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.

Monday, August 7, 2017

Business Debt Collections: How an Attorney Can Help You

Business Debt Collections: How an Attorney Can Help You
As a business owner, you have most likely encountered customers/clients who have failed to pay for products, labor and/or services that you provided for their benefit. You may have also experienced the difficulties involved in collecting those outstanding debts yourself. The insecurity caused by not knowing the collection measures you are legally allowed to utilize and the lack of responsive communications with these types of customers/clients often lead small business owners to give up collecting their past due accounts. Having an experienced, commercial debt collections attorney on retainer can be an extremely effective way to collect these past due accounts.

Advantages of Utilizing a Debt Collection Attorney
As an attorney who works in commercial collections, I believe every business should have an internal process for making initial attempts to collect outstanding accounts. A key element of those processes, however, is knowing when to hand over collection efforts to a collections attorney. Once the initial attempts prove to be ineffective with a particular debt, there are several reasons why it is a good idea to pursue professional, legal help.

First and foremost, there are Federal and state laws that provide protection to consumers by regulating the efforts that can be made in collecting debts. Attorneys are in the business of knowing the law and the consequences for violating it. It is far more efficient to rely on a professional who is familiar with the laws related to debt collection than to use time that should be spent focused on growing and bettering your business than figuring out which laws could affect your collection attempts. It will also give you peace of mind to know that you won't be unintentionally violating the law and opening yourself up to potential claims from debtors.

Additionally, experienced collections attorneys have knowledge and access to tools that the average small business owner does not possess. This knowledge allows them to evaluate each collections issue you have, determine the assets available to secure collection and develop a plan for the most effective options for recovery. For example, they know how to trace assets that the debtor may have hidden. A collections attorney will be able to communicate to a debtor all of the pre-suit and post-judgment options available to your business to secure payment from them, convincing the debtor that it is in their own best interest to pay their debt. In situations where the debtor is not convinced, the attorney will be able to follow-through with utilizing those options.

Finally, collection attorneys are usually able to get your money more quickly than when you use self-help methods. When a letter appears bearing the name of an attorney, most people become afraid that they will encounter legal action, and that fear leads to you getting payment more quickly.

Why an Attorney and Not a Collection Agency?
The foremost concern of most small business owners when considering ways to effectively collect their past-due accounts is cost. This is why so many attempt collections on their own. Most collection agencies work on a contingency basis, meaning they keep a portion of the debt they collect, regardless of the amount of time and effort they expend in collecting that debt. While this approach may seem appealing to business owners because of the lack of up-front investment, this model can cause businesses to unnecessarily give up a significant portion of the amounts they are attempting to collect. Collection agencies are limited in the options they have for collection: usually they will only send letters and make phone calls. If they are successful in collecting a debt, they receive the agreed percentage even if they put in minimal effort. Using an attorney, however gives the client has more control over the cost they are willing to expend to collect each specific debt they are owed. If the attorney is successful in collecting a debt with minimal effort, the business will retain more of the funds it is owed.

As mentioned above, collection agencies are very limited in the actions they can take on your behalf, which makes their collection efforts less effective. By the time you are seeking assistance to collect a debt, you have likely already sent several letters and made multiple telephone calls to the debtor. The likelihood that a collection agency will be more effective with letters and phone calls than you were, is not high. Additionally, the more ineffective attempts at collection are made, the longer the debtor has to potentially restructure or hide assets. Debtors tend to take communications from attorneys more seriously, because they come with the possibility of legal action and the ability to follow-through with bringing a suit if necessary.

In conclusion, it is critically important for small business owners to choose the right course of action for collecting each debt they are owed. Hiring an attorney that is knowledgeable and experienced in all facets of debt collection can prevent a business from making the wrong choices could lead to the unnecessary expenditure of resources, including valuable time that should be spend managing and growing their business.

If you have a related legal matter and would like to find out how The Cromeens Law Firm, PLLC, can assist you, contact us today.

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, June 5, 2017


Dealing With an EEOC Charge of Discrimination


If you have received a notice that an EEOC (Equal Employment Opportunity Commission) Charge of Discrimination has been filed against your company by either a current or former employee, the following are tips on dealing with a Charge of Discrimination.

