On Nov 2, 7:07 am, Swingman wrote:
CHANGE ORDER – COST PLUS

* SNIP *

Get a cup of coffee... this is a long one.

A couple of thoughts....

All valid points in the post Karl, as are the points preceding. On my
master contract (going from memory - not at my own computer) I have
another caveat that is somewhere in this neighborhood:

"While this Change Order affects the original scope of work and its
cost, it does not affect the Terms and Conditions of the original
Contract. All Terms and Conditions of the original Contract, unless
otherwise specified within this Change Order will be observed and in
effect as agreed to by both parties as if no modifications had been
made to the original Contract."

My contract delineates that "The Scope of Work to be Performed" has
all the details, including time needed to perform the work. It
includes the cost of work to be performed as well as materials needed
to perform the work.

When I built anything of substance, I kept a book of finish selections
and spelled out where each paint color went, each tile selection, each
bit of wallpaper, carpet, wood floor, deck stain, counter tops, etc.
This book of finishes became part of the contract by reference to "see
finish selections". My paint suppliers are required by me (now they
are printed automatically) to write the paint number on each can
received to match up with the book. Same with wallpaper, etc. I made
a copy for the client, but kept the original with their initials and
date under each selection under every selection.

My biggest problem when building a house (only built 5) was the people
changing their minds about finishes and colors. (I ran back screaming
to commercial my first chance to get away from houses.)

The Terms and Conditions part of my contract specify where to pay,
when to pay, and *a lot* of language warning the client that under no
circumstances will they screw around with me or our agreement. It has
the standard exculpatory language to protect me, but it also sets for
that if I have to hire any kind of help for payment, they will pay not
only the amount invoiced, but all related fees required to collect
including MY time.

(As a sidebar, I have tested this clause. I can recover the amount
needed to collect such as attorney's fees, etc. I was not allowed to
collect money for my time in that particular case because it wasn't an
exorbitant amount and the judge decided that should be part of my cost
of doing business.)

I found it necessary to add the "from memory clause" above into my
contract as an attorney friend of mine reviewed my contract and told
me that would be a good idea since **technically** I had changed the
contract without limiting the scope of change.

Think about it.... yes, we agreed to the add on, and its cost. Yes,
we agreed it increased the price. We further spelled out the time
needed to complete the specified work.

But... did we agree to the same exculpatory language? Did we spell
out the exact method and time of payment and what would happen if
those tenets weren't observed? In the case of any overlapping work
touched on by the contract, was/is it reasonable for the client to
assume that the new work would be treated differently in any way other
than specified in the contract? Will you have to listen to the
dreaded "oh... I didn't understand that... I thought this was
separate". Since it is more money, how will it affect the pay
schedule? You need to make sure the additional work and additional
money are completely protected.

You get the drift.

Over the years I have seen so damn many of my contracting amigos take
it in the shorts because they didn't have the legal experience to
fight off an unruly client. One of them in particular had trouble
with a client that paid the contract amount for work just fine, but
since the terms and conditions of payment for the change orders
weren't spelled out, the judge chastised him in small claims court for
not spelling out the terms of payment. That judge considered the
change order (careful to point out this out here; it was an ADD ON,
NOT a modification like a paint color change) to be a completely
different issue, and a completely different contract. Sadly, one with
no teeth for my amigo. The judge told my amigo that he thought the
change order resembled an invoice, not a component of a larger
contract.

While every attorney will look at any contract and tell you they can
break it easily, I haven't had one of mine broken yet. I am diligent,
and I have been tested.

But the amount of paper work and contractual expertise we have to have
these days to do the smallest thing is amazing to me.

One thing I have found out though; if you have a client that is going
to screw you, no amount of paperwork and legal blather will save you.
Nothing will. You will get screwed.

All a good contract does is to keep everyone on the same page, remind
them of what was agreed to, and to provide reference for how the job
is to be handled.

