Monday, May 14, 2018

Business Collections - How We Can Help

Business Collections - How We Can Help

We know what is at stake for your business and bottom line if you are not receiving payments owed.
Helping businesses across Texas, we off expert representation and proven results with a variety of legal matters including:

•Contract Disputes
•Debt Collections
•Liens
•Litigation
•Post-Judgment Collections
Contact us today to learn more about how we can assist you:

https://goo.gl/zu2H2

The Cromeens Law Firm, PLLC

Wednesday, May 2, 2018

Tips for Contractors: How to Keep Homeowners Happy Post-Harvey




The devastation caused by Hurricane Harvey has sent the construction industry in affected counties into a tailspin as construction professionals struggle to keep up with demand. Unfortunately, as builders and contractors attempt to regain equilibrium, many may find themselves dealing with major disputes with homeowners for the first time. Although the construction industry, as a whole, has rallied around our communities to assist many homeowners in times of great need, disputes will inevitably arise. We have kept track of many common causes of issues that arise and propose a few best practices contractors should consider, not just in the wake of Hurricane Harvey, but in general. As always, we recommend that you consult with an experience construction attorney prior to implementing new procedures.
 
1.        Be an open book: during the interview/bid process ensure the customer feels comfortable asking questions regarding your background and experience. Provide references and encourage background checks and address any bad reviews with honesty. Professionalism and candor are the key to making a great first impression.

2.          Provide detailed specifications: the more detailed the proposal (plans and drawings) the less likely misunderstandings and confusion will arise regarding the scope of work. Also, make sure all change orders are documented in writing and signed by the homeowner.

3.          Be realistic about the timeline and cost: if you anticipate delays due to a lack of available manpower, communicate this to the customer as soon as possible. Also, let the customer know if you expect the cost of certain materials to increase due to recent demand.

4.          Maintain a clean work space: homeowners understand and expect a certain level of dirt and debris during the construction process; however, it is important to keep the work area as clean and safe as possible. 

5.          Be mindful of energy consumption: make sure to turn off lights and air-conditioning when not in use.

6.          Communicate with the customer prior to requesting a draw from the bank or insurance company: nothing frustrates a homeowner more than finding out a contractor has requested a draw prior to completing the corresponding work or, even worse, requesting a final draw prior to substantial completion and a final walk through. Make sure your customer understands the draw schedule.

7.          Get it in writing: homeowners are often in a hurry to regain normalcy and begin construction work after a natural disaster. However, it is crucial to take a step back and make sure a written contract is executed by both contractors and homeowners prior to the commencement of work.
8.          Hire competent subcontractors: a contractor’s reputation is only as good as the subcontractors he or she utilizes. Make sure to use dependable, ethical, and experienced subcontractors for all projects. You may be tempted to “work with what you have” when there is a labor shortage, but that may cost you a great deal in the future. Obtain necessary lien waivers and include indemnity clause/hold harmless clauses in your subcontracts. 

Final thoughts, a home is much more than an investment tool for many people; homeowners are also invested emotionally, which can lead to strong feelings when their construction project does not go as planned. That is why constant written communication is recommended. A clear contract that adequately outlines the terms and scope of work is the number one tool for preventing misunderstandings and managing customer expectations. We encourage you to contact an experienced attorney prior to implementing new procedures and contract documents. Contact us today for a free consultation.
This article is intended as a general educational overview of the subject matter and is not intended to be a comprehensive survey of recent jurisprudence, nor a substitute for legal advice for a specific legal matter. If you have a legal issue, please consult an attorney.

Tuesday, April 10, 2018

Filing a Bond Claim: Public vs. Privately-Owned Property Rules

 By Courtney E. Stricklen, Associate Attorney at The Cromeens Law Firm, PLLC

Filing a claim against a bond may offer a subcontractor protection against both privately and publicly incurred debts. However, there are different rules for filing a bond claim on public property versus privately-owned property.

PUBLIC BONDS

Liens are not allowed on publicly owned lands. To protect contractors, the law provides for claimants to file against a bond under the following conditions:

The prime contractor must have a contract directly with the governmental body that owns the property that is to be improved. The prime contractor will then furnish a payment bond for the benefit of subcontractors and suppliers, and a performance bond that protects the governmental owner from the prime contractor's default.

There are two different kinds of public bonds: state and federal.

