Archive for the ‘Construction News’ Category

Landlords Have Rights! Use of Lessors Privilege

Lessors Privilege

Here in Louisiana, just as in many jurisdictions, there are certain rights or privileges which are bestowed on certain types of individuals or entities. These privileges are not effective until the person or entity decides to exercise those rights. A common example that we blog about here is the, Statement of Claim and Privilege, a Louisiana lien. The subject matter of this post refers to another privilege, the Lessors Privilege.

Lessors Privilege

The Lessors Privilege is found in the Louisiana Code of Civil Procedure under the “special proceedings” book and the “provisional remedies” code, La C.C.P. 3571. It is also found in the Louisiana Civil Code under the section Lessors Security Rights, La C.C. 2707.

I in layman terms the Civil Code lays out the laws and rights allowed to persons. Whereby the Code of Civil Procedure is the method of steps that a person needs to accomplish in order to properly exercise those code rights.

The Lessors Privilege is defined as:

“To secure the payment of rent and other obligations arising from the lease of an immovable, the lessor has a privilege on the lessee’s movables that are found in or upon the leased property.” La C.C. 2707.

This means that if a lessee (tenant) has not paid rent or any other obligation under the lease, the lessor (landlord) has the power under the law to seize the tenants property, by using the Sheriff or Constable, and hold it until the landlord can get a judgment against the tenant.

The Power of Sequestration

Saying that the landlord has a privilege over the tenants things is one thing, but carrying this out in the real world is difficult. Therefore the law uses a tool called Sequestration. If the landlord thinks its within the power of the tenant to get rid of the property he can file a writ of sequestration with the court and have the sheriff seize the property of the tenant who owes back rent.

La. C.C.P. 3571 reads:

“When one claims the ownership or right to possession of property, or a mortgage, security interest, lien, or privilege thereon, he may have the property seized under a writ of sequestration, if it is within the power of the defendant to conceal, dispose of, or waste the property or the revenues therefrom, or remove the property from the parish, during the pendency of the action.”

La C.C.P. 3572 goes a step further and allows for Sequestration based on the lessors privilege before the rent is due! This is extremely powerful and a good way to get that tenant to pay up before vacating the premises. Most writs of sequestration require some type of security deposit, but the lessor’s privilege is exempt from this requirement.

Of course the tenant has rights too but these must be enforced after the property has been sequestered. Tenant can get its property back by posting a security deposit in lieu of its property under seizure.

How Is All This Accomplished?

All of these rights and privileges are great but unless you know how to put them into action, they are meaningless. A good landlord / tenant attorney will be able to walk you through these steps. This procedure is complicated and landlords should always consult an attorney when making such bold moves.

Nevertheless, the Cliff Notes version of how to do this goes like this… First, the landlord need to file an eviction proceeding. This is a summary proceeding under Louisiana law and can be accomplished fairly quickly, in a few weeks. An eviction proceeding is the subject of another blog post. Once the eviction order or judgment has been granted and back rent is owed, then the landlord need to file an ordinary law suit to claim its lessors privilege.

Second, the lawsuit is an ordinary proceeding whereby it will not be expedited. The lawsuit needs to contain a sworn statement from the landlord that rent is due and how much. From there it needs to assert the Lessor’s privilege and use a Writ of Sequestration to seize the property of the tenant.

Third, once suit is filed and it contains a Writ of Sequestration with the clerk of court, the sheriff or constable will get the Writ and set up a time with the landlord to go to the property and take inventory of the tenants property. Here in New Orleans, the landlord can be named “keeper” and “mover” of the property therefore it can pay to have the property moved and stored to save costs. If not then the sheriff or constable will do this, many times a high price.

Finally, the landlord and tenant proceed with the lawsuit all the way until a trial can be had. Once a judgment is rendered in favor of the landlord, the property will then be sold at an auction. The proceeds from the auction will go to pay the costs and then to the judgment of the landlord. Any extra proceeds after these parties are paid, will go back to the tenant.

All of these steps can take a while. This process can take weeks, months or even years depending on how much is at dispute and how much the tenants fights the suit.

Conclusion

Overall, this is a very powerful process and savvy landlords will use this process to their advantage to claim the lessors privilege. This can also be a costly process, but a properly written lease can provide for the repayment of attorney fees and costs from the proceeds of any collection attempts. At the end of the day, the law needs to have teeth. The use of sequestration and eviction are ways that the law has teeth.