There is an attorney here in town that has something like 14 liens
against his home.... and he has another group of judgments as well.
He is legendary, and he does well until he has someone like me that
files a mechanic's lien against the house BEFORE I start a major
remodel, and modify it along the project time line.

When he finds someone like me (he hasn't found me, though!) he is
screwed. But there are plenty of guys ready to jump into the briar
patch with him.

I still remember when I did 99% of my business on a handshake. Man,
does that seem like a eon ago now.

Robert

On Nov 3, 4:34*am, "
wrote:
On Nov 2, 7:07 am, Swingman wrote:

CHANGE ORDER – COST PLUS

* SNIP *

Get a cup of coffee... this is a long one.

A couple of thoughts....

All valid points in the post Karl, as are the points preceding. *On my
master contract (going from memory - not at my own computer) I have
another caveat that is somewhere in this neighborhood:

"While this Change Order affects the original scope of work and its
cost, it does not affect the Terms and Conditions of the original
Contract. *All Terms and Conditions of the original Contract, unless
otherwise specified within this Change Order will be observed and in
effect as agreed to by both parties as if no modifications had been
made to the original Contract."

My contract delineates that "The Scope of Work to be Performed" has
all the details, including time needed to perform the work. *It
includes the cost of work to be performed as well as materials needed
to perform the work.

When I built anything of substance, I kept a book of finish selections
and spelled out where each paint color went, each tile selection, each
bit of wallpaper, carpet, wood floor, deck stain, counter tops, etc.
This book of finishes became part of the contract by reference to "see
finish selections". *My paint suppliers are required by me (now they
are printed automatically) to write the paint number on each can
received to match up with the book. *Same with wallpaper, etc. *I made
a copy for the client, but kept the original with their initials and
date under each selection under every selection.

My biggest problem when building a house (only built 5) was the people
changing their minds about finishes and colors. *(I ran back screaming
to commercial my first chance to get away from houses.)

The Terms and Conditions part of my contract specify where to pay,
when to pay, and *a lot* of language warning the client that under no
circumstances will they screw around with me or our agreement. *It has
the standard exculpatory language to protect me, but it also sets for
that if I have to hire any kind of help for payment, they will pay not
only the amount invoiced, but all related fees required to collect
including MY time.

(As a sidebar, I have tested this clause. *I can recover the amount
needed to collect such as attorney's fees, etc. *I was not allowed to
collect money for my time in that particular case because it wasn't an
exorbitant amount and the judge decided that should be part of my cost
of doing business.)

I found it necessary to add the "from memory clause" above into my
contract as an attorney friend of mine reviewed my contract and told
me that would be a good idea since **technically** I had changed the
contract without limiting the scope of change.

Think about it.... yes, we agreed to the add on, and its cost. *Yes,
we agreed it increased the price. * We further spelled out the time
needed to complete the specified work.

But... did we agree to the same exculpatory language? *Did we spell
out the exact method and time of payment and what would happen if
those tenets weren't observed? *In the case of any overlapping work
touched on by the contract, was/is it reasonable for the client to
assume that the new work would be treated differently in any way other
than specified in the contract? *Will you have to listen to the
dreaded "oh... I didn't understand that... I thought this was
separate". *Since it is more money, how will it affect the pay
schedule? *You need to make sure the additional work and additional
money are completely protected.

You get the drift.

Over the years I have seen so damn many of my contracting amigos take
it in the shorts because they didn't have the legal experience to
fight off an unruly client. *One of them in particular had trouble
with a client that paid the contract amount for work just fine, but
since the terms and conditions of payment for the change orders
weren't spelled out, the judge chastised him in small claims court for
not spelling out the terms of payment. *That judge considered the
change order (careful to point out this out here; it was an ADD ON,
NOT a modification like a paint color change) to be a completely
different issue, and a completely different contract. *Sadly, one with
no teeth for my amigo. *The judge told my amigo that he thought the
change order resembled an invoice, not a component of a larger
contract.

