The general prohibition against waiving lien rights under Chapter 53 of the Texas Property Code has been written about extensively, and is well known through 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 construction trust fund rights can be waived or not. Less than two years ago, the Texas Fourteenth Court of Appeals considered this issue, among several others, in Mesa Southern CWS Acquisition, LP v. Deep Energy Exploration Partners, LLC. In that case, the Court considered the following provision: Continue Reading Can the Trust Fund Act be Waived?
Co-author: Tim Fandrey
In these unprecedented times, every bit of revenue is critical to the continued operation of nearly every business operating within the construction industry. Fortunately, there are a myriad of remedies to aide collection efforts. Perhaps the most commonly discussed remedy is the mechanic’s lien provided by Chapter 53 of the Texas Property Code Chapter. Continue Reading Mechanic’s Liens For Design Professionals: A Powerful Payment Collection Tool
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 lien claimants, the Texas Property Code has very specific rules that must be followed. Continue Reading Lien Inception
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 and their jobs. Business leaders will have to make tough decisions in the coming weeks and months. Many of these decisions will touch on important legal issues. Below are a few legal hot topics addressed by my colleagues at Gray Reed in the past few days: Continue Reading COVID-19 – Legal Impact
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. Continue Reading Obscure But Important Surety and Guarantee Rules
For 140 days, starting on Jan. 8, 2019, the 150 members of the Texas House of Representatives and 31 members of the Texas Senate, under the leadership of Governor Greg Abbott, will gather for the 86th Texas Legislative Session. As is often said, when the Texas Legislature is in session – your life, liberty and property are at stake – as new laws, rules, regulations, taxes and fees will be proposed and will receive substantive debate and deliberation before Texas legislators ultimately vote on your behalf.
Most legislators agree that the main issues driving the agenda for the session are public education (including school finance, school safety, workforce development and teacher pay) and property tax relief. Additionally, there is no question that the legislature will spend considerable time on what is sure to be a complicated and challenging state budget cycle. With school finance, healthcare, infrastructure funding and Hurricane Harvey recovery looming large on the horizon, this legislative session will present unique fiscal challenges – and also great opportunities – to ensure Texas remains strong and prosperous.
In terms of “construction” legislation, general contractors, subcontractors, suppliers, owners, developers, lenders and lawyers all have reason to pay particularly close attention as several important issues have seemed to gain the attention of Texas Legislators. To name a few: Continue Reading What’s Ahead for the Construction Industry in the 86th Texas Legislative Session
Co-author: Catherine Chlebowski
The business of construction is a day to day adventure fraught with peril and liabilities dangerous enough to put many construction firms out of business. Given that reality, it is imperative that contractors properly structure the legal entities that provide the fortresses to protect their assets. While most are familiar with the limited liability company (LLC) and limited partnership (LP) set ups, many have no familiarity with series limited liability companies (Series LLC). Continue Reading Series LLCs in the Construction Industry: Increasingly Popular Fortresses to Protect Contractor’s Assets
In October 2016, the Antitrust Division of the U.S. Department of Justice (DOJ) issued guidance identifying poaching agreements and wage-fixing agreements as primary antitrust enforcement targets. In April 2018, DOJ brought the Department’s first enforcement case over illegal anti-competitive employment related agreements.
In a market where skilled labor is in increasingly high demand, and the price of labor continues to rise, scrutiny of employment-related agreements is also on the rise. Industries facing skilled labor shortages are natural targets of DOJ scrutiny, the construction industry is no exception. Continue Reading Anti-Poaching and Wage-Fixing Agreements: Drawing the Line Between Competitive and Criminal
Since at least 2008, Flood, Fire, Famine and Pestilence have ravaged the construction workforce across America. In the downturn, many workers left the industry never to return. Others left the U.S. and have not returned. Couple that with construction growth, a resistance to training workers who may leave for another dollar an hour, and seeming lack of interest in construction jobs by the current generation now entering the workforce, and you’ve got the makings of a big challenge.
Protect yourself on the contracting side before heading into the storm . . .
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). Continue Reading Establishing Personal Liability Without a Guaranty