1. Don't Panic. Although it's called a "Charge of Discrimination," the initial notification that a claim of discrimination has been made is just that - a claim by the employee. No investigation or finding of discrimination has yet been made by the EEOC. The "Charge" simply puts you on notice that an employee has filed a claim alleging discrimination and/or retaliation which the EEOC will investigate.
2. Don't Ignore the Charge. You should immediately and thoroughly review the Charge. It contains important information and instructions that you should carefully read and follow. Note any deadlines to file a response to the Charge or provide requested documentation. Your response to the Charge is called a "Position Statement." A Position Statement is your opportunity to tell your side of the story and correct any misstatements by the employee and defend the claims being asserted against your company.
3. Don't Ignore Additional Requests for Information. After receipt of your Position Statement, it is not uncommon for the EEOC to request additional information. You may be asked for your policy on discrimination, employee handbook, personnel information or even employee files. If you don't supply the information requested, the EEOC will issue an administrative subpoena for the documents.
4. Ask for Additional Time to Gather Any Documents Requested. If it appears complying with an EEOC request will be difficult or impossible, request additional time in writing. It is best to ask well before your deadline to respond.
5. The EEOC's Investigation. After receiving your Position Statement and relevant documents, the EEOC may conclude there was no finding of discrimination and close its file. However, If the EEOC determines that discrimination may have occurred, its investigation will continue. The EEOC may request an on-site visit, interview witnesses or ask for additional documentation.
6. Take Advantage of Mediation If It Is Offered. Some, but not all, Charges will be eligible for mediation. Take this opportunity to try to resolve the claim. If the case is voluntarily settled, the EEOC will close its file. However, the EEOC may place certain requirements of its own in the settlement such as employer training on discrimination and/or setting up anti-discrimination policies.
7. Propose A Settlement to The Charging Party. Even without mediation, you can propose and negotiate a settlement to the Charging Party at any time. The EEOC will take part in this settlement proceeding. Additional terms and conditions not required by EEOC may be set forth in a separate settlement agreement (which will not include the EEOC) if the Parties desire additional terms and conditions be included such as non-disparagement or other terms important to the Parties, but not necessarily important to the EEOC.
8. If You Can't Resolve the Issue. If you are unable to resolve the Charge issues, the EEOC will continue its investigation and either issue a finding of discrimination (a "for-cause" finding) or may find it is unable to determine if discrimination occurred.
9. Bringing Suit Against the Employer. If the EEOC is unable to determine that discrimination occurred, it will issue a Right to Sue letter which gives the employee the right to file a civil suit in federal court against the employer within 90 days. If the EEOC concludes there is reasonable cause to believe that discrimination may have occurred the EEOC may file suit against the employer.
10. You Have the Right To Hire An Attorney. Retaining an experienced attorney WHEN YOU FIRST RECEIVE A CHARGE OF DISCRIMINATION can be your best decision in order to secure a positive outcome for your company when you are faced with a Charge of Discrimination.
If you have a related legal matter and would like to find out how The Cromeens Law Firm, PLLC, can assist you, contact us today.

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, May 8, 2017

Everything you need to know about 85(R) HB 3065



Construction industry professionals may or may not be aware that there is currently a bill pending in committee in the Texas House of Representatives that would completely overhaul the mechanic's and materialman's lien process in Texas. Those who are aware may be asking themselves and their colleagues whether they should give this bill their support. Read on for an in-depth summary of the most sweeping changes proposed by HB 3065 and how those changes could affect the lien process and rights of contractors, subcontractors, and material suppliers.

HB 3065 primarily does two things: it provides clarification of various provisions of Chapter 53 of the Texas Property Code by cleaning up much of the confusing language currently found there and proposes amendments that will significantly change the lien process in Texas. The biggest, and perhaps best known change to the current lien process proposed by HB 3065 is the creation of a new website where owners, contractors, and subcontractors will be able to search for notices related to construction projects within the state and post notices to owners and original contractors. The current version of the bill requires that the website allow claimants to post notices free of charge and also that the website provide free forms to claimants to use for all notices required under Chapter 53. The only fees currently authorized by HB 3065 are those charged to owners when they file a notice of commencement for a project. The filing of a notice of commencement by owners would be mandatory, and so far, the requirement is not qualified as applying only to projects of a certain value, as is the case in some other states. Proposed amendments to Texas Property Code 53.003, would allow notices from subcontractors to be posted on the new lien website or sent to the owner by email to the email address provided, in addition to by certified mail. The effective date of a notice would be the date the notice is posted on the lien website or the date the email is sent.