While every attorney will look at any contract and tell you they can
break it easily, I haven't had one of mine broken yet. *I am diligent,
and I have been tested.

But the amount of paper work and contractual expertise we have to have
these days to do the smallest thing is amazing to me.

One thing I have found out though; if you have a client that is going
to screw you, no amount of paperwork and legal blather will save you.
Nothing will. *You will get screwed.

All a good contract does is to keep everyone on the same page, remind
them of what was agreed to, and to provide reference for how the job
is to be handled.

There is an attorney here in town that has something like 14 liens
against his home.... and he has another group of judgments as well.
He is legendary, and he does well until he has someone like me that
files a mechanic's lien against the house BEFORE I start a major
remodel, and modify it along the project time line.

When he finds someone like me (he hasn't found me, though!) he is
screwed. *But there are plenty of guys ready to jump into the briar
patch with him.

I still remember when I did 99% of my business on a handshake. *Man,
does that seem like a eon ago now.

What did you charge for the handshake?

On of the only times I got screwed was on a handshake. It was pretty
weird as I was working as a subcontractor for a guy who had always
been my subcontractor and we had never had any sort of problem. I
didn't realize that handshakes were directional!

Good post. One question. I didn't know that a mechanic's lien could
be recorded prior to work being done. How is that and where are you?

R

On 11/3/2010 3:34 AM, wrote:
On Nov 2, 7:07 am, wrote:
CHANGE ORDER – COST PLUS

* SNIP *

Get a cup of coffee... this is a long one.

A couple of thoughts....

snip of good stuff

Most all remodel work I do, and I dislike the work intensely and the
circumstances in which I will do it are very narrow, and with the
exception of the kitchen portion, is on a cost plus, coordination fee
schedule.

Since I generally don't do remodels without a full, to the studs,
kitchen renovation, I cover the kitchen portion in a separate
contract/proposal generally included as an additional "exhibit" to the
basic remodel contract.

Basically, I like simple contracts if I feel I can get away with them,
if not, I go with boiler plate stuff I've used for years ... I spent 15
years in the O&G business, much of it writing and negotiating drilling
and operating agreements, and supervising an in-house title
curative/contracts section with as many as 11 attorneys at my direction
.... I've had the "contract" course to the nth degree.

When I built anything of substance, I kept a book of finish selections
and spelled out where each paint color went, each tile selection, each
bit of wallpaper, carpet, wood floor, deck stain, counter tops, etc.
This book of finishes became part of the contract by reference to "see
finish selections". My paint suppliers are required by me (now they
are printed automatically) to write the paint number on each can
received to match up with the book. Same with wallpaper, etc. I made
a copy for the client, but kept the original with their initials and
date under each selection under every selection.

I am REQUIRED by my colorblindness to do the same thing ... IOW, I deal
in numbers, not colors.

My biggest problem when building a house (only built 5) was the people
changing their minds about finishes and colors. (I ran back screaming
to commercial my first chance to get away from houses.)

I explain upfront that it is useless to ask me a question about colors
(and generally get the opportunity to prove it, but generally not more
than once, before they get the point fully.)

On a custom job my paint contractor of years deal with ALL questions of
color, in my presence, with the client. (The last custom I did in the
Austin area was with a paint contractor I'd never used before and, as
expected, they did paint one wall the wrong color before the owner
noticed ... BTDT, so I had had the foresight to cover that almost
guaranteed circumstance in the sub's contract)

On spec homes, I'm lucky to have a wife who is excellent at interior
design and I just turn her loose with a budget.

snip of more good stuff

I still remember when I did 99% of my business on a handshake. Man,
does that seem like a eon ago now.

In the recording studio business I got _damn good_ at making money from
a clientele who never has any ... musicians!

I'm here to testify that that experience alone will make a decent
business man out of a stone stump.

--
www.e-woodshop.net
Last update: 4/15/2010
KarlC@ (the obvious)

On 11/3/2010 7:53 AM, RicodJour wrote:

Good post. One question. I didn't know that a mechanic's lien could
be recorded prior to work being done. How is that and where are you?

