Posts Tagged ‘Wolfe Law Group’

Construction Contracts – Pay Now to Save Later

On March 9, 2012 Author By Seth Smiley        

All to often in my job I am faced with clients who end up in a dispute on a construction project. Whether it be a public or private, commercial or residential, and no matter how large or small the project or contractor, the first question I ask any potential client is – where’s the contract? The contract is the cornerstone of any construction project and eventual dispute. It contains the scope of work and all provisions which govern when disputes arise.

Construction contract defined:

Construction Contract:A legal document which specifies the details of a construction project. A good construction contract will include: 1.The contractors registration number. 2.A statement of work quality such as ‘Standard Practices of the Trades’ or ‘according to Manufacturers Specifications.’ 3.A set of blue prints or plans. 4.A set of specifications. 5.Any allowances. 6.A construction timetable including starting and completion dates. 7.A fixed price for the work, or a time and materials formula. 8.A payment schedule. 9.A written warrantee. 10.A clause which outlines how any disputes will be resolved.

Any savvy contractor will have a custom tailored contract for each job that will help put that company in a good position when the dispute arises and its time to call the lawyer. A thousand dollar contract upfront can save a contractor thousands upon thousands later on in the project. Properly written ADR clauses and indemnity clauses can save a contractor thousands in legal fees and court/administrative costs.

All to often, I will have contractors operating on oral agreements, (just a handshake and a man’s word!) or I have contractors who download a form off the internet, not knowing what provisions lie within. In these current times, form documents and oral agreements are unacceptable. Parties who operate like this will lose money over the long haul, especially those who want to operate on a large scale and actually make money. Otherwise, the big boy contractors will make you use their contracts which are so lopsided that the other contracting party will never prevail in any dispute.

If you as a contractor are considering using  or signing a contract given to you by a contractor you are subbing to, then you should have that agreement reviewed by a professional so as to make sure the sub’s rights are protected. For more information see Wolfe Law Group’s website regarding contract drafting and contract review.

Posted in:     About Our Services, Construction Contracts  /  Tags: , , , ,   /   3 Comments

Louisiana Contractors & State Licensing – Home Improvement

On March 6, 2012 Author By Seth Smiley        

Just the other day here at Wolfe Law Group, I had to do so research for a client on the licensing rules for contractors. I deal with these rules daily but this client’s issue helped to refresh me. This got me thinking that many contractors and hiring parties do not necessarily know the rules that govern contractors of all types. Here in Louisiana, contractor licensing law is governed by the State Licensing Board for Contractors (SLBC). The actual statues are codified in La R.S. 37:2150 et seq.

Today’s post focuses in on a classification called Home Improvement Contracting. Home Improvement Contractors (La R.S. 37:2175.1 et seq) need to have a “certificate” (not a full license) with the SLBC to perform any home improvement contracting services in excess of $7,500 but below $75,000. These contracts need to be in writing and include: 1) full agreement between owner and contractor, 2) full name, address and registration number of the contractor, 3) detailed list of work and materials, 4) total to be paid & how the costs will be paid, and 5) finally signatures of all parties. Finally the owner needs a copy of the contract documents before any work can start. See La R.S. 37:2175.1 for complete list.

This seems like a very commonsensical list, but you will be surprise how many parties get this wrong and/or miss out on critical elements. The contract will not be deemed invalid if an aspect is missing but the rules need to be followed.

Residential contractors need to be registered with the SLBC. The contractor needs to make a written application with the SLBC, under oath. The application needs to include the following information in addition to proof of workers compensation insurance:

(B)(1) The applicant’s name, home address, business address, and social security number.

(2) The names and addresses of any and all owners, partners, or trustees of the applicant including, in case of corporate entities, the names and addresses of any and all officers, directors, and principal shareholders. This Section shall not apply to publicly traded companies.

(3) A statement whether the applicant has ever been previously registered in the state as a home improvement contractor, under what other names he was previously registered, whether there have been previous judgments or arbitration awards against him, and whether his registration has ever been suspended or revoked.

La. R.S. 37:2175.2

The requirements for granting this certification are more relaxed than the normal contractors license but there are grounds for denial and/or revocation.

If contractors are performing projects that fall within the $7,500-$75,000 window on residential improvements and they get caught for not being registered or not having the proper certification there are penalties. Penalties include administrative costs for hearings and a maximum of 25% of the contract price for the violating party. This could essentially mean thousands of dollars in addition to any causes of action that the homeowner may have against the violating contractor.