While the lien website may be the biggest proposed change to current lien law in Texas, it is not the only significant change. As will be appreciated by lien claimants and their attorneys, the deadline for notices and liens would be extended to the next business day when the 15th of the month falls on a weekend or holiday. HB 3065 also proposes to simplify the notice requirements for a subcontractor's lien claim from requiring multiple notices to requiring only one notice, known as a notice of furnishing. The notice of furnishing would be posted on the lien website, emailed, or mailed to the owner. Under the proposed new rule, a subcontractor would want to file their notice of furnishing as soon as they are hired on a project, because there would be limitations on claims for work/material furnished prior to its filing. The notice of furnishing would preserve lien rights on work/material furnished no more than 45 days before the notice is posted/filed if an owner does not file a notice of commencement, but only 15 days before the notice of furnishing is posted/filed if the owner does file a notice of commencement for the project. Also, subcontractors working on the same project for more than one original contractor would need to file a notice of furnishing for each original contractor to whom it provided work.

HB 3065 additionally proposes to change the deadline for filing a lien with the county clerk to the 15thday of the 4th month after the work under the original contract is completed or terminated for commercial projects (and the third month for residential projects), instead of the current rule which is the 15th day of the 4th month after the work/material is furnished. Owners would be required to either post a notice of termination on the lien website, or to send a copy to every person who filed notice of furnishing. This amendment would eliminate the potential need for a subcontractor who is working on the same project for an extended period of time to file multiple liens on the same property. One proposed rule that could use some revision is that providing for a notice of completion to be posted and filed by the owner. As currently proposed, that rule states that owners "may" file a notice of completion with the county clerk and post it on the lien website if a notice of commencement was filed. It does not provide for the owner providing a notice of completion when it has failed to file a notice of commencement, and does not make the filing of the notice of completion mandatory. However, as you can see, this bill in its current form would provide the construction industry with much more simplified lien notice and filing requirements: each subcontractor would only be required to file one notice and one lien for each project to which they provide labor/materials.

Owners would be benefited by HB 3065's proposed opportunity for owners accelerate the filing of liens by claimants once a project is complete or an original contract is terminated. Since the time for filing a lien has been extended for subcontractors, HB 3065 offers owners the option of sending via certified/registered mail to all subcontractors who have filed a notice of furnishing, a notice of completion/termination providing the date of completion/termination and demand that any subcontractor who intends to file a lien on the project do so within 30 days. The 30-day deadline would begin on the date the notice was sent from the owner, and would only be effective as to those who have actually completed their work at the project. The downside to this rule for subcontractors, is that any subcontractor who didn't comply with the demand would waive any lien rights they have on the project.

One proposed change that is not as far-reaching as some of those discussed thus far, but is nonetheless beneficial to lien claimants, is the proposed extension of the deadline for sending a copy of a filed lien affidavit to the owner and original contractor from 5 days to 10 days.

When discussing HB 3065 with a material supplier recently, one of the concerns he expressed was that the proposed revisions would eliminate the trapping of funds by owners. However, just as the current law allows owners to withhold payment to an original contractor if that owner receives a notice or lien affidavit from a claimant in the amount necessary to pay that claim/lien, so does the proposed amendment to that rule. Although, as I am sure original contractors will be glad to hear, the proposed amendment would limit the owner's ability to withhold funds to only the amount necessary to pay claims. If the owner is already withholding payment from the original contractor for retainage at the time it receives notice of a claim/lien, then the owner would have to include the amount of retainage withheld in the overall amount withheld from the original contractor to pay the claims/liens. For example, if an owner has withheld $25,000 in retainage from an original contractor and receives a $12,000 lien claim, the owner would not be able to withhold any additional funds from the original contractor. It would only be after the claims/liens exceed the amount of retainage withheld that an owner would be authorized to withhold additional funds from the original contractor. The amount of time an owner could withhold funds from an original contractor to pay claims would be revised to be until payment is made, the claim is settled/discharged or determined to be invalid by final order of a court. The opportunity to release funds to the original contractor once lien deadlines have passed would no longer be available.
Another significant benefit to subcontractors proposed by HB 3065 is the expansion of owner liability. No longer would an owner's liability be limited to retainage; it would instead be limited to the full amount (including change orders) of the original contract. Payments by the owner to the original contractor would also not affect the owner's total liability to claimants. Furthermore, an owner's liability would no longer attach only to the property: the revisions proposed would hold an owner personally liable for a lien claim even after transfer or foreclosure of the owner's interest in the property.