That's a new one on me also ... being constantly required to obtain
releases, I'm pretty familiar with Chapter 53 of the Texas Property Code
and it seems on the surface that the notice requirements would preclude
that.

Then again, I'm not a lawyer, I just play one on the keyboard, and since
it was surely written by the breed, there are undoubtedly trapdoors,
intended or otherwise.

--
www.e-woodshop.net
Last update: 4/15/2010
KarlC@ (the obvious)

On 11/3/2010 8:48 AM, Swingman wrote:
On 11/3/2010 7:53 AM, RicodJour wrote:

Good post. One question. I didn't know that a mechanic's lien could
be recorded prior to work being done. How is that and where are you?

That's a new one on me also ... being constantly required to obtain
releases, I'm pretty familiar with Chapter 53 of the Texas Property Code
and it seems on the surface that the notice requirements would preclude
that.

Then again, I'm not a lawyer, I just play one on the keyboard, and since
it was surely written by the breed, there are undoubtedly trapdoors,
intended or otherwise.

I forget to add that I do recall a provision that when working with a
retainage, a lien can be filed at inception on the retainage, but I was
under the impression that it also took some type of notice and agreement
of all parties ... then again, it seems a pretty antagonistic thing to
do a client, but the guy in Robert's example sounds like he deserves it.



--
www.e-woodshop.net
Last update: 4/15/2010
KarlC@ (the obvious)

On Nov 3, 9:58*am, Swingman wrote:
On 11/3/2010 8:48 AM, Swingman wrote:

On 11/3/2010 7:53 AM, RicodJour wrote:

Good post. One question. I didn't know that a mechanic's lien could
be recorded prior to work being done. How is that and where are you?

That's a new one on me also ... being constantly required to obtain
releases, I'm pretty familiar with Chapter 53 of the Texas Property Code
and it seems on the surface that the notice requirements would preclude
that.

Then again, I'm not a lawyer, I just play one on the keyboard, and since
it was surely written by the breed, there are undoubtedly trapdoors,
intended or otherwise.

I forget to add that I do recall a provision that when working with a
retainage, a lien can be filed at inception on the retainage, but I was
under the impression that it also took some type of notice and agreement
of all parties ... then again, it seems a pretty antagonistic thing to
do a client, but the guy in Robert's example sounds like he deserves it.



Wouldn't touch the guy with a backhoe, no matter how potentially
lucrative the project or what protective clauses were in the
contract. The guy should be disbarred, and I'm sure eventually will
be.

R

On Nov 3, 9:58*am, Swingman wrote:
On 11/3/2010 8:48 AM, Swingman wrote:

On 11/3/2010 7:53 AM, RicodJour wrote:

Good post. One question. I didn't know that a mechanic's lien could
be recorded prior to work being done. How is that and where are you?

That's a new one on me also ... being constantly required to obtain
releases, I'm pretty familiar with Chapter 53 of the Texas Property Code
and it seems on the surface that the notice requirements would preclude
that.

Then again, I'm not a lawyer, I just play one on the keyboard, and since
it was surely written by the breed, there are undoubtedly trapdoors,
intended or otherwise.

I forget to add that I do recall a provision that when working with a
retainage, a lien can be filed at inception on the retainage, but I was
under the impression that it also took some type of notice and agreement
of all parties ... then again, it seems a pretty antagonistic thing to
do a client, but the guy in Robert's example sounds like he deserves it.



Wouldn't touch the guy with a backhoe, no matter how potentially
lucrative the project or what protective clauses were in the
contract. The guy should be disbarred, and I'm sure eventually will
be.

R

On Nov 3, 6:53 am, RicodJour wrote:

On of the only times I got screwed was on a handshake. It was pretty
weird as I was working as a subcontractor for a guy who had always
been my subcontractor and we had never had any sort of problem. I
didn't realize that handshakes were directional!



