3d 79 (Tex.App.–Houston [14th Dist.] July 3, 2008) sued the two sole shareholders of an Arizona GC individually for breach of contract, violations of the Construction Trust Fund Act, and fraud. The defendants argued that Texas courts did not have personal jurisdiction over them individually because they acted solely in their corporate capacity. The court ruled that there was no jurisdiction on the breach of contract claim because the individuals had, in fact, acted on behalf of their company. However, they found jurisdiction on the Trust Fund Act claim. The court noted that the Trust Fund Act essentially allows subcontractors to pierce the corporate veil. The Act creates personal liability if (1) the party breaches the Act’s duties with the appropriate intent, and (2) the claimants are within the class of people the Act was designed to protect.
C&G, Inc. d/b/a Fox Rental v. Jones, 165 S.W.3d 450 (Tex.App.–Dallas 2005) is a very interesting case (particularly if you want to give yourself a little heartburn). Fox Rental sued CCG supply company, including officers Jones and Duncan under Trust Fund Act. Jones and Duncan had signatory authority on CCG's checking account. Neither of them personally received any trust funds, nor did they "independently" determine to whom the trust funds should be paid. In fact, they simply disbursed such funds as they were directed by the officers of American Eco, which owned CCG. Over time, Jones and Duncan objected to American Eco’s use and direction of the funds; in fact, they were eventually asked to leave their employment in large part because of their objections to the way American Eco handled the funds. By all accounts, these guys were doing the "right thing" and objecting.
Nevertheless, court of appeals held that they participated in both the decision to divert the funds and the actual diversion of the funds. As such, they were held personally liable. Their objections were not a defense, and the court did not accept the "just following instructions" justification either.
The point of this discussion is that construction trust funds are a serious matter that can bring serious personal liability. There are defenses to claims of violations of the Act, but with the potential for personal liability, these defenses should be particularly well documented. In any event, construction trust funds are not something to play fast and loose with. Knowing the Act’s requirements and potential for liability in advance will, however, help minimize liability down the road.
Wednesday, January 21, 2009
Construction Law CLE on Texas Payment Statutes
A little self-promotion from the Texas Construction Law Blogger:
On Thursday, February 5th at 12:00 noon, Walker M. Duke will be presenting the Continuing Legal Education program "Three Payment Statutes Every Construction Lawyer Should Know" to the Construction Law Section of the Dallas Bar Association at the Belo Mansion, 2101 Ross Avenue, Dallas, Texas.
The presentation will discuss three statutes that relate to payment issues in the construction industry. First is the Texas Prompt Payment to Contractors and Subcontractors Act. This Act is useful for attorneys to know because it provides some guidance to a common scenario—a subcontractor has not been paid on a job and does not know whether to walk off the job for nonpayment or continue and hope for the best.
The second statute is the Texas Construction Trust Fund Act. This statute covers how construction funds and loan receipts should be handled. Construction law attorneys should be aware of the requirements of this statute because failure to meet its requirements can result in criminal penalties, in addition to civil liability.
The third topic is Texas lien laws. Liens can be a powerful tool for builders and contractors to encourage payment for services rendered and goods provided. However, they are fairly technical and must meet the strict requirements of the Texas Property Code. Failure to comply with these requirements, including deadlines (that are often blown by contractors before they call their lawyer), prevents proper perfection of the lien, and could result in a sizeable liability for wrongfully filing a lien.
For more information, contact Walker Duke at (214) 891-8040 or the Dallas Bar Association at (214) 220-7400.
On Thursday, February 5th at 12:00 noon, Walker M. Duke will be presenting the Continuing Legal Education program "Three Payment Statutes Every Construction Lawyer Should Know" to the Construction Law Section of the Dallas Bar Association at the Belo Mansion, 2101 Ross Avenue, Dallas, Texas.
The presentation will discuss three statutes that relate to payment issues in the construction industry. First is the Texas Prompt Payment to Contractors and Subcontractors Act. This Act is useful for attorneys to know because it provides some guidance to a common scenario—a subcontractor has not been paid on a job and does not know whether to walk off the job for nonpayment or continue and hope for the best.
The second statute is the Texas Construction Trust Fund Act. This statute covers how construction funds and loan receipts should be handled. Construction law attorneys should be aware of the requirements of this statute because failure to meet its requirements can result in criminal penalties, in addition to civil liability.
The third topic is Texas lien laws. Liens can be a powerful tool for builders and contractors to encourage payment for services rendered and goods provided. However, they are fairly technical and must meet the strict requirements of the Texas Property Code. Failure to comply with these requirements, including deadlines (that are often blown by contractors before they call their lawyer), prevents proper perfection of the lien, and could result in a sizeable liability for wrongfully filing a lien.
For more information, contact Walker Duke at (214) 891-8040 or the Dallas Bar Association at (214) 220-7400.
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