The proposed revisions concerning the liability of purchasers of liened property is another change that could use some additional attention. Though this amendment provides that new purchasers of liened property cannot be held personally liable for the claims/liens on the property, it clarifies that they can be held liable for attorney's fees under Section 53.156. What is not clear, and what could in my opinion use further clarification, is whether the property at issue in these situations could be foreclosed on to pay the claims/liens asserted thereon. The current proposed language seems to imply that it could not, but there is enough ambiguity in the language used that litigation on the issue would be invited.
Though subcontractors seem to be the focus of HB 3065's overhaul of our lien statutes, there are also some benefits for original contractors being proposed. In additional to the above-discussed limitations of an owner to withhold funds from an original contractor for the payment of claims, HB 3065 proposes to eliminate an original contractor's statutory obligation to defend an owner against lien claims when the owner is in violation of its contract with the original contractor.

There are also a few proposed revisions that would more directly affect attorneys litigating in this area of construction law, the first of which is a revision of the deadline to bring suit to foreclose a lien. HB 3065, in its current state, reduces the two-year deadline to bring suit on liens filed on commercial projects to the same 1-year deadline for residential projects. An owner and claimant could extend either deadline to 2 years, but only by written agreement filed with the county clerk. There is also an amendment proposed which would affect the ability of attorneys to bring summary motions to remove liens. The current law allows for seven situations in which a summary motion may be used to remove a lien. HB 3065 proposes that two of those situations be eliminated: when the deadlines for perfecting a lien claim for retainage have expired and when the contested funds have been plead into the registry of the Court. It seems the intention here is to limit the availability of a summary motion to remove a lien to instances where the claimant has somehow failed to comply with the statutory requirements for perfecting its lien.

As we are all aware, sometimes bonds are filed on a project to protect the owner/property from lien claims and potential foreclosure based on those claims. HB 3065 proposes to revise a few of the rules related to the filing of bonds and bond claims. For example, the amount of a claim requiring a bond two times the claim amount has been raised from $40,000 to $60,000, meaning also that claims above $60,000 will require a bond in the amount of one and a half times the claim amount. The sponsors of HB 3065 are also seeking to simplify the notice requirements for bond claims. Bond claimants who contracted directly with the original contractor would not be required to provide any notice of their claim to the original contractor, and those who did not contract directly with the original contractor would only be required to give the original contractor a notice of furnishing. Effective notice to the surety would be achieved by a simple notice stating the amount and nature of the claim, and if required, a copy of the notice of furnishing provided to the original contractor.

In summary, the changes to current lien law proposed by HB 3065 seem to be very subcontractor focused, and have the potential to shift some of the risk and burden currently carried by subcontractors onto owners in a way that is more true to the intentions expressed both in the plethora of court opinions issued by Texas courts over the last century and in the legislative history of our current statutes governing this area of law.

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, May 1, 2017

If you are owed money for work performed, below is a reminder on important lien deadlines:

Residential Projects - The Deadline is May 15th for Work Performed in March

• For Notice to Original Subcontractor or Derivative Claimant

Non-Residential Projects - The Deadline is May 15th for Work Performed in February and March

• For Notice to Original Contractor by a Subcontractor or Derivative Claimant (March)
• For Notice to Owner and Original Contractor by a Subcontractor or Derivative Claimant (February)

The Cromeens Law Firm, PLLC, specializes in construction law and will aggressively work to protect your rights. Contact us today to learn more.

