The private and public prompt pay acts both provide contractors and subcontractors with the right to stop work if an owner or upstream contractor fails to pay an undisputed amount. With H.B. 3485, the Texas legislature has now extended this right when the contractor or subcontractor is waiting on large dollar value change orders.
Co-author: Stephanie Snyder-Zuasnabar
In James Construction Group, LLC v. Westlake Chemical Corporation, the Texas Supreme Court clarified the standard necessary to satisfy notice provisions in a construction contract. The Court’s opinion reached two key holdings: (1) substantial compliance is sufficient to satisfy a party’s obligation under a contractual notice requirement; (2) however, if the
Co-author: Stephanie Snyder-Zuasnabar
Texas has new lien laws that affect all construction projects with a prime contract dated on or after January 1, 2022. The new lien laws are particularly helpful to architects, engineers, and surveyors. Design professionals will benefit from the expanded lien rights provided by this new legislation. Lower tier design professionals will
My law partner, David Gair, and I recently wrote a paper regarding the energy-efficient commercial building tax deduction (IRC § 179D). The upshot is that the Consolidated Appropriations Act of 2021 recently made this deduction permanent. As discussed in much more detail in the paper, 179D allows for a tax deduction of up to $1.80 per
The general prohibition against waiving lien rights under Chapter 53 of the Texas Property Code has been written about extensively, and is well known throughout the industry. However, the Construction Trust Fund Act (Ch. 162 of the Texas Property Code) does not contain any such prohibition. From the Act itself, it is not clear whether
When owners file bankruptcy or projects otherwise go south, lien priority often comes to the forefront. The idea is relatively simple. Priority is how courts determine which creditors get paid first. This often pits lenders against M&M lien claimants. For lenders, their liens typically arise when they record their deeds of trust. However, for M&M
COVID-19 is now interrupting and, in some instances, cancelling contracts across the country. While the situation is highly fluid, these business disruptions appear likely to continue and perhaps even worsen in the immediate future. This will significantly affect and perhaps threaten businesses people have worked had to establish. And it will of course impact employees
Texas surety law contains obscure procedural rules that can have outsized consequences. Chapter 43 of the Civil Practice and Remedies Code is an important example.
Applicability
This chapter applies to everything that is a “surety” as defined by the statute. The statute’s definition includes “an endorser, a guarantor, and a drawer of a draft that
Co-author: Trevor Lawhorn
Published in Build Houston Magazine
When non-payment occurs, suppliers and service providers often first seek relief by suing for breach of contract. Unfortunately, many companies are undercapitalized or otherwise “judgment proof.” A personal guaranty might mitigate this risk by providing an additional target, but guarantees are often difficult to obtain. Even if one is signed, the guarantors may lack assets, perhaps deliberately so. Judgement proof debtors and guarantors are especially frustrating when the case involves misappropriations of construction project funds or wrongful transfers of assets. Texas law provides at least two statutory tort claims in these circumstances: the Texas Uniform Fraudulent Transfer Act (TUFTA) and the Texas Construction Trust Funds Act (the Trust Fund Statute).
Co-authors: JP Vogel and Tim Fandrey
Published in Build Houston Magazine
Texas is a hot-bed for construction. In 2016, according to the Virtual Builders Exchange, Texas was second only to New York in construction expenditures, spending $44.4 billion. And there is no sign that the proliferation of construction is slowing down. New housing starts are up in Texas as a result of an influx of new employees moving to the area. The U.S. Census Bureau reported that Texas has experienced the largest population growth of any state between 2010 and 2016. This, in turn, increases demand on civil infrastructure thus requiring more construction. This explosion of growth in construction spending has taken place without consideration given to the rebuilding efforts arising from the aftermath of Hurricane Harvey.