Finally, and most importantly for contractors, it is easy to get this certification. If a contractor is not properly licensed to be a home improvement contractor, and that contractor is not paid on the home improvement project, that contractor is legally prohibited from filing a lien on the project! (See La R.S. 37:2175.6) This is very important if you are a contractor trying to get paid. The homeowner can rip you off with very little recourse.

Bottom line: if you are a contractor who deals in home improvement, it is easy to get your home improvement license with the state. It will give you protections and keep you legal. Further, if you are a homeowner and know or suspect your contractor is not properly licensed, you have the SLBC to help protect you and penalize the offending contractor. I help contractors get this registration and I’ve also helped homeowners turn in violating contractors.

Posted in:     Construction Contracts, Construction News, Filing Requirements, Licensing, Louisiana, Regulations  /  Tags: , , , ,   /   Leave a comment

Sports and Construction – Lessons Learned

On January 17, 2012 Author By Seth Smiley        

Growing up in South Louisiana, originally from Baton Rouge and now residing in New Orleans, I’ve had a really rough week being a sports fan. After LSU laid an egg in the BCS Championship game and the Saints came up seconds short in the NFL playoffs, I began to ponder, what can we learn from this? Being a construction law attorney, I wanted my clients and readers to learn form the mistakes and shortcomings of my favorite teams.

Some general themes we can take away from both losses are that the teams who are most prepared and execute the game plan the best will be the most successful. In both instances, LSU and the Saints did not execute and were not as prepared as their oppoinent. In the construciton world owners, general contractors, subcontractors and suppliers succeed when they are fully prepared for the project at hand and fully execute the company’s specific game plan for success.

IF LSU’s BCS PERFORMANCE WERE A CONTRACTOR IT WOULD NEVER GET PAID

LSU worked very hard all season to get into the big game. This paralles a budding company doing all it can to land that very promising bid for a substantial project. A contractor prepares for months and years to get that big once-in-a-lifetime project. When the big stage rolls around, the contractor needs to make sure, he/she does everything correctly so that they get paid and produce quality.

In LSU’s case this contractor would have not been successful in negotiating a quality contract that is mutually beneficial to each contracting party. They would not have filed all of the preliminary documents such as a notice of contract. This is a company that would have had numerous delays along the way, many of its own doing. During the course of the project this company would have not made any adjustments as the project went along continuing to further bury itself with no chance for success. When then end of the project rolled around, there would be no substantial competion filed, no adequate demand for payment, no lien filed or any other tool used to secure payment. This company would be last in line to get paid, and when its all said and done, the dream project would have been a disater, possibly putting this company in financial ruin. I encounter this type of company all the time and unfortunately, by time it gets to my desk, there is little or no hope of securing full and final payment.

IF THE SAINT’S PLAYOFF GAME WITH THE 49′ERS WERE A SUPPLIER IT WOULD FALL SHORT OF SUCCESS

The Saints on the otherhand had a game that played out just a bit differently. Had it not been for mistakes early on and poor late game defense, they too would have advanced and been in the NFC Championship game. This is analogous to many issues that suppliers have when trying to successfully obtain full payment at the conclusion of a job.

By the time I get a call from a supplier who is not being paid on a job, many of the typical right protection devices are no longer present due to the mistakes that suppliers have made early on. When supplies are delivered to a job, notice to the general contractor, hiring party and property owner need to be given to preserve lien rights. Also, suppliers need to make good practice of obtaining a personal guarantee from the contracting party. Further, suppliers need to set up an “open account” in the supply contract, which will statutorily preserve rights for attorney fees and costs. All of these precursor items can be set up in the begining and save a supplier lots of time, money, and stress at the end of a project.

When I finally get the call from the supplier to aid in collection efforts, we make a strong last minute charge to file a lien, send a demand letter asserting rights under open account, and file suit to protect these causes of action. Depending on the set of facts at that juncutre will determine our chances of success. In the case of the Saints, too many early mistakes and a shoddy prevent defense, led to their downfall. If this were a supplier then they would have gotten pennies on the dollar at best on this project, no matter the last minute heroic efforts.

WRAP UP

We need to look at the success and failures of others and learn from mistakes and good calls. There are lessons to be learned here. My teams will live to fight another day, but many companies do not. In these economic times an ounce of prevention is worth a pound of cure, to steal a medical analogy. Set up your game plan to do it right from the start and you will end up with success, unlike the teams noted above.