Thursday, March 30, 2017

Five Questions Contractors and Subcontractors Should Ask Before Entering Into a Construction Contract



1. What are the Terms of the Contract?

The answer to this question may seem as though it should be straightforward, but that is not always the case in construction contracts. Often time there are appendices or addendums to contracts that may not be transmitted to a contractor with the contract, or a contractor assumes that his bid on a project is taken into account or incorporated into a contract when it is not. Be sure that you are aware of what other documents are a part of the "contract documents" and that you know what your obligations are under them.
It is also becoming more common for subcontracts to incorporate the terms of an original contract by reference. If your contract does this, ask for a copy of the original contract so that you can be sure you are following all procedures necessary to get paid for your work and so that you are aware of all of the risk you may be taking on in accepting the contract.

2. Who are the Parties to the Original Contract?

It is important to know the parties to the original contract for any construction project. Not only will you be required to give notice of any lien you may have to file to the correct parties, but the property you are allowed to lien is directly affected by whether the original contract is with a property owner or a tenant of the owner. Often times this is not clear, even to the original contractor.
If the original contract on a construction project is with a tenant rather than an owner, the lien rights of the original contractor as well as any subcontractors and/or material suppliers are limited to the tenant's leasehold interest, which is much less valuable than a lien on a property owner's interest. This makes it more difficult for a contractor to recover funds it is not paid on a project. If the contractor is unaware that it is working for a tenant and files a lien on the owner's property interest, the contractor could face penalties for doing so. It is always best to know going in to a project who you are ultimately working for so that you can take into account the potential recoverability of any payments you don't receive prior to accepting a contract.

3. If the Contract is for a Residential Project, is the Property a Homestead?

If you are considering taking on a residential project, whether it is an original build or a remodel, you should know and take into account whether the residence you will be working on is a homestead. Some contractors mistakenly believe that an owner must designate a property as a homestead for tax purposes to have homestead protection, but this is not the case. Whether or not a property is or could be a homestead for lien purposes is dependent on 1) whether the person owns the property and 2) whether they live at the property and/or intend to live at the property after construction is completed.
The reason you want to establish whether a residential project is a homestead prior to entering into a contract is that there are specific requirements for construction contracts involving homesteads. A failure to comply with those requirements will prevent a contractor from being able to file a valid lien on the property, and may have financial consequences for the contractor if it does file a lien on the property without having followed the homestead requirements.

4. How and When Will You Be Paid?

There are multiple ways in which a contractor or subcontractor can agree to be paid on a project. The important thing is that be sure your contract is clear about when and how you will be paid for both the original scope of work and any change-orders or extras that come up. It is also important that you know and understand the process for submitting a change-order for approval and who has the authority to approve your change-orders. If you do not strictly comply with the process provided for in your contract, the owner and/or general contractor could deny your change-order request leaving you without compensation for work you may have already completed.
Additionally, if you are a subcontractor, your contract may include either a "pay when paid" clause or a "pay if paid" clause. It is important that you are aware of such clauses and that you take them into consideration prior to accepting a contract. These types of clauses are particularly burdensome on smaller subcontractors who may not be able to float the expense of a project in the event that that payment on that project does not happen timely. Texas law does provide some ways in which you may be able to get around these clauses and demand payment, but the process for doing so is complicated and will often involve a subcontractor incurring the expense of hiring an attorney to assist them in doing so.

5. How Will Contract Related Disputes Be Resolved?

Nearly all standard form construction contracts will provide direction on how any disputes related to the contract will be resolved. Many will contain a provision requiring disputes to be resolved with mediation and/or arbitration rather than through litigation in a court. If you are a subcontractor and there is no provision providing for how disputes will be handled, look for language that incorporates the original contract terms into your subcontract.
Whether or not the contract includes language awarding attorney's fees if you prevail in a contract dispute should also be considered. Litigation and/or arbitration can be very expensive and many smaller contractors and subcontractors cannot sustain the cost, especially if it is uncertain whether or not they can recover the costs of pursuing a claim. This can be particularly important if a contractor is out of time to file a lien and must pursue a contract claim against the general contractor to get paid money they are rightfully due for the labor and/or materials they supplied to a project.

