5 Things Every Construction Lawyer Wishes You’d Done Before They Defend You

Problems will always arise at some point, but construction lawyer, Aaron Cartwright, explains how and why a little bit of prevention can help you out big time when they do.

Watch this webinar to learn:

• Why it’s important to be prepared
• How to build an airtight defense to avoid a messy fight
• Ask a Texas construction lawyer anything

Full Transcript

Seth:
My name is Seth Bloom. I’m senior director of attorney services at Levelset here in new Orleans. We’re putting on a lot of webinars these days trying to get people as much information as they can, especially during these times of uncertainty with COVID. You can always, if you have any questions during this webinar, please post questions and Aaron can answer them. And if you’re not, we’re not able to get to your questions, you can post them on the expert center or ask Aaron directly and we’ll talk about that a little bit. Don’t be bashful. Please ask questions. So we’re really excited today to have Aaron Cartwright from Arlington, Texas who practices in that greater area. Give us a webinar on building your case. So Aaron, thanks so much for hosting this webinar today. We look forward to a great presentation.

Aaron:
Everyone can, can you all hear me? All right, sound okay? Everything sounds good. Awesome. Awesome. Okay, so first I would like to thank Levelset for having me. I greatly appreciate the opportunity to educate anyone whenever I’m given the opportunity. I think that, you know, the more education people have, the more likely they are to succeed. And I absolutely 100% need all of y’all to succeed for selfish reasons, very selfish reasons. But today’s presentation is going to be basically how to protect yourself because a lot of the questions that I get from my contractors, so I’ll introduce myself here in a second, but a lot of the questions that I get from new contractors, from contractors that are, you know, experiencing the litigious nature of Americans involves, well, how can I protect myself in the event that something stupid happened? Well, here we are.

Aaron:
So I am a business securities and construction attorney. I do primarily litigation construction litigation specifically. I represent mostly contractors, but I have represented property owners. I, you know, file liens. I enforce liens, I enforce breach of contracts. Basically I sue people and I defend people who get sued. It’s what I do and I enjoy every second of it. But being where I am, I see a lot of the same problems over and over and over again. And while they’re fixable during the litigation, it actually would help make your life easier, my life easier. And in result, the cost? Far cheaper if there were just a couple of things that we could do upfront. Okay. And that is where this presentation comes in. So there are going to be four topics today that are covered. The first one is going to be why this area is important, which we’ve already kind of gone over a little bit, but they were going to cover what happens at the beginning of a relationship between a contractor and a property owner or between a subcontractor and a general contractor.

Aaron:
We’re going to go through some of the stuff that happens during the course of construction during the course of a bill, during the course of a project, uh things that you should be doing to protect yourself things that you can be doing to just make sure that the project runs smoothly from your end as well. And then at the end, we’ll go through some of the things that are important on final walkthrough and punch list. Okay. So I also believe that there’s going to be a bonus section in here, but you know, I’ll, I’ll leave that as a surprise for everyone and feel free to ask questions. I do have some spots every so often where we’re just going to take a quick break or a quick break for questions. Okay. So why is this important? The reason that this is important is because lien enforcement and litigation are stories.

Aaron:
As a trial attorney, it is my job to tell your side of the story in the best, most convincing way to a judge and a jury, a judge and a jury are people. They’re people just like, you know, you and I, you know, you pick a jury of your peers, it’s 12 random people that sit in a jury box and make a decision on their case. There’ve been all sorts of studies done that show that people connect most with a story. And so whenever you are talking to them, whenever I am talking to them, whenever I’m presenting your case, I’m not just presenting facts and figures using, you know, the turns and the lingo and everything else because that overwhelms people. People’s eyes just glaze over. Okay? So what I am presenting is a story. And right here you see a timeline that I usually do at the very beginning of any litigation that I start.

Aaron:
Okay. And what this does is it kind of shows you how I walked through things from very visual perspective. Okay? So at the beginning we’ve got the contract for sake of argument and put this on January 1st, 2020 at your contract, you usually mobilize, you know, you go grab your first set of materials, you grab your labor, you put everybody home the project and you start, okay. There’s usually a, some people will ask for a mobilization or you know, 25% upfront, the down payments on and so forth. It’s not a really big deal, but some people will do it. That’s why it’s in green. Okay. After that, there’s work done. Usually there’s a payment. If the project goes long enough, more work, more payment project keeps going. There’s a change order somewhere in there. If you’ve got, you know, a particularly difficult setup, then you know there’ll be multiple change orders throughout the light of this.