Now that sir, is sad. I have had different folks screw me, and some
got away with it. Realistically, how do you collect a $350 repair
when the folks don't want to pay it? How much is your time worth,
especially knowing the court system it could be a year and a half
before you come up in small claims court.

I have been working here so long that with my subs it isn't at all
unusual for me to contract for $7 - $10K on a handshake. Many will
start on a job for me (like my roofing subs) without knowing anything
about the job but when and where to show up. We *never* talk about
money until the job is finished. In fact, I help some of them bid the
jobs they do for me (and others) as I want to make sure they make
money and stay in business for our future endeavors.

They know if they do what they are supposed to do, I will treat them
fairly. I have a tendency to pay just a little bit more than the
market price for services to my favorite guys, so they respond by
taking good care of me.

Thankfully, the only big ticket item I ever got screwed on was when a
group of doctors filed for bankruptcy just as I finished their office
finish out. I was hit for a little over $16K, and I thought I would
never drink that one off.

But as far as a fellow contractor trying to put the drill to me..... I
literally grew up in construction. I know how to handle those things
for the most part. No lawyer needed.

Good post. One question. I didn't know that a mechanic's lien could
be recorded prior to work being done. How is that and where are you?

I ONLY do this when it is a big ticket contract and folks I don't
know. I like for my clients to know that we are playing on a level
field and they will nt be hiding behind any legal maneuvering or
shenanigans.

I am in Texas and spent a great deal of time in finance here, so I
learned from some very knowledgeable people.

I managed the construction/remodel portfolio of Norwest Banks when
they were here. As a matter of course, we filed a lien against the
property before allowing any work to start, because in Texas the
oldest liens (first filed) are considered superior to any subsequent
liens.

In the case of the liens being addressed (paid), each lien is
completely satisfied before going to the next inferior lien.

When at Norwest, we executed some fairly sophisticated liens
structures for their time, and modified them after each draw. Each
draw required 1) an invoice for a certain dollar amount from a
contractor 2) a description of the work performed requiring a draw 3)
a partial release of lien signed by the contractor detailing the
percentage of completion. If the contractor used subs for work
instead of all employees, we required releases from them as well.

The master lien held by Norwest was modified (reduced) at the end of
each billing cycle to reflect the new outstanding amount of the lien,
as well as the new loan balance accrued by the payout(s).

At the end of the project, the master lien was released after all
monies were paid out and all mechanic's lien waivers had been
collected with an attachment that acknowledged that the contractor(s)
had been fully paid.

The final release of lien and the loan documents were then given to
the permanent financing organization (bank, mortgage company, etc.)
and a permanent loan was established.

In the case of remodeling, many folks go to the bank for a second lien
these days. This is another opportunity for disaster if you don't
know what you are doing. Usually, the client still has a first lien
(mortgage). The bank they go to for he second will INSIST on being in
second position, superior to any contractor ( "mechanic an
workman's" ) liens. That means that the contractor is in the last
position.

If for any reason the property is foreclosed upon, (medical problems,
divorce, loss of ability to pay, etc.) the mortgage company will
foreclose. In Texas, since the mortgage company is almost always the
superior lien, they will be completely satisfied, even if they have to
take some money out of the second lien position. What is left after
the first is satisfied is the bank's position, and after that the poor
contractor.

So imagine this; clients start a new large room addition. The main
earner loses a job. The house is foreclosed upon. When sold on the
courthouse steps, it is under the market price because it is not only
a slow market now, but because the work wasn't completed since the
people quit paying their bills. Since they have a bunch of unfinished
work to contend with, bids are low and not much money is generated at
the foreclosure sale.

The mortgage company will most certainly be satisfied. The bank is a
little shakier, but they are great at protecting their own ASSets.
But that that poor contractor waits to see if there is any money left
after the banks pick the loan clean....

If the superior lien holders take all the money, the contractor gets
nothing. In this economy with falling real estate prices, it happens
all the time.

He is off to civil court to try to go after the client personally.
Good luck with that one.

