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While this coronavirus event grips the nation, contractors and subcontractors are asking whether this qualifies as a force majeure or changed condition event.  We think it qualifies as both. 

When you bid and signed your contracts, if the force majeure clause was given any thought, it likely was about the impact of a ...

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Small Business Economic Injury Disaster Loans

The Small Business Administration (SBA) has designated COVID-19 as a qualifying event for the provision of Economic Injury Disaster Loans to small businesses and private non-profits. As a result, on March 17, 2020, Governor Greg Abbott requested an emergency designation from the SBA for the entire state of Texas ...

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COVID-19 Made Performance Impossible – Now What?

The spread of COVID-19 has severely impacted our nation and economy. We are facing lockdowns, travel bans, and massive disruptions to day-to-day activities as authorities work to stop the spread of COVID-19. As the virus-related impacts spread, parties are likely to find it increasingly difficult to meet their ...

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A Matter of Trust – Avoiding the Pitfalls of the Texas Construction Trust Fund Act

Subcontractors have long celebrated—and general contractors long feared—the Texas Construction Trust Fund Act, codified in Chapter 162 of the Texas Property Code.  The Act, which is (ideally) construed broadly to primarily protect subcontractors, provides that payments “made to a contractor or ...

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Different Types of Construction Work: Chapter 56 vs. Chapter 53 and Why It Matters

If you are involved in the construction industry, you have probably heard of or dealt with mechanic’s liens. The majority of work performed on private Texas construction projects will fall under Chapter 53 of the Texas Property Code, to which mechanic’s liens apply. However, certain projects involve work ...

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Perfecting Bond Claims on Public Projects in Texas

Unlike with private commercial projects, liens cannot be filed against public projects in Texas. This means that unpaid subcontractors and suppliers do not have the same protections on public projects as those on private projects. On a private project, a subcontractor or supplier would ordinarily file a lien ...

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Top Five Construction Contract Modifications to Comply with Texas Law

Texas law has certain peculiarities which must be followed when a project is located in Texas.  To avoid surprises and unanticipated liability on construction projects, the parties should modify contracts consistent with Texas law—or at least be aware of the limitations that are in place due to certain Texas ...

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Part 1: Subcontractor Negotiating Tips for AIA Documents

What should a Subcontractor do when a General Contractor presents, to the Subcontractor, the 401A-2017 Standard Form of Agreement Between Contractor and Subcontractor (“A401”)?  While some provisions in the A401 are favorable to the Subcontractor, others are not.  This multi-part series explores some of the ...

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The Consequences of Betting the Ranch

Different types of damages may be recoverable from a breach of a design, construction, EPC or other construction-related contracts. The baseline damages are “direct” damages, which are necessarily caused by a breach and compensate for the losses, for example the costs to repair faulty work ...

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Call-Back Periods in Call-Back Warranties – the Confusion Surrounding Their Effect on Other Warranties in Construction Contracts

Commercial construction contracts between owners and contractors, such as the form AIA Document A201 contract, often include various express warranties whereby the contractor warrants its work on the project to the owner. Among those express warranties are the more common warranties that: (i) the materials and ...

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The Often Overlooked Protection Provided by a Statutory Payment Bond Under Chapter 53 of the Texas Property Code

Owners of construction projects are often surprised to learn that they are required to withhold 10% retainage on private construction projects in Texas. Failure to withhold 10% can result in liability up to that amount.[1]  Similarly, owners often continue to pay the general contractor after receiving a lien ...

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UPDATE – More Construction Bills to Watch in the 86th Texas Legislative Session

The Texas Legislature is back in session, and lawmakers generally have until March 8, 2019 to file bills for consideration this session. In our original post on January 31, 2019, we identified several bills of interest to the construction industry that had been filed as of that date. Since that post, the ...

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Construction Bills to Watch in the 86th Texas Legislative Session

The Texas Legislature is officially back in session. While lawmakers generally have until March 8, 2019 to file bills, many bills of interest to the construction industry have already been filed. Below is a list of some key construction related bills we will be following this session along with a description of the ...

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Back to the Basics: Lien Notice Deadlines for First and Second-Tier Subcontractors

Texas Property Code Section 53.056(a)-(c) details the notice requirement deadlines that subcontractors must comply with to perfect a statutory lien on a private, commercial project in Texas. Simply put, the statute sets forth separate notice deadlines dependent on whether the claimant is a second-tier (and ...

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Alternative Fee Structure Goes Live for American Arbitration Association

Although arbitral institutions like the London Court of International Arbitration and International Chamber of Commerce have historically based arbitration costs on models other than a pure hourly-basis, the American Arbitration Association/International Centre of Dispute Resolution recently ...

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Hurricane Season and Disaster Preparedness: Part 2 – Insuring the Risk of a Hurricane on a Construction Project

As described by my colleague Sean McChristian in Part 1 of this two-part blog series, planning for hurricane season in Texas is a critical part of mitigating risk in the construction industry. In addition to reviewing force majeure provisions, owners and contractors need to have an understanding of the ...

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Hurricane Season and Disaster Preparedness: Part 1 – Review Your Construction Contracts Now, Not After the Storm

The Gulf Coast hurricane season runs from June 1st to November 30th each year. Because this is a known risk, many businesses prepare emergency response plans to mitigate risks to persons and property, but many of those same businesses are not prepared to mitigate economic risks arising from ongoing construction ...

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It’s a Flow-Down, Not a Flow-Up

Subcontracts between a general contractor and subcontractor often contain a flow-down provision stating that the terms and conditions in the owner/contractor agreement (the “Prime Contract”) are also binding on the subcontractor—making the subcontractor obligated to provisions in the Prime ...

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Is Your Expert Qualified? – Certificate of Merit Requirements

Filing a certificate of merit (“COM”) can quickly become a sticky situation for any plaintiff pursuing a claim against a design professional. Plaintiffs who comply with the COM requirements can still have their claims dismissed for various reasons. This post focuses on the necessary qualifications of the ...

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Limitations and the Discovery Rule: Revisiting Bayou Bend Towers Council of Co-Owners

November 2018 will mark the 25th anniversary of a significant case regarding the limitations period for construction defect claims in Texas. In Bayou Bend Towers Council of Co-Owners v. Manhattan Construction Co., 866 S.W.2d 740 (Tex. App.—Houston [14th Dist.] 1993, writ denied) the Court held that even ...

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Delays v. Disruption Damages

A recent Texas case clarified that both disruption and delay claims are potentially recoverable against a county pursuant to Texas Local Government Code § 262.007. Under the statute, sovereign immunity is waived to a certain extent against a county in Texas when the county is a party to a construction contract. The ...

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