Aaron:
But I had to keep this one simple today. Okay? So after your change orders, you’ve got more work that’s being done. You’ve got final walkthrough and you’ve got punch list. Okay? We’re not going to go into the specifics. We’re going to keep this one simple, but that’s the general overview. All right? So here at the very beginning you’ve got three things that in my opinion, you should be paying attention to and that you should take good care that you are noting properly. Okay? The first one is the contract. So the contract itself should, you should always have a contract and the reason that you should have a contract is because it is the first and best defense that you have against somebody saying you did do something or you didn’t do something that you were not supposed to. Okay? It provides clarity. It tells people, you know, who are the parties that are going to be here, what exactly is being done, where the project is going to be taking place.

Aaron:
Exactly how long the project is supposed to take or a reasonable expectation of how long the project is supposed to take. So on and so forth. But the primary primary takeaway from this should be that it provides clarity to everyone about the scope of work. You need that, I just wanted to say something because I see you have that nice icon of a handshake. So you’re not suggesting anyone just do business with the handshake, are you? So I have had people who constantly frequently tell me that the way they do business is with a handshake. I mean I’m a lawyer, I have a vested interest in people not doing business with handshake agreements. I think that it’s a, it’s a bad business practice nowadays. But there was a point in time where, you know, the handshake was just what it was. You know, people, people value their, and I’m not saying that people don’t anymore, but there was a time when people valued their word a little bit more.

Aaron:
In my experience, America in general has become just a lot more litigious. People are a lot more likely to say, Oh well you know, you damaged this or this wasn’t done or I asked you for this and you didn’t provide it. Like it just, it wasn’t a, but I have a vested interest in that. So handshake agreements, I’m not so much, even though do note oral agreements are enforceable in Texas. Alright? But the other reason for the contract has to do with that handshake agreement versus not. And that is lien perfection. Okay? So when you have a written contract it makes my life easy to enforce your lien because a written contract, you need a signature by the person holding an interest in the property. Okay? In certain situations it’s one person, one property owner. Until you go into a multi owner situation and you need to perfect a lien, your lien can only be perfected against the person whose signature against the interest of the person whose signature that you have.

Aaron:
Let me just give you an example. Okay, so let’s say that you’re going into business with a…, or your contractor. You’re going to do business with a house flipper. Well, the house flipper, they didn’t register their entity, so it’s one, it’s two people. Let’s just go ahead and call them. Husband and wife, husband and wife decided that they’re going to get into house flipping, right? Well a wife is going to manage the company from the back office. Husband’s going to be going out, you know, doing the projects, the front side, managing the contractors, so on and so forth. You show up with your contractor to this or you show up with your contract to the site. Only the husband’s there. So you get the husband to sign it. You go ahead and do the work at the end of the day. The, they don’t pay.

Aaron:
Okay, well now you have one excellent job and you have one signature on that contract. Good job, but not perfect because what you didn’t know was that behind the scenes, the husband and wife had decided that they weren’t going to bother registering their entity. And so whenever they bought the property, it’s in the name of the husband and wife. Now, even though it’s a commercial property, maybe you have two separate interests. Okay? You had the husband’s interest and you had the wife’s interest and they have an undivided right to that property. Well, when you place your lien, you can only place against the husband’s interest. And when you do that, that means that you can’t foreclose. And ordinarily commercial properties are a lot easier to foreclose on. Okay? So you can just, you know, shut those down and sell them all for your piece if you don’t get paid. But in this situation, without a signature by both parties, you only have the husband’s interest and therefore you can’t foreclose on it. So the only thing we’re left with is a breach of contract action with cause of action for promissory estoppel, quantum meruit bunch of other wonderful legal jargon which we won’t get into.

Aaron:
So that’s why you need a signature by all parties. Okay. So either corporate representative or both husband and wife or everybody that’s living there that you know would own the property. You can check the central appraisal district records if you want to get into that. But other than that it’s just who owns the property. Make sure that they sign it.

Aaron:
The next thing that you need to be looking at, our initial pictures the best contractors I had worked with were the ones that went into a job site and as they were doing their initial walkthrough or before any of their guys ever stepped foot in there, they took pictures of the work area before anybody had done anything. And the reason that’s important is because you don’t need to walk into a spot where there’s already busted wood work, busted Wall work, busted machinery and then you don’t take pictures, you walk out and now somebody is trying to claim that you bust it up. You know, their wood work, their machinery, something that was on the property and you’re like, but I didn’t and how are you going to prove that? So the best contractors, like I said that I’ve worked with have been people that took pictures of everything right before they started just so that they had kind of a, this is our entry picture, so on and so forth. But here’s a good place for questions. Any questions so far?