Texas has some strong (and strange) real estate laws. New
construction is different than remodel, and you need to get a good
title company (or a law firm that specializes in real estate liens) to
make sure you have the proper liens filed the correct way.

Lonnnnng ago I found that it is more important to be a good business
man than it is to be a good contractor. You can lose your whole
company in one poorly structured deal. You can be a pretty good
contractor and still stay in business. But if you don't know the
legal aspects of what you are doing, the right customer (or their
attorney) can skin you alive if they want.

It's a jungle out there.

Robert

On 11/3/2010 1:39 PM, wrote:

f Norwest Banks when
they were here. As a matter of course, we filed a lien against the
property before allowing any work to start, because in Texas the
oldest liens (first filed) are considered superior to any subsequent
liens.

A different kettle of fish though, eh? ... a Lender has an entire legal
pallette of liens that a mechanic/contractor/materialman (unless I'm
missing something in the Texas Property Code) does not have access to,
from Deeds of Trust, to the liens of which you speak?

Then again, as every lawyer who I've tried to talk into suing a bank for
me has noted: In law school, if the question involves a bank, the answer
is automatically "the bank wins".

I can't get away with that.

It's a jungle out there.

And it's a lawyer's game and you can't win, even if you prevail.

IME, and it often happens that, the more contractual diarrhea used in
trying to protect yourself against all eventualities, the more you
expose your intent to adverse interpretation in a court of law.

I've learned to do everything I can to keep it simple, or I walk away
.... Bill Clinton's meaning of "is", notwithstanding.

--
www.e-woodshop.net
Last update: 4/15/2010
KarlC@ (the obvious)

On Nov 3, 3:43 pm, Swingman wrote:

A different kettle of fish though, eh? ... a Lender has an entire legal
pallette of liens that a mechanic/contractor/materialman (unless I'm
missing something in the Texas Property Code) does not have access to,
from Deeds of Trust, to the liens of which you speak?

I must confess that I don't remember the exact name of the lien type
that was filed. In the case of the Lender action, Norwest filed a
lien equal to the amount of construction as a second position to the
lot or land loan.

In some cases, the lot/land equity was actually deeded over to Norwest
as a down payment in lieu of cash. These transactions were handled
differently since Norwest held title to the real estate itself, and it
held the only position of interest against the real estate. With that
in mind, the Norwest would pay off the outstanding balance of a lot/
land, assuming the superior position. The master lien would be
modified (increased) as the construction continued until finished.

Since Norwest's loan was not on a house, they had to file the lien as
a lien against real property with proposed improvements (as you
know). At the end of the process we took the clear title and flipped
the construction loan including the lot and recast it as a permanent
"real estate" loan.

I had a few of my remodeling cohorts that (when they were still in
business... this economy finished them off) that filed a M&W lien
against a project before it started. Only prudent when you are doing
$80 - $250K additions.

Their liens were not considered valid for the full amount of the
project as while **in process** they had not performed the full amount
of work. The strategy there was to have the lien in place to protect
their position in the line of creditors, and if/when it went to court
the judge would modify the lien to reflect actual monies owed.

Texas real estate law is set up to protect the homeowner and in many
ways leaves everyone else (except the banks) out in the cold. Since
only the superior lien holder can force foreclosure, and only for the
reason of non-payment (not only the note, but insurance and taxes if
collected by them in escrow) a contractor that is in second position
has little power.

You can file all the liens you want and they will just sit in the
system. No harm will come to the deadbeat client.

That is why the banks and lenders have entire legal firms that
specialize in Texas real estate law constantly review, update, and
implement new documentation and strategies.

Then again, as every lawyer who I've tried to talk into suing a bank for
me has noted: In law school, if the question involves a bank, the answer
is automatically "the bank wins".

I can't get away with that.

Truer word were never spoken. The banks know the legal system/real
estate law so well that they can create a Gordian knot that can't be
unraveled by anyone but them. And one little hickey in your
paperwork... on small mistake... it can render your paperwork invalid
in some instances.