Federal Bonds - The Miller Act

The Miller Act provides protection to construction professionals, like architects and engineers, and to first and second tier subcontractors and suppliers only.

Notice

If a claimant has a contract directly with the general contractor, the claimant does not have to meet any special notice requirements to file suit. If, however, the claimant has a contract with a subcontractor, it must provide notice of its claim to the general contractor within 90 days of the last furnishing labor or material to the project.

The notice must be:
· In writing
· State with substantial accuracy the monetary amount claimed
· Name the party to or for whom the labor or material was furnished
· Be delivered by any means that provides written verification of delivery or by any means by which the U.S. marshal of the district in which the project is located may serve the summonses

Filing Suit
For a federal bond, claimants must wait 90 days after they last furnished labor or materials to the project before they can file suit. A claimant may not be able to recover attorney fees under the Miller Act unless there is a clause in the contract between the parties that allows for interest and fees.

State Bonds

Public works jobs in Texas valued at over $25,000.00 are required to have a bond. There are exceptions to this rule that this article does not cover. It is also important to note that a general contractor does not have a claim to a state bond and is limited to statutory or contractual remedies.

Notice
 
In order to send notice, the claimant must first obtain a copy of the bond. However, this can sometimes prove challenging and timely, so asking for this information as early as possible in the project is best. A subcontractor can request the bond information from the general contractor in writing and the general contractor is required to respond within 10 days. Or, a public information request may be made for a small fee, but this can take up to 30 days.

A claimant must send notice to the prime contractor and surety by the 15th day of the third month after each month in which the labor was performed or the materials were supplied. If you are a sub of a sub-contractor, you must provide notice by the 15th day of the second month after each month in which the labor was performed or the material was delivered.

It is important that the claimant include with the notice a sworn statement of account which states that "the amount claimed is just and correct" and that all lawful offsets, payments and credits have been allowed. Substantial compliance is all that is necessary for notice.

Filing Suit

A claimant may file suit on a bond before the end of the first year after the date of mailing the claim. A sub of a sub must wait to file suit 61 days after the claim has been made.

PRIVATE BONDS

Only a contractor with a written contract with the owner may acquire a bond, which is then recorded in the county of the owner's property where construction is performed.

The bond protects the owner by relieving them from having to withhold funds and retainage as required under the Texas Property Code, and also benefits potential claimants.

Notice

The same notice requirements that grant a Mechanic's or Materialman's Lien apply to a lien claim on a private bond. To perfect a bond claim, a claimant must provide notice to the general contractor by the 15th day of the second month after the debt has incurred, and the owner by the 15th day of the third month after the debt has incurred.

Filing an Affidavit

The same rules for filing an affidavit for a Mechanic's or Materialman's Lien apply to a private bond, also. A claimant must file an affidavit not later than the 15th day of the 4th calendar month after the day on which the indebtedness occurs, and for residential projects, by the 15th day of the 3rd calendar month.

Filing Suit

To file suit against a private bond claim, a claimant must wait 60 days after perfecting their claim (abiding by all the rules for notice and filing) before they can file suit. If the bond was recorded, the claimant has one year from the date of perfection to file suit.

If the bond was not recorded, the claimant has two years to file suit in the county in which the property being improved was located.

There are many more factors and rules to consider when making a claim against a bond, whether private or public. If you have questions about a potential bond claim or need assistance, we are here to help. Contact us today for a free consultation.

This article is intended as a general educational overview of the subject matter and is not intended to be a comprehensive survey of recent jurisprudence, nor a substitute for legal advice for a specific legal matter. If you have a legal issue, please consult an attorney.

www.houstonconstructionlawyer.com
 

Tuesday, March 27, 2018

The Cromeens Law Firm, PLLC, to Exhibit at The Blue Book Building & Construction's "Who's Who Showcase" - April 12th

The Cromeens Law Firm, PLLC, is excited to be an exhibitor at this year's Blue Book Building & Construction Network's "Who's Who Showcase" event on April 12th at Minute Maid Park.

 This premier event offers subcontractors, suppliers and manufacturers a great opportunity to meet with top general contractors looking to hire and buy.