Seth:
I don’t think we have any right now. It looks like we’ve got a quiet audience today, but I’m sure we can get them going in a few minutes. I know some will pop up. I don’t know, Aaron, to your point, my brother in law is a contractor and you know, you think a contractor needs to really always be on site, but they do such a good job at taking photos before and then having their supers go through and take pictures during it. It’s amazing how some of these new platforms can really watch the progress go.

Aaron:
Absolutely. There are several of them out there that will keep track of the pictures for you. I don’t know how much costs, but no, they’re, they’re super useful if it’s a routine part of your business, but alright, let’s go ahead and move to kind of the middle section as work itself is being done. Alright. Don’t pay too much attention to this, but kind of do because the pictures are out of order. Okay? And so I might have to flip back and forth between these next two slides. Alright. So the first thing that you’re going to be looking for, this is a primary importance are payments over here and lien waivers, okay. Obviously you’re doing work so that you can get paid. Understand that your liens have to be done for each invoice that has been submitted and not paid on. Okay. Consider it getting multiple bites at the apple.

Aaron:
Okay. So you’ve got a project, you’re on this project for two months. You’re supposed to be getting three payments during those two months, all right? Every other week. Okay. Plus your initialization, right? Well, you go in and you, you know, do the first month’s worth of work. You know, you submit two invoices for it, right? Well, those invoices haven’t been paid 30 days later, but you’re continuing to do work on the project. Okay? Now you do have some time to discuss or you do to have some time to send out lien notices or whatnot. But what you need to do is realize that each lien or your lien rights extend to each invoice. And so if you let a payment requested in January, slip all the way out to April, even though you were on the project until March, then you’ve got a problem. Okay?

Aaron:
So you’ve lost the right to lien on the amount that that invoice covers. That is very important, so just pay attention to that. All right. The other thing that we’re going to discuss here is the middle picture, and this was my fault for not organizing this the way I kind of should have beforehand, but during, there are four types of lien waivers, okay? Those four types of lien waivers can be divided up quite quickly. They are conditional and unconditional on progress and final. Okay, so you’ve got conditional on progress, payment and unconditional on progress payment, and then you’ve got conditional and final payment and unconditional on final payment. And what this means is very simple. So the, the real words, well, we’re not gonna go into real words, but basically you need to just pay attention to conditional and progress. Conditional means that you go to the job site, the general contractors there, the property owners there, they hand you a check and they want to lien waiver, okay?

Aaron:
If they hand you a check and they want a lien waiver, you had to make an additional product. You hand them a conditional lien waiver on progress payment. And the reason for that is that means that you have been paid. But as of the time that you sent the lien waiver over, or the time that you signed the lien waiver, the check had not clear, had not cleared. Okay. Meaning that it’s conditional. Because when it does clear, that means that you no longer have rights to lien because you’ve been paid. Okay. But in the event that they stop the check, the check bounces or something like that, your lien rights are still preserved. Okay? The next one is unconditional. On progress payment. You go to the job site, the GC or the property owner hands you a cashier’s check, which are readily available, funds guaranteed or certified funds or they hand you cash, however you want to, you know, get paid, okay?

Aaron:
Unconditional means that you’ve been paid enough. You can basically take that money and go out to the grocery store and buy groceries with it, all right? You can pay your guys right there, however it is that you want to do it, but it means that you recognize that you have been paid at the same time. That or the money is good at the same time, the the lien waiver is signed, okay? There are certain circumstances in which people will say, well, we want, you know, an unconditional lien waiver on final payment. Like, no, if I haven’t been paid, like if you hadn’t been paid, if the check hasn’t gone through, it’s not the full amount. You’re not getting an unconditional lien waiver on final payment. Like you’re just not. And it’s not a requirement by law that you have to, that you have to have that unconditional final payment before you get your check from the general contractor, the property owner.