And it's a lawyer's game and you can't win, even if you prevail.

Can I get an AMEN on that one, brother? Not possible. Even if you
"win", you are lucky to be made whole, and if you are made whole, how
much goes to your attorney? And there is a lot of back and forth on
how much of your attorney's fee are "reasonable" and how much you
should allow as a normal cost of doing business for collections.

IME, and it often happens that, the more contractual diarrhea used in
trying to protect yourself against all eventualities, the more you
expose your intent to adverse interpretation in a court of law.

I agree. With plethora of unrealistic legal shows on TV, many now
think they are junior lawyers. I hear things like "I'm not sure I'm
comfortable with the language you used here" and other such drivel.
Some don't even understand what they are reading in the first place.
I think some believe it is a game, and the more aspects you provide
for them to consider, the more challenged they feel.

I've learned to do everything I can to keep it simple, or I walk away
... Bill Clinton's meaning of "is", notwithstanding.

We are certainly on the same path. I only do work for one attorney,
and he is such a great guy you would never know he was one. Others
are too argumentative, and LOVE to split hairs and interpret every
aspect of a project or repair. My current contract has the basic
legal caveats and verbiage in it, and no more. It is a simple two
page contract, with no tiny writing on it.

While this may sound arrogant, it isn't. I look at my meeting with my
proposed client as a mutual interview. I want to see if we are a good
fit for each other. If I smell trouble or there is an overly
aggressive know-it-all in the mix, I simply tell them "I don't think
we can help you" and leave.

Life is too short. The legal system is a long and winding road with
no end. Who needs the aggravation?

Robert

On 11/4/2010 12:50 PM, wrote:
On Nov 3, 3:43 pm, wrote:

A different kettle of fish though, eh? ... a Lender has an entire legal
pallette of liens that a mechanic/contractor/materialman (unless I'm
missing something in the Texas Property Code) does not have access to,
from Deeds of Trust, to the liens of which you speak?

I must confess that I don't remember the exact name of the lien type
that was filed. In the case of the Lender action, Norwest filed a
lien equal to the amount of construction as a second position to the
lot or land loan.

In some cases, the lot/land equity was actually deeded over to Norwest
as a down payment in lieu of cash. These transactions were handled
differently since Norwest held title to the real estate itself, and it
held the only position of interest against the real estate. With that
in mind, the Norwest would pay off the outstanding balance of a lot/
land, assuming the superior position. The master lien would be
modified (increased) as the construction continued until finished.

Since Norwest's loan was not on a house, they had to file the lien as
a lien against real property with proposed improvements (as you
know). At the end of the process we took the clear title and flipped
the construction loan including the lot and recast it as a permanent
"real estate" loan.

I had a few of my remodeling cohorts that (when they were still in
business... this economy finished them off) that filed a M&W lien
against a project before it started. Only prudent when you are doing
$80 - $250K additions.

Their liens were not considered valid for the full amount of the
project as while **in process** they had not performed the full amount
of work. The strategy there was to have the lien in place to protect
their position in the line of creditors, and if/when it went to court
the judge would modify the lien to reflect actual monies owed.

Texas real estate law is set up to protect the homeowner and in many
ways leaves everyone else (except the banks) out in the cold. Since
only the superior lien holder can force foreclosure, and only for the
reason of non-payment (not only the note, but insurance and taxes if
collected by them in escrow) a contractor that is in second position
has little power.

You can file all the liens you want and they will just sit in the
system. No harm will come to the deadbeat client.

That is why the banks and lenders have entire legal firms that
specialize in Texas real estate law constantly review, update, and
implement new documentation and strategies.

Then again, as every lawyer who I've tried to talk into suing a bank for
me has noted: In law school, if the question involves a bank, the answer
is automatically "the bank wins".

I can't get away with that.