  • Find the connections you need to earn profits and get in front of GC’s and other qualified decision makers who are looking to hire and buy
  • Stand out from the crowd by sharing your company story
  • Bring your qualifications to the table and talk to local decision-makers who require your products or trade
  • Connect face-to-face with your customers and build relationship with potential new ones

*BONUS: Includes free drinks and hors d’oeuvres

Click the link below for free registration:

http://www.thewhoswho.build/showcases/houston,tx

Founded in 2006, The Cromeens Law Firm, PLLC, is an established, full-service, Houston-based law firm serving clients across the state of Texas. With a concentration in business, construction and real estate law, our firm is committed to providing results driven, cost-effective and personalized representation to each one our clients.

Monday, March 19, 2018


The Cromeens Law Firm, PLLC, Joins The Houston Food Bank’s 3rd Annual  Food From the Bar Competition

The Cromeens Law Firm, PLLC, is pleased to announce that it has joined the Houston Food Bank’s 3rd Annual Food From the Bar initiative, a month-long competition among Houston’s legal community where participants earn points by donating food, funds and volunteer time to benefit the Houston Food Bank. The competition starts on April 2nd and ends on May 2nd.
Through donations and support, the legal community helps Houston Food Bank feed more kids and families in our community. The event is timed to raise much needed resources just before the summer break when kids will be out of school and not receiving school breakfast and lunches. Many local families struggle to provide that extra food during the summer and you are helping bridge that gap.
To actively raise the most funds and food donations as possible, The Cromeens Law Firm, PLLC, will run fundraising campaigns through its various social media sites, volunteer time and will accept goods at its office location throughout regular business hours.
 
“This will be our second year participating in the competition and are excited to be a part of this great effort to support the Houston community in need again,” stated Karalynn Cromeens, Managing Partner of The Cromeens Law Firm, PLLC. “The Houston Food Bank is such an important organization, and we strive to make difference through partnership with them.”
Last year, 45 participating legal organizations raised $177,412, collected 14,675 pounds of food and donated 2,344 volunteer hours (702 volunteer shifts), which generated the equivalent of 685,105 meals for the community.
About The Cromeens Law Firm, PLLC
 
Founded in 2006, The Cromeens Law Firm, PLLC, is a full-service, Houston-based law firm serving clients across the state of Texas. With a concentration in construction, real estate and business law, our firm is committed to providing results driven, cost-effective and personal representation to each one of our clients. For more information, please visit www.thecromeenslawfirm.com.
About the Houston Food Bank
A member of Feeding America, the Houston Food Bank is a 501(c)3 non-profit hunger relief organization. It serves an 18-county area and works with 600 partner agencies to distribute millions of meals annually. In terms of distribution and size, Houston Food Bank is the largest food bank in the United States.
Media Contact:
Carly Norausky
Marketing Director
The Cromeens Law Firm, PLLC
713-715-7334
 

 

Wednesday, March 7, 2018

GOOD BUSINESS: Limiting Your Personal Liability

One of the best tools to limit or avoid personal liability associated with running your business in Texas is to set up a corporation, limited liability company, or a similar entity. However, many business owners set up their business entity, open a bank account, and go about their "business as usual" without timely filing the required business franchise tax reports with the State of Texas.
The Basics of The Franchise Tax
The State of Texas Comptroller website states: "The Texas franchise tax is a privilege tax imposed on each taxable entity formed or organized in Texas or doing business in Texas."
https://comptroller.texas.gov/taxes/franchise/faq/reports-payments.php

The annual franchise tax report is due May 15, and various penalties are assessed for failure to file and pay the tax by the due date. The comptroller provides a notice of forfeiture if the report and/or required tax is not paid prior to forfeiting an entity's corporate privileges. Once an entity's corporate privileges have been revoked, a business may continue to operate; however, the protections against liability that are afforded by maintaining the corporate form are no longer in effect. This means that corporate directors and officers may be held personally liable for debts which are incurred during the period wherein corporate privileges are revoked.

The Basics of Reinstatement
Reinstatement of corporate privileges is a fairly straightforward process. An entity must pay the penalties on its account, file franchise tax reports for the missing time periods, and obtain a letter from the Texas Comptroller showing the account has been brought current. This letter is then presented to the Texas Secretary of State for reinstatement.