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Convenient Store Truth – A Regulated Industry

convenient store

As a construction lawyer there are many industries that I get involved with that are spin-offs of the construction industry. Typically, these are commercial collections, such as when contractors and suppliers are owed money on projects, they hire counsel to collect. Landlord/tenant is another spin-off, due to the fact that many landlords perform construction work on what the own or they build it new and lease it out. In both instances its natural to help clients with the collection or leasing aspects of the construction projects.  There are complicated contractual documents that are associated with these spin-offs, therefore clients need to look out for their best interests.

A not-so-common, spin-off I come across with regularity is the convenient store industry. I have had the fortune of representing owners, developers, suppliers and purveyors in this industry here in the New Orleans area. Most people use the services of these places whether it be a Shell, Velero or an independent without ever knowing what goes on behind the scenes. This is a very heavily regulated industry, with complex deals and transactions happening daily. Savvy business owners are the ones who are prepared.

Construction and Development

There are two ways to begin this type of enterprise and its no surprise that an owner/developer can either build a new store from scratch or they can renovate an existing location. The problem with building new is that the property needs to be zoned properly for the desired business type. You can’t just go around throwing gasoline into the ground, without getting approval from the Louisiana Department of Environmental Quality (DEQ). The property needs to be zoned properly or owners need to seek a variance through the New Orleans City Council.

Even if a development is a renovation of an existing location, there needs to be soil samples and testing done to make sure that the ground is not contaminated. This can be a nightmare for developers, and nearly the kiss of death if the ground is contaminated. Contracts between developers, owners and the installers of the underground tanks is essential. There is an element of passing along the risk that should be addressed in any document between these parties.

Running A Convenient Store Business

The actual business of running a convenient store can be done in the standard ways by either a corporation (Inc) or a limited liability company (LLC). The structure of the business is the same as any other business, and to be successful you have to see what products maximize return on investment.

The more tricky part comes in when you want to sell gas, food, liquor, tobacco and/or have video poker (allowed in Orleans and other surrounding Parishes). All of these aspects are heavily regulated by both local and state government. There is a mountain of paper work that any owner needs to be familiar with when seeking to increase revenue from any of theses sources.

Both the City and State have arms for the the board of health that regulates food. Liquor and tobacco are regulated by the City and the State’s Alcohol and Tobacco Control (ATC). Video Poker (if you have alcohol permit and sell enough food) is regulated by the Louisiana State Police. All of these agencies have different rules and standards that convenient store owners need to be familiar with. Application processes are time consuming and tedious.

Gas Related Regulation

As mentioned above the petroleum industry is one of the most heavily regulated industries in the country. There is regulation with regards from the installation of the pumps and storage tanks. Regulation on the pricing and distribution. Even a mere understanding of the Louisiana Superfund and remediation process if there is ever a site contamination is helpful.

The Louisiana Department of Environmental Quality has extensive resources and regulation on the way petroleum or gas is used in Louisiana. This is done so that we preserve the environment for later generations. Nevertheless, there is a huge price tag associated with this process and understanding it can pay dividends for convenient store owners.

A Business Like No Other

There are few businesses that encompass such complex local and state regulation like the convenient store industry. There are few businesses that take on such risk and become involved in complicated contractual schemes that shift risk to other parties and insurers.

So the next time you look at an Exxon, Race Trac or independent convenient store / gas station, know that there are many moving parts, starting back before the first shovel broke ground. Even as each truckload of gasoline is dropped off and each Big Gulp is poured, the government is weighing heavily on an owner’s metaphorical back. There are very complex contractual regimes which exist and countless hours of manpower that have been put in to that establishment and the services it provides.

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Contractors And Property Owners Prepare For The Freeze

By Cha già José from Vienna, Austria (Frozen Pipes Uploaded by darkweasel94) [CC-BY-SA-2.0 (http://creativecommons.org/licenses/by-sa/2.0)], via Wikimedia Commons

As a resident of the city of New Orleans, Louisiana, I do not see temperatures fall below freezing very often. When this does happen it is usually for a brief time and residents usually do not have much worry. Last night and tonight put the South Louisiana region in rare air.

When temperatures fall below freezing for durations of such as these its considered a hard freeze. I have clients, plumbers and HVAC companies who are working over time right now. It is very important for contractors and property owners to know what is happening and how to prevent a possible disaster.

The most common and most harmful result of a freeze such as this is for a water pipe to freeze and burst. I have had clients who have had water leaks for days without realizing and others for just a few hours and the damage was serious. Not only will the plumber bill be high to repair the broken pipe, but the water leak will cause significant damage as well.

If you own property that suffers damage from a frozen pipe breach, you will need to follow a few steps to make sure that you prevent harmful damage and then get made whole for any resulting damage.