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, March 13, 2017

Tips On Improving Your Attorney-Client Relationship

Tips On Improving Your Attorney-Client Relationship

As in most relationships, it's a two-way street. Without effective communication and mutual respect, most relationships will fail. The same is true when it comes to your relationship with your attorney. Your attorney-client relationship is an important partnership, which seeks to maximize the outcome in your favor.
Below are some helpful suggestions on how to best work with your attorney:
1. Be truthful when communicating with your attorney.
No attorney wants to hear the bad facts for the first time from the other side at trial. Tell your attorney the good, the bad and the ugly. With this knowledge, an attorney can more effectively deal with bad facts and be prepared to deal with them when they come up. There is one certainty - bad facts will be brought out by your opponent.
2. Be realistic in your expectations.
You most likely came to your attorney because of a dispute you could not resolve. That dispute existed before you contacted your attorney and that dispute will not simply disappear because you have hired an attorney. An attorney cannot force the other side magically go away or get you 100% of what you want. If it were that easy, you would not be contacting an attorney in the first place. Remember, there are always two sides to every story and you will likely be having a judge or jury hear two competing and very different versions about the same set of facts. Which side the judge or jury will believe is a true unknown.
3. Be responsive to your attorney's requests for information and records.
Without a client's active participation, an attorney cannot properly do his or her job. All of the facts and documents must come from you. There are strict timelines which must be met by the attorney and without your cooperation and input, your case will not be in its optimum position for a positive outcome in your favor.
4. Respect the information conveyed to you by your attorney.
Your attorney has more experience in the legal arena and that is why you sought out his or her services to begin with. Sometimes, you may not agree with the attorney's perspective or analysis of your case. An attorney comes into your case with a set of experiences and training that make him or her better qualified than your friends or family to assess your legal circumstances. Listening to family and friends is helpful for emotional support, but you should leave your legal analysis to your attorney.
5. Remember your attorney is on your side.
The old phrase "don't kill the messenger" also applies in an attorney-client relationship. There may be bad news that needs to be delivered to you, an unfortunate turn of events in your case, or even a less than successful outcome at trial. Your attorney believes in you and your case or he or she would not have accepted the challenge to represent you.
6. Attorneys can't predict the future outcome of your case.
Although what you might want as a client is to hear that "you've got a slam dunk case" or "there's no way you are going to lose," such predictions are reckless at best. No attorney can ever guarantee you a certain result and if they do, you may want to consider getting a second opinion.
At The Cromeens Law Firm, PLLC, we are always at your service. It is our mission is to truly understand each client's unique needs and go beyond expectations to exceed those needs. Contact us anytime for additional information on our legal services or request 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.

Wednesday, February 22, 2017

5 Questions to Help You Understand the Basics of Mechanic's Liens


By The Cromeens Law Firm, PLLC, on Friday, January 13, 2017


Mechanic's liens exist to protect the rights of construction professionals and to help ensure they are properly compensated for work or materials they have provided. While the purpose liens serve is beneficial, maneuvering through the process in Texas can be complicated and tricky. To get you started with understanding the basics, the construction attorneys at The Cromeens Law Firm, PLLC, answer these five questions: 

1. What is a mechanic's lien?

mechanic's lien, also known as a materialman's lien (M&M lien), is a legal recourse construction professionals can utilize to enforce payment for their labor as well as any materials or supplies purchased for a project or improvement to a property. These types of liens are filed in the real property records against the property where labor and/or materials were used.

The M&M lien is like an involuntary mortgage the property owner did not agree to, but if done correctly, the owner will be forced to pay. Often times, since project agreements are usually made through the general contractor, the property owner may not have ever met or come in contact with the lien claimant until the lien process was initiated. Additionally, as a result of an M&M lien, the property owner will face difficulties in selling or refinancing the property without first paying off the debt.

2. Who can file a lien?

An M&M lien can be filed by any construction professional who has not been compensated for providing labor, supplies or materials for a construction, repair, building, improvement or renovation to a property, including:
  • Builders
  • Contractors, subcontractors
  • Suppliers
  • Architects
  • Engineers
  • Surveyors
  • Landscapers
  • Demolition crews
Additionally, Texas law also allows an M&M lien to be filed for custom materials specific to a project that were not delivered to the property but cannot be used anywhere else, including tinted paint, specially sized windows, doors, etc.

3. What information do I need in order to file a valid lien? 

There are a number of items and pieces of information that need to be included in order to file a valid lien. Failure to produce any of the following information could result in an invalid lien:
  • The property owners name and address
  • The general contractors name and address
  • A legal description of the property
  • A brief description of the work that was done or materials supplied
  • The month when the work was provided or when the materials were supplied
  • The dates and manner in which you sent previous payment notices
  • A sworn statement that the lien amount is due
4. How do I start the process?