Posted in:     Collections, Construction Contracts, Construction News, Delays, Filing Requirements, Litigation, Louisiana  /  Tags: , , , , , , , , , ,   /   3 Comments

Louisiana Suppliers – Extra Notice Needed for Lien Rights

On January 4, 2012 Author By Seth Smiley        

Over the past holiday season, I was at a Christmas party discussing with a friend of mine who runs an electrical supply company here in South Louisiana, the intricacies of notice provisions before a company like his can file a lien on a private project. Others party-goers probably thought our conversation boring, but we were intrigued. This conversation got me thinking that I should report to the supply world what my friend did not understand…

Here at the Wolfe Law Group we love liens. We file them for clients and recommend them to all others out there as a tool to preserve rights if, and often when, funds dry up and you are not paid on a construction project. Part of the privileged class under the Louisiana Private Works Act (La R.S. 9:4801 et al), are suppliers.

There are two types of suppliers protected under this act. Suppliers who lease equipment to contractors (“Lessors”) and suppliers who provide the materials to be used in the project (“Suppliers”).

EQUIPMENT RENTAL (see La R.S. Art. 9:4802(G)(1))

For Lessors, these companies need to deliver a copy of the lease agreement to the property owner and contractor within ten (10) days of when the leased equipment is delivered to the site. This notice is required as in most states to put all relevant parties on notice of potential future claims. So for companies who deliver equipment to job-sites as a rental, it is PARAMOUNT that you send out this notice so that you can file a valid lien after not getting paid. Then with your properly filed lien you can go after the party you have a lease agreement with and the property owner, general contractor and as a last resort you can foreclose on the property! Very strong rights indeed.

MATERIAL SUPPLIERS (see La R.S. Art. 9:4802(G)(2-3))

Next, for supply houses, such as plumbing materials, and electrical supplies – these companies also need to send out a notice to the property owner and the general contractor after delivery of goods. The Supplier needs to send notice of non-payment to the owner at least ten (10) days before filing a lien. Notice needs to be sent by certified mail return receipt and needs to have the name, address of the Supplier, description of materials provided, description of the property and the total amount owed, plus interest and fees. Also the Supplier needs to put the hiring party, general contractor and owner on notice of the items list above within seventy-five (75) days of the last month that the materials were delivered to the project via certified mail return receipt – or no later that then lien period. Strategically it may be best to send out one notice after the goods are delivered to all the parties above with the required information, just to preserve the right to file your lien.

These notice provisions can be tedious and if not followed to the letter of the law, will result in an invalid lien. The notice practice should become a staple in the administration of the aforementioned types of companies.  My office constantly invalidates liens that were not filed correctly. We also file a number of notices and liens which are filed correctly. General contractors and owners pay lien holders typically first because of the added security.

Bottom line – all of the successful rental and supply companies have these notice mechanisms in place. If you are a company who plans on competing in this arena, then following notice laws is always a smart plan.

Other resources on the topic: Zlien.com, reasestatelawyers.com, levy-law.com,

Posted in:     Construction News, Filing Requirements, Louisiana, Mechanics Lien  /  Tags: , , , , , , ,   /   Leave a comment

Happy Holidays – Goodbye 2011, Hello 2012

On December 29, 2011 Author By Seth Smiley        

The week between Christmas and New Years is typically a slow one for the legal and construction industries. Although, many projects rarely see breaks, this is a time when many companies take a look at the year that was, and reflect on all of the good, bad and ugly. Then look to the year that will be so that it can be made better than the last.

For most of us 2011 was a rebounding year or even a rebuilding year. The economy has leveled out (somewhat) and the public sector is pushing the construction industry forward. There is money starting to move in the private markets which will make way for projects into 2012.

I am optimistic for the year to come and feel like things are moving in the right direction for the construction industry. For those companies who have weathered the storm, hopefully good days lie ahead. For those who did not make it, there will be other opportunities where wise decisions will manifest from woeful past experience.

So from all of us here at the Wolfe Law Group we like to wish all of our clients, readers, followers, friends and family the happiest of holidays. Best of luck into the new year, may exciting times lie ahead.

Posted in:     Construction News, From The Experts, Louisiana  /  Tags: , ,   /   Leave a comment
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