Construction Law

Joint Checks on Construction Projects

joint check texas construction project lawWhat are joint checks? How are they used on construction projects? Are they a perfect solution?

A joint check is a check made payable to two or more payees in the conjunctive, e.g. “Jane Doe Masonry, Inc. and Good Brick, Inc.” A financial institution should only honor the check if both payees have correctly endorsed it.

A joint check may provide the parties on a construction project an additional level of security. For example, an owner may issue a joint check payable to both the general contractor and the subcontractor. By endorsing this check, both the general contractor and subcontractor will be admitting receipt of payment: the general contractor from the owner, and the subcontractor from the general contractor. By virtue of this fact, the owner has some assurance that the general contractor has paid the subcontractor at least some portion of what the subcontractor is properly owed. Furthermore, the subcontractor will know when and how much the general contractor has been paid.

Joint checks are not foolproof. People and financial institutions can intentionally or carelessly circumvent the security joint checks may offer.

In our Law 101 posts, we define terms, phrases, or concepts with the goal of conveying core information in order to set the stage for more complex discussions.

Are Construction Contracts Enforceable if Not in Writing?

The major players in the construction realm do not, as a general proposition, routinely rely upon oral contracts on complex projects because of the number of issues, parties, and stakes that are usually involved. On the other hand, some projects may be so small or simple (or any number of other reasons may exist) that they may not be perceived to warrant the time and effort required to prepare a written contract.

Regardless, are oral construction contracts enforceable?texas oral verbal construction contract statute of frauds

In Texas, oral construction contracts generally are enforceable. However, they are not enforceable if they fall into or constitute any one of several categories under the Texas Business & Commerce Code including, but not limited to (1) a contract involving the transfer of certain interests in real estate; or (2) an agreement which isn’t to be performed within one year from the date of making the agreement.

Verbal construction contracts may make sense and be relied upon in some situations. In other contexts, they should be avoided — not only because they may not be enforceable, but because there could be other consequences, too, which are not discussed here.

But the fact that an agreement has construction as its subject matter does not in and of itself dictate whether it is enforceable if it is not in writing.

Can I Fire my Contractor?

I often get calls from folks who are unhappy with contractors they’ve hired, wanting to know if they can terminate the relationship before the project’s completion.texas construction terminate fire contractor

Termination is typically allowed under any one of three circumstances.

First, does the contract specify the events under which termination may take place? If so, have those events occurred?

Second, did the contractor materially breach the contract and, if so, did that breach occur before any material breach by the owner (the party that contracted with the contractor)?

Third, will the contractor agree to terminate the contract early?

There are repercussions associated with terminating a contractor prematurely. A project owner is wise to take stock of the situation from an objective standpoint, evaluate the risks and benefits of each available option and their attendant consequences, and then move forward decidedly.

Our Tips & Resources posts are intended to provide general educational information. Like all other material on this blog, it is not a substitute for legal advice.

Is Time Always of the Essence in Construction Contracts?

Whether it’s the construction of a new shopping center or a new home, many people assume that a construction time of the essence construction contractproject will be completed by a particular date. For example, the owner of that shopping center may anticipate a date that he/she needs to have the space finished in order to market it and thereby obtain a stream of income to defray his/her expenses. The owner of that home-under-construction may be without shelter if the home isn’t built timely.

Questions often arise around whether a project, or benchmarks leading up to the completion of the project, must be completed within a specific timeframe. Does the construction contract state an explicit completion date? Does it define what exactly constitutes completion? Does it express that time is of the essence? What if the contract attaches a proposed schedule but has no other reference to a completion date? What if that schedule was only an estimate but the owner of the project nevertheless relied upon its accuracy in agreeing to hire the contractor, investing in the shopping center, or selling his/her old home?

In Texas, time isn’t ordinarily of the essence in construction contracts. Moreover, a stated date for performance does not imply or mean that time is of the essence. The contract must expressly make time of the essence or there must be something in the nature or purpose of the contract and the circumstances surrounding it making it apparent that the parties intended that time be of the essence. Otherwise, the contract must be performed within a reasonable amount of time. And a judge, jury, or arbitrator may have to determine what “reasonable” means.

In our Law 101 posts, we define terms, phrases, or concepts with the goal of conveying core information in order to set the stage for more complex discussions.

 

 

Risk of Unknown Site Conditions on Construction Projects

Sometimes parties to a construction contract encounter conditions on the site that were unknown at the time they entered into their contract. Who bears the risk and expense of dealing with those conditions?texas construction unknown differing unforeseen site conditions

The general rule in Texas: a contractor who is paid on a lump-sum basis is not entitled to additional payment because differing site conditions are encountered and must be addressed.

Exceptions to the general rule may arise where there was fraud or mutual mistake, or the parties expressly agreed in their contract how to allocate such risk and expense.

In our Law 101 posts, we define terms, phrases, or concepts with the goal of conveying core information in order to set the stage for more involved and complex discussions.

Land Surveying in Three Sentences

The Board of Professional Land Surveying is charged with licensing, regulating, and disciplining land surveyors in the state of Texas.texas land surveyor land surveying

Professional surveying includes any work involving the application of “special knowledge of the principles of geodesy, mathematics, related applied and physical sciences, and relevant laws to the measurement or location of sites, points, lines, angles, elevations, natural features, and existing man-made works in the air, on the earth’s surface, within underground workings, and on the beds of bodies of water to determine areas and volumes for: (i) locating real property boundaries; (ii) platting and laying out land and subdivisions of land; or (iii) preparing and perpetuating maps, record plats, field note records, easements, and real property descriptions that represent those surveys.”

According to the Bureau of Labor Statistics, perhaps unsurprisingly, the industries that employ the most land surveyors are architectural and engineering, government, and construction.

In our Law 101 posts, we define terms, phrases, or concepts with the goal of conveying core information in order to set the stage for more complex discussions.

The Texas Residential Construction Liability Act in Three Sentences

texas residential construction liability

Chapter 27 of the Texas Property Code is the Texas Residential Construction Liability Act.

The RCLA applies to any action by a homeowner (and subsequent purchaser of a residence) against a contractor arising from a construction defect, except for claims of personal injury, survival, wrongful death, or damage to goods.

The RCLA imposes pre-lawsuit notice, inspection, and settlement procedures, limits contractors’ liability and damages in defined circumstances, and establishes legal-fee shifting for frivolous claims, among other things.

In our Law 101 posts, we define terms, phrases, or concepts with the goal of conveying core information in order to set the stage for more complex discussions.