Before a valid M&M lien can be filed, preliminary notices must be sent to the property owner and the general contractor by the predetermined deadlines. These notices give the owner and general contractor a chance to resolve the claim prior to filing a formal lien.

For a non-residential project, the first notice that is required to be sent is only a statement to the general contractor with the amount you are due, letting them know you are owed money for the project. This notice must be sent by the 15th day of the second month after the first work was done or materials were supplied that you are owed money for.

The next letter is the formal intent to lien and is sent to both the general contractor and the property owner. This notice needs to be sent the 15th day of the third month after first work done or material supplied that you are owed money for.

For residential projects, the first notice that is required to be sent is the formal intent to lien and needs to be sent to the owner and general contractor by the 15th day of the second month after the first work was done or materials were supplied that you are owed money for.

These notices must be sent certified, not filed with the County Clerk's office, and require that specific statutory language is included. If the notices were not sent, a lien should not be filed. Any lien filed without sending the required notices is invalid.
After providing the notices, the next step is to file an Affidavit of Mechanic's Lien in order to collect on your delayed payments. The affidavit is the document claiming the lien and must be filed in the real property records of the County Clerk's office in the county in which the property is located. Keep in mind the timelines for filing a lien have a different start date than the notice letters.

Additionally, as the claimant, once you have filed an M&M lien, you must also file a court action to enforce the lien within one year for residential liens and two years for non-residential liens.

5. How do I know what my deadlines are in order to remain within the guidelines to file a valid lien?

In Texas courts, missing just one of the deadlines even by a day can result in an invalid lien.

Since notification types, deadlines and recipients all vary depending on project types, it is strongly recommended to seek guidance from experienced construction attorneys in order to guarantee all deadlines are met and the lien is valid.

At The Cromeens Law Firm, PLLC, we are expert construction attorneys, and work to protect you rights. If you have provided services or materials for a project and have not been paid for that work, contact us today, and we can help you determine the right strategy to implement.

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. 

Collecting a Judgement in Texas


Texas law provides different methods to collect on a court judgment regardless of whether the judgment originates from the state of Texas or another state. When a person or entity recovers money damages in a court, it will primarily be in the form of a judgment. A judgment is merely a piece of paper that declares a person or an entity owes another person or entity money. In order to collect on that piece of paper, consider the following methods and rules:

1. Abstract of Judgment, Domestication and Time Concerns
First, determine whether you have a judgment from a Texas court or another state's court.
If you have a Texas judgment, you can begin the collections process immediately by filing an abstract of judgment in the Real Property Records of the county where the judgment debtor may own non-exempt real property. Once the abstract of judgment is filed and properly recorded then a judgment lien is created which will automatically attach to any non-exempt real property owned or thereafter acquired by the debtor and located in that county. The practical effect of this to warn all potential buyers of a piece of real property that there is an outstanding balance due to the judgment creditor which needs to be paid out of the proceeds of any sale of the property.
If you have a foreign judgment, as in a judgment from another state, then before abstracting the judgment domestication must occur. To domesticate a judgment, file an affidavit filing a foreign judgment, attaching a certified copy of the judgment from the foreign court to said affidavit and a notice of filing a foreign judgment with the county clerk. Be sure to send this a copy of the notice to the debtor. This provides the debtor and public notice of the foreign judgment. Once domesticated in Texas, the judgment creditor can begin employing any and all methods of collection available for a Texas judgment, including but not limited to, abstracting the judgment in particular counties.
Please be aware that a judgment becomes uncollectable ten years following rendition. However, abstracting the judgment within the first ten years after the judgment is rendered will keep it alive for another ten years after abstracting. It starts the ten-year clock over. So if a judgment is rendered on November 10, 2002, then the judgment creditor should abstract the judgment by November 9, 2012. Assuming the abstract is renewed via refiling on November 9, 2012, then the judgment can still be collected until November 9, 2022. This process continues, theoretically, forever. Remember to renew the judgment by refiling the abstract within ten years after the initial filing of the abstract to avoid losing the power to collect on the judgment.

