It’s Better to Have It and Not Need It than it is to Need It and Not Have It: How Early Lien Notices Can Simplify the Process for Securing Payment– Texas Construction Law Attorneys

Contractors and other professionals in the construction industry are afforded considerable rights and protections under Texas law. Those who provide labor and/or materials often run into problems when attempting to secure payment for work performed, but the Texas legislature has provided a mechanism designed to aid in the collection efforts of contractors and other professionals.

Many are familiar with the term Mechanic’s Lien, but few truly understand the proper procedure that must be followed in order to enjoy the protection it provides. In order to perfect one’s lien rights, notices must be mailed (certified mail return receipt requested) at a series of deadlines in order to make the landowner and other interested parties aware of the fact that a lien is being pursued.

These deadlines depend on a number of factors such as when the work was performed and completed, as well as where you fall in the chain of command (Original Contractor or Sub-Contractor). With so many variables at play, adhering to the deadlines can be and most often is a difficult task. Often times a contractor will lose its lien rights without ever knowing it.

Although you have no way of knowing whether a lien will be required until a significant amount (if not all) of the work has been completed, there are steps which can be taken before work even begins that will minimize the risk of losing your lien rights once its determined that a lien is necessary.

The first such step is to send a Notice of Contractual Retainage Agreement to everyone above you, including the property owner. This will alert the property owner that a sum of money needs to be withheld for payment of your bill. While this notice is not required to perfect your lien, it will eliminate the need for one of the subsequent notices that would otherwise be required. It is important to note that this notice must be sent to the contractor by the fifteenth day of the second month following the date you first provide labor or materials for the project. Also, this notice is only used when you do not have a contractual relationship with the property owner (hired by another contractor).

Another early lien notice is the Notice of Specially Fabricated Materials, which allows you to perfect a lien even if the customer does not receive or use your specially fabricated materials on the project in question. This notice must be sent to the property owner (and original contractor if you don’t have an agreement with the original contractor) by the fifteenth day of the second month following receipt and acceptance of the order for specially fabricated materials.

Additionally, when you execute your contract on any job, it is a good idea to request in writing from the property owner and all parties above you in the chain of command the following:

1. A legal description of the real property being improved;
2. A copy of any contracts executed for the project;
3. A copy of the surety bond, if any, including the name and last known address of the surety; and
4. Whether the real property in question is encumbered by any prior recorded liens or security interests, and if so, the name and last known address of any persons having such lien or security interest.

While these steps will not guarantee any payment or favorable result, they will help simplify the process and expedite payment of any money that is owed. When dealing with issues like the ones addressed hereinabove, it is always a good idea to consult with an experienced attorney who is familiar with Texas lien laws.

Williams, McClure & Parmelee is dedicated to high quality legal representation of businesses and insurance companies in a variety of matters. We are experienced Texas civil litigation attorneys based in Fort Worth who know Texas courts and Texas law. For more information, please contact the law firm at 817-335-8800. The firm’s office location is 5601 Bridge Street, Suite 300, Fort Worth, Texas 76112.

Martindale AVtexas[2]

How to Collect when your Debtor does not own Property in Texas–Fort Worth, Texas Collections Attorneys

So you’ve been awarded a judgment against the individual or entity that owes you money. Time for them to pay up, right! Unfortunately it is rarely this simple. That judgment you have in your hand certainly has value, but it does not necessarily mean that your recovery efforts are concluded.

As discussed in the previous article, you can obtain from the court an Abstract of Judgment. You can also apply for a Writ of Execution, which allows a Texas sheriff or constable to seize any “nonexempt” real or personal property (cannot be the debtor’s homestead) to satisfy your judgment. However, these remedies are only helpful if your Debtor does in fact own nonexempt property within the state of Texas.

Riding the wave of the internet, companies and individuals alike are making transactions and entering into contracts with out of state customers and suppliers. As a result, it is not uncommon to have a Debtor who owns zero property within this great state. And while you may initially feel great sympathy for the poor soul(s) that have to live somewhere other than Texas, I imagine you ultimately still want to get paid. If so, the Abstract of Judgment and Writ of Execution will not do anything for you.

Thankfully, there is an alternative not confined by state boundaries. In the scenario envisioned above, you can file an application with the court for a Writ of Garnishment. The application must be accompanied by an active judgment and an affidavit stating that, to your knowledge, the Debtor does not possess property in Texas subject to execution and sufficient to satisfy the judgment.

Once issued, the Writ of Garnishment will allow you to acquire property owned by your Debtor while it is in the possession of a third party; and you are not limited to real property. This means that funds held by a bank in the Debtor’s name can be garnished to satisfy your judgment. For obvious reasons, a Writ of Garnishment can be a very effective tool when attempting to enforce a judgment, but as one might expect, there are specific rules and procedures that must be followed. For this reason I encourage you to seek legal counsel from a lawyer with significant experience handling collection matters before initiating a garnishment action.

Williams, McClure & Parmelee is dedicated to high quality legal representation of businesses and insurance companies in a variety of matters. We are experienced Texas civil litigation attorneys based in Fort Worth who know Texas courts and Texas law. For more information, please contact the law firm at 817-335-8800. The firm’s office location is 5601 Bridge Street, Suite 300, Fort Worth, Texas 76112.

Martindale AVtexas[2]

Examinations Under Oath: An Opportunity to Minimize Loss– Fort Worth, Texas Insurance Defense Attorneys

In the insurance business, claims are the most significant expense. This is why the prompt yet efficient processing of claims is the paramount consideration for insurance companies and third party-administrators. Successful companies recognize that with each claim comes an opportunity to minimize losses. However, this can be a difficult task when the company is put at odds with its insured. The good news is that by subjecting each claim to a series of filters the claim process can still allow a company to effectively serve both the interests of its customer, as well as that of its own.

One effective filter that is often used in the early stages of the claim process is an Examination Under Oath (EUO). When a company wants a thorough investigation or desires answers to questions for which the claimant only provides a vague response, an EUO can provide a cost –conscious method for collecting valuable information.

A timely EUO will allow the company to address the issue of fault and can be extremely helpful when a company suspects a false claim. EUO’s can typically be conducted in a matter of hours, and will often reveal information or evidence that would otherwise only be obtainable during litigation. As a result, it is common for claims in which an EUO is conducted to be resolved long before litigation would otherwise arise.

The concern with EUO’s is that the scope can become too broad. This type of questioning should not be performed by individuals unfamiliar with the process or the rules by which the game is to be played. The questioning can quickly become harassing if not confined to the issues and subject-matter that is relevant to the underlying claim.

Although not required, it is recommended that EUO’s be left to experienced insurance defense counsel. Lawyers who regularly engage in this type of questioning possess the ability and temperament needed to maximize the value of this loss minimizing opportunity.

Williams, McClure & Parmelee is dedicated to high quality legal representation of businesses and insurance companies in a variety of matters. We are experienced Texas civil litigation attorneys based in Fort Worth who know Texas courts and Texas law. For more information, please contact the law firm at 817-335-8800. The firm’s office location is 5601 Bridge Street, Suite 300, Fort Worth, Texas 76112.

Martindale AVtexas[2]