Truer word were never spoken. The banks know the legal system/real
estate law so well that they can create a Gordian knot that can't be
unraveled by anyone but them. And one little hickey in your
paperwork... on small mistake... it can render your paperwork invalid
in some instances.

And it's a lawyer's game and you can't win, even if you prevail.

Can I get an AMEN on that one, brother? Not possible. Even if you
"win", you are lucky to be made whole, and if you are made whole, how
much goes to your attorney? And there is a lot of back and forth on
how much of your attorney's fee are "reasonable" and how much you
should allow as a normal cost of doing business for collections.

IME, and it often happens that, the more contractual diarrhea used in
trying to protect yourself against all eventualities, the more you
expose your intent to adverse interpretation in a court of law.

I agree. With plethora of unrealistic legal shows on TV, many now
think they are junior lawyers. I hear things like "I'm not sure I'm
comfortable with the language you used here" and other such drivel.
Some don't even understand what they are reading in the first place.
I think some believe it is a game, and the more aspects you provide
for them to consider, the more challenged they feel.

I've learned to do everything I can to keep it simple, or I walk away
... Bill Clinton's meaning of "is", notwithstanding.

We are certainly on the same path. I only do work for one attorney,
and he is such a great guy you would never know he was one. Others
are too argumentative, and LOVE to split hairs and interpret every
aspect of a project or repair. My current contract has the basic
legal caveats and verbiage in it, and no more. It is a simple two
page contract, with no tiny writing on it.

While this may sound arrogant, it isn't. I look at my meeting with my
proposed client as a mutual interview. I want to see if we are a good
fit for each other. If I smell trouble or there is an overly
aggressive know-it-all in the mix, I simply tell them "I don't think
we can help you" and leave.

Life is too short. The legal system is a long and winding road with
no end. Who needs the aggravation?

As usual, Robert ... well spoken!!

I'm waiting, as we speak, to pickup a signed contractand check that we
were, according to the client, going to do "in the morning". They have
had some unusual health issues, and are old acquaintances and previous
clients, so I'm not concerned, but like I told Leon, "don't hold your
breath".

(Just got email while I was typing this that he is on his way home from
the office so his wife can sign, and that he's got a check with him ...)

Leon, keep breathing!

--
www.e-woodshop.net
Last update: 4/15/2010
KarlC@ (the obvious)

On Wed, 03 Nov 2010 16:43:20 -0500, Swingman wrote:

On 11/3/2010 1:39 PM, wrote:


IME, and it often happens that, the more contractual diarrhea used in
trying to protect yourself against all eventualities, the more you
expose your intent to adverse interpretation in a court of law.


Where there is ambiguity in a contract, the ambiguity must be
resolved against the interest of the author of the contract.

Apprectiated this thread -- as a contractor and as an occasional
lurker.


Ken in Calgary.

In article ,
Swingman wrote:

[sneck]


On a custom job my paint contractor of years deal with ALL questions of
color, in my presence, with the client. (The last custom I did in the
Austin area was with a paint contractor I'd never used before and, as
expected, they did paint one wall the wrong color before the owner
noticed ... BTDT, so I had had the foresight to cover that almost
guaranteed circumstance in the sub's contract)

And, to add to the fun, there are paints that go on as one color, and dry
to something _completely_ different. Woe be unto you if the customer
sees the wet paint going on.

The specific paint I recall went on as a *BRIGHT* saffron yellow, but
dried to a subdued fern green. If I (customer) hadn't been on-site, and
observed the color shifting _as_ it dried, I would -not- have believed
that somebody did _not_ go in there and repainted the 'right' color.

Got forcibly reminded of this, when, some 25 year later, I had to do some
repair work on one of the walls in that room. Go down to the basement and,
yup, there is the carefully squirreled-away remanents of the various paints
used, labeled by which room, color name, and drips/smears on the outside
of the can. The right green smears on the outside, and bright yellow
inside. The touch-up work Looked even gaudier against the green background
than originally (over white primer). The next morning, you couldn't tell
where the repairs had been made. grin