2. Writ of Execution
Secondly, after abstracting the judgment, the judgment creditor can find non-exempt personal or real property in a specific county in Texas and request a writ of execution from the county clerk. The clerk of the county will then send a writ to the judgment creditor. This writ can be sent to a constable or sheriff in the county who will then physically go to the location of the property who will then levy and sell the property on the first Tuesday of the month along with the other foreclosure sales.

3. Writ of Garnishment
Thirdly, along with abstracting the judgment in a county and executing a writ on property, a judgment creditor can collect on the judgment by freezing and taking assets found in a debtor's bank account by executing a writ of garnishment. This allows a creditor to demand a bank turnover any assets found in its customers' account to partially or totally satisfy the judgment.

4. Turnover Order
Fourthly, the most extraordinary of collection methods is to ask a court to appoint a receiver. This receiver will use its court appointed power to find and turnover assets to the creditor where such assets are unattainable through normal collection means. This is the most powerful option, yet the rarest due to its power.
These four methods provide effective ways for judgment creditors to collect on their money judgments. As with many areas of the law, an attorney can be an excellent and sometimes necessary asset in navigating these processes. If you need help collecting a judgment, please call The Cromeens Law Firm, PLLC, and our attorneys will be happy to help.

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. 

Thursday, January 5, 2017

The Cromeens Law Firm, PLLC, Continues to Grow - Welcomes Melissa Masoom as Associate Attorney

The Cromeens Law Firm, PLLC, is pleased to announce that Melissa Masoom has joined the firm as an Associate Attorney. In her position, she represents clients in a variety of matters and disputes concerning business, construction and real estate law. 

"We are very happy to have Melissa as part of our team. She exemplifies our firm's commitment to strong client advocacy, ensuring the highest level of client trust and service at all times," stated Karalynn Cromeens, Managing Shareholder of The Cromeens Law Firm, PLLC. 
Melissa's extensive experience also includes counsel on personal injury, immigration and family law for both individuals and companies as well. Prior to joining The Cromeens Law Firm, PLLC, Ms. Masoom held positions at Nguyen & Chen, LLP, The Lanier Law Firm, the Law Office of Reginald McKamie and George R. Willy, P.C.

She graduated from the New England School of Law in 2009, and is a member of the American Bar Association and the Houston Young Lawyers Association. In addition, she is active with several non-profit legal organizations including the legal clinic at Daya, Inc., where she represents victims of domestic abuse and helps them navigate the complex nature of immigration and family law. 

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. 

Payment of Construction Subcontractors

Payment of Construction Subcontractors - Chapter 56 of the Texas Business & Commerce Code

"Pay-when-Paid" Clause v. "Pay-if-Paid" Clause

A "Pay-when-Paid" clause is not covered under Chapter 56, as Chapter 56 "does not affect provisions that affect the timing of a payment...if the payment is to be made within a reasonable period." It merely creates a future event as a convenient time for payment; but still requires the general contractor to pay the subcontractor. In other words, in most cases a "Pay-when-Paid" clause is enforceable.

Conversely, a "Pay-if-Paid" clause is covered under Chapter 56. It effectively shifts the burden of risk from the general contractor to the subcontractor. Technically, it is enforceable, but is easily defeated, so long as a subcontractor objects to its enforcement. Essentially, a subcontractor performing good-work can defeat the contingent payment clause 55 days after a pay application was sent, in addition to the applicable statutory notice.
An example if a typical "Pay-if-Paid" clause is as follows:

"The Owners payment to Contractor is an express condition precedent to Contractor's obligation to pay subcontractor. Subcontractor expressly assumes the risk of nonpayment or insolvency by the Owner."

Keep in mind, Chapter 56 does not apply to:
(1) Design services;
(2) The construction or maintenance of a road, highway, street, bridge, utility, water supply project, water plant, wastewater plant, water and wastewater distribution or conveyance facility, wharf, dock, airport runway or taxiway, drainage project, or related type of projected associated with civil engineering construction;
(3) Improvement to or the construction of a structure that is a:
a. Detached single-family residence
b. Duplex
c. Triplex; or
d. Quadruplex

This can very a very complicated area of law to navigate; specifically, the notice requirements. Please let us know if you have any questions or if you'd like to discuss your individual case.

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.