Freeze Damage Prevention

Here, in South Louisiana we know how to protect property from Hurricanes and flooding but do not often experience sub-freezing temperatures. The two best ways to prevent pipes from freezing are to keep water running by dripping a faucet or to wrap your pipes in insulation.

Freeze Repair

Contacting a licensed plumber or handyman to aid in the quick response is pivotal to mitigating damages. Any insurance claim will be reviewed with the insureds duty to mitigate its damages in mind. The best course of action here is to get the damage repaired and stop further damage from any water leaks. This can be costly and any insurance funds my not be available for months.

Preserving Evidence and Reporting Claim After The Freeze

Once you repair the pipe and remediate the water damage, a claim needs to be processed with your property damage insurance provider. You should obtain this information from your insurance agent or from your policy.

Proper and prompt notice of the damage are essential to any claim. The damage is significant and an insurance claim may be made, then you will want to take pictures as the damages is revealed and through the construction process.

Next you will want to properly notify the insurance company by initiating the claim process. This will be a formal claim made in writing. Many policies need a “sworn proof of loss” to accompany the claim stating exactly how much damage happened. This can be ascertained from the contract you had with the plumber and contractor to repair all the damage.

The insurance company will want to send out its own adjuster to review the damage. Many savvy owners will hire their owner adjuster to provide an alternative report to the insurance adjuster report.

Many times its helpful to retain counsel in more complex situations to make sure you maximize your recovery and make sure that the insurance company is not getting the better of you.

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Happy Holidays from Wolfe Law Group!

Happy Holidays from Wolfe Law Group!

2013 has come and gone in a flash. We’ve had a great year at Wolfe Law Group and are excited to see what the new year brings.

We hope all of our clients, readers, friends, and colleagues are having a safe, wonderful holiday season and end of the year celebration!

Cheers to 2014, and Happy Holidays!

 

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Mediation – Success Involves The Right Frame of Mind

Measure SuccessHere at Wolfe Law Group, LLC, I mediate disputes many types. The disputes I usually handle are construction, collections, insurance claims, contracts and leases . Often times I am asked, what it takes for a mediation to be successful and if there is a trick to getting a successful mediation. Normally, it all depends on the parties frame of mind.

What Is A Successful Mediation?

The number one measuring stick and overall way the legal industry measures mediation success is whether the case settles, due to the mediation. This typically is a clean way for all parties to know whether the mediation was a success.

There are other types of successful mediation, whereby the parties agree to resolve some of the disputed issues but not all of them. In my mind, these partial settlements are a success.

Finally, I believe that just about every mediation that is completed and the parties work through the entire process is a success. Mediation is a unique tool that lets the parties prepare and evaluate the case strengths and weaknesses, before getting into a trial setting. There is no judge or decision maker, therefore parties as well as their attorneys can see what a neutral third party thinks of the merits. This can be very helpful and a real eye-opener for clients.

Another success story that comes out of working through the mediation process is knowing what the opposition is willing to do to resolve the dispute. You can determine whether you have someone who will work to get a resolution or an adversary who is irrational.

There Are A Number Of Factors That Go Into A Successful Mediation

There are many factors which can lead to a successful mediation. Each case is different therefore the importance of success factors will vary from dispute to dispute.

Ripeness is a big issue when it comes to whether a mediation will be successful. Some times its impossible to know if your matter is ripe until you engage in the mediation process, due to unexpected factors which may arise. Further, many attorneys will jump into mediation in order to get a quick deal. This practice is not beneficial to the client or the outcome of the dispute.

Attitude of the parties is another huge factor when it comes to the success of a mediation. There are disputes where all sides are irrational and cannot make a deal. There are other disputes when its just one party who is creating an impasse. A good mediator will work on parties to encourage positive attitudes with regard to making a deal. The mere fact that the parties agreed to come together, is a sign that reason is being applied and there’s a possibility for a deal.

Having all parties actually listen and work through all of the issues presented by each other party. Many times a party will only want to discuss its issues and not listen to what other are saying. This breakdown in the communication process can be very problematic for the mediation process.

Other Sources For Mediation Information

Mediation is quickly becoming one of the go-to methods for alternative dispute resolution. Its been around for a long time and will continue to be here because of its cost-effective alternative to standard litigation. There are a number of good sources which talk about successful mediation. NOLO.com has a good article with Ten Rules for Success. Marc Engel has a similar article with good information entitled 8 Steps to Make Mediation Successful.

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Posted in:     Arbitration & ADR, Construction News  /  Tags: , ,   /   1 Comment