Liability Issues
Even if corporate privileges are reinstated, corporate officers or directors will remain potentially liable for any contractual-type monetary debts which were "created or incurred" during the forfeiture period (between the date that a company forfeits its corporate privileges and the date that it revives them). See Tex. Tax Code Ann. Section 171.255(a). For instance, if an LLC forfeited its privileges in June 2017 and revived privileges in October 2017, but the company purchased $200,000 of materials during August of 2017 and they were signed for on behalf of the (now forfeited) entity - an officer or director could be pursued in his or her personal capacity for the materials purchase because the debt was created or incurred during the forfeiture. Some business owners mistakenly believe that reinstatement of the corporate privileges in October 2017 reaches back into time and covers the debts that were incurred during the forfeiture period. However, the Code states: "If a corporation's corporate privileges are forfeited, each director or officer is liable for each debt of the corporation that is created or incurred in Texas after the date on which the report, tax, or penalty is due and before the corporate privileges are revived. See Tex. Tax Code Ann. Section 171.255(a).
It is also mistakenly assumed that for personal liability to exist, the director or officer must have been personally involved in the transaction which created the debt. However, as recognized by Texas courts, it is a director's or officer's "consent or approval of the corporate debts" in general, providing the basis of personal liability. First Nat'l Bank of Boston v. Silberstein, 398 S.W.2d 914, 915-16 (Tex. 1966). Therefore, a director or officer does not need "actual knowledge" of the debt to be held personally liable. Silberstein at 916, In re Trammell, 246 S.W.3d 815, 822 (2008).
Once exception to this general liability, found in Section 171.255(c) of the Tax Code, provides a director or officer the ability to show the debt was created (1) over his objection, or (2) without his knowledge. The officer or director has the burden to show he objected to the debt. Arguably, it would be difficult to meet this burden in court.

Exactly What Is A Corporate Debt?
It is important to know - particularly for those in the construction industry-liability during a tax forfeiture does not apply to "involuntary debts," such as judgments obtained against an entity resulting from personal injury claims. Williams v. Adams, 74 S.W.3d 437, 442 (2002). "[S]ection 171.255 cannot be used to impute personal liability to an officer or director of a corporation for a corporate debt when the 'debt' at issue is a tort judgment based on negligence liability." Williams at 442.
With regard to judgments flowing from contractual agreements, the Texas courts have expended a certain amount of energy attempting to clarify when a "debt" becomes liquidated and enforceable. In Hovel, a homeowner sued an LLC for breach of contract and DTPA violations. The Court concluded a judgment-debt is created or incurred when the conduct or contract occurs. Hovel v. Batzri, 490 S.W.3d 132 (2016). Therefore, if a specific money judgment is obtained during tax forfeiture, but the entity was in good standing when the conduct or contract occurred, then the officers and directors may not be held personally liable: "[W]e hold that, under Section 171.255 of the Tax Code, judgment-debts arising from or related to pre-forfeiture agreements and pre-forfeiture acts are considered to have been created or incurred pre-forfeiture even if not liquidated until post-forfeiture, whether the claims are expressed solely as contract claims or a combination of contract, statutory and tort claims." Hovel at 134. The Court concluded that the contract was executed pre-forfeiture, and the breach, tortious conduct, and injury occurred pre-forfeiture, even though the specific amount of the claim was not calculated until after forfeiture. The Court, as a result of this analysis, provided the officers and directors with limited liability.

With these various arguments in mind, corporate officers and directors should make it a priority to finalize tax reports to prevent or close up any potential gaps in franchise tax reporting. However, in the event of delay - which happens for many reasons - care should be taken regarding entering into various transactions in light of the potential for personal liability.

With a concentration in business, construction and real estate law, The Cromeens Law Firm, PLLC, is committed to providing results driven, cost-effective and personalized representation to each one our clients. Contact us today to learn more about our in-depth experience and how we can assist you.

This article is intended as a general educational overview of the subject matter and is not intended to be a comprehensive survey of recent jurisprudence, nor a substitute for legal advice for a specific legal matter. If you have a legal issue, please consult an attorney.

Monday, October 9, 2017

After the Flood - Legal Issues for Homeowners and Builders to Consider

In the days following Hurricane Harvey, news agencies reported only about 80 percent of homeowners in the affected areas were covered by flood insurance.[1] As a result, uninsured flooded homeowners have sought other options to repair and replace their damaged property. In an effort to find alternative forms of compensation, some homeowners have attempted to direct their complaints at their builders, subdivision developers, municipalities, and state and federal authorities. This articles summarizes the recent legal actions considered by flooded homeowners, and information that homeowners and their builders should consider going forward.

Suits against builders. If a homeowner pursues a torrential rain flooding case against a builder, the owner would need to show: (a) the builder directly warranted or guaranteed the house would not flood (this would be a difficult provision to find in any contract) -OR- (b) the builder gave an "implied warranty" the home was constructed in a workmanlike manner and is fit for habitation. Humber v. Morton, 426 S.W.2d 554, 555 (Tex. 1968); Gupta v. Ritter Homes, Inc., 646 S.W.2d 168, 169 (Tex. 1983). Except for very unusual situations, all home purchases carry an "implied warranty of habitability," which covers hidden defects not discoverable by a reasonably prudent inspection of the building at the time of sale. Humber, 426 S.W.2d at 552. The implied warranty of habitability does not include defects, even substantial ones, that are known by or expressly disclosed to the buyer. In the case of flooding during a torrential hurricane rainstorm, the homeowner would have to show that the builder knew, or should have known, that the property would flood and had a duty to disclose it to the homeowner. In the case of previously flooded homes, it would be possible to make a case for a breach of implied warranty if the flooding is not disclosed. However, for a home that has never flooded, it would be difficult and very expensive to make such a case.

Suits against subdivisions/developers. Residents in the Millwood Riverstone subdivision in Sugar Land, a five year old subdivision, are gearing up to sue the developer, neighborhood engineer, and possibly the homeowners' association because they allege their property was removed from the Brazos River flood plain before it was developed.[2] These lawsuits would have to be brought a group of homeowners due to the expense of hiring engineering and floodplain experts to prove the case against the developer. It is expected that several similar lawsuits will be filed in Houston over the next year. The legal claims will most likely be based upon misrepresentation of facts known by the developers or the homeowners' associations.

Suits against municipalities, and state and federal authorities. Claims against local and state agencies will be the topic of discussion over the next year in Houston as well. The San Jacinto River Authority released water from the Lake Conroe dam during Hurricane Harvey, which is largely believed to have caused major flooding around Lake Conroe, Spring, Humble, Kingwood, and Atascocita. Similarly, The Army Corps of Engineers, a federal agency which deals with dams, canals and flood protection in the United States, released water from the Addicks and Barker reservoirs in west Harris County, which also resulted in flooded neighborhoods.[3] The claims against these agencies, if they are pursued, would be considered "takings" claims -- a plaintiff must allege: (1) an intentional governmental act; (2) that resulted in his property being taken; (3) for public use. Harris Cty. Flood Control Dist. v. Kerr, 499 S.W.3d 793, 799 (Tex. 2016); Gen. Servs. Comm'n, 39 S.W.3d at 598. If the government does not pay for the property and damaged or destroyed it, the takings claim is called "inverse condemnation." Kopplow Dev., Inc. v. City of San Antonio, 399 S.W.3d 532, 536 (Tex. 2013). The homeowners will need to show that governmental entity caused the harm.

What can builders do to make a difference? Although it would be difficult to find a builder directly responsible for a home flooding as a result of a hurricane or tropical storm, some in the building community are calling for more proactive approaches to residential development, particularly new construction, because flooding is so unpredictable. Armando Cobo, a builder interviewed in What's Wrong, and What's Right, With Residential Building in Texas, stated that builders, engineers and homeowners should consider raised elevations above and beyond the local code requirements for flooding. In addition, if a new home construction is near a creek, golf course, or other low-lying areas, to consider higher elevations - even when not required - and to use treated plywood for the first four feet of wall sheathing.[4]

[1] https://www.usatoday.com/story/money/2017/08/29/hurricane-harvey-houston-flood-insurance-damages-claims/611910001/
[2] http://abc13.com/homeowners-file-lawsuit-against-developer-after-flooding-issues/2461702/; https://independentamericancommunities.com/2017/09/28/when-is-a-flood-zone-not-a-flood-zone-riverstone-owners-sue-hoa-developer/comment-page-1/
[3] https://www.click2houston.com/news/attorneys-file-class-action-lawsuit-over-addicks-barker-releases

[4] http://www.greenbuildingadvisor.com/articles/dept/musings/what-s-wrong-and-what-s-right-residential-building-texas

This article is intended as a general educational overview of the subject matter and is not intended to be a comprehensive survey of recent jurisprudence, nor a substitute for legal advice for a specific legal matter. If you have a legal issue, please consult an attorney.

If you have a related legal matter, The Cromeens Law Firm, PLLC, is here to assist you. Contact Us today.