Aaron:
So people will try it, you know, scare you in deciding those things. Don’t be scared. The next part that we’re going to go through pictures, pictures are going to be a running theme throughout this. Okay. So I was answering a question by a gentleman on a Facebook group yesterday, I think it was, and it’s absolutely perfect for this presentation. What he was saying is that he would go and he would do work, but then when he came back the next day, parts of the work would be damaged and there would have been multiple contractors out there, multiple subcontractors, and then you know, he wasn’t responsible for it, but the general contractor, the property owner made him responsible for it because they’re like, look, you damaged this and we wanted it in perfect condition. Here’s the deal. If you’re taking pictures as your progress is going along, you can show the owner where you walked off the job site, you know on a Monday you came back on a Tuesday and you’re, you know, stuff was busted up, right?

Aaron:
But when you walked off the job site on Monday, it was perfectly clean. Everything was hanging exactly where you left it. The job site was cleaned, the paint was in order, you know, everything was clean. You can show him that in a picture and then what’s he going to do is say, well, you know, you came in early and destroyed it yourself. Like why? That doesn’t make sense. Pictures are very important. They show your side of the story. Whenever you are in court, you are showing your side of the story. People want to know what happened. People want to be able to connect with it and in order to do that, one of the best ways to do it is through pictures. Take the pictures. Just doing Aaron, we do have a question from Lisa. Awesome. Lisa, what can I do you for? Lisa asks for projects that are bank funded, the bank always requires that I sign signing unconditional lien waiver prior to getting the final paid. I’ve tried to refuse and explain why with no luck. Any thoughts?

Aaron:
Yes. Consider who is asking you that question. Okay. it’s a bank. Technically it’s a bank asking you that question, but the bank itself has set down a policy for everyone to follow. Okay. And it’s really simple to tell 500 employees, just get the unconditional final lien waiver on final payment right before you hand over a check. Okay. That’s what the policy is because it’s the property code is real confusing on some of this stuff. Okay. That’s their policy. The person who’s executing that policy is an employee. Okay? They’re, they’re working for somebody else. That’s their job. They’re not, they’re not the ones doing the work. They’re not the one researching the law. They’re not the one executing on this. They’re just the one saying, bank policy says that I can get this from you.

Aaron:
And that situation, I would say that it’s all right to go ahead and do it. Okay. Now the reason I say this is because an unconditional final lien waiver that’s executed and then a check is given to you that later bounces or somebody decides that they’re not going to pay. I can still enforce your lien rights on that because the liens invalid or the lien waiver is invalid if you weren’t paid. That just makes this scenario a lot more complex. The easy way to do it is to give them the right lien waiver. Did you know fast way to do it is to get them the one that they want. The right way to do it is definitely to get them the one that they’re actually needing. Did I say that right? Basically saying easy, fast, and cheap, you can only have to, sorry.

Aaron:
But in, in that case, I mean I would also just do the bank, like if I’m, if I’m enforcing that and they either don’t pay you or they decided to stop the check for work that you’ve already done and submitted a lien waiver for. I’m bringing the bank in and they don’t like being sued, so they tend to pay up. So the next part, change orders. Change orders are a big concern because a lot of the times what I find is that people will, while they’re on the job, the jobs moving away, if they’ve got a hundred million moving parts going at the same time, everything’s, you know, firing on all cylinders. So when somebody walks in and says, Hey, I need this change, you know, you agree to it, you set a price to it and then you keep moving, right? You maybe write it down somewhere.

Aaron:
I need you to do me one tiny, tiny favor. When you’re standing next to that person, send them a text message. Okay? So if they’re saying, Hey, we decided that we want the paint in the living room to go from blue to red, you’re like, okay, I have blue paint on or blue paint on site already. It’s going to take me a day to get the red paint in here. We’re going to have to charge you, you know, 30 or $40 extra or however much, and we’re going to be delayed by a day because we had originally thought that this would only take, you know, we’d be done by Monday, but it’s going to take us till the end of Wednesday. Okay. Send that in a brief text message while you’re standing there next to them and get back. You know, just have them send back a yes, I can do so much more with that than I can do with absolutely nothing because it comes into a, well.

Aaron:
He said, well, she said, nobody likes that. The judge, the judges like to see what’s in the contract, what’s written. Okay. Obviously stay with the change order slide here, but obviously my best, my preferred practice of doing it whenever I have people in my office and I’m, you know, helping them set up their shop, I will provide them with a change order form. Okay. Just a little blank change order form with, you know, room to put everything the date lines for expected delay. Any additional payment, you know, signatures for everybody to approve as well as, you know, their address. We try and customize it to their shop, but it’s still, you know, a generic change order for that would be the best way. Any event that you can’t do that, try and get a text, try and get an email, try and get something that’s written down and that’s where that picture comes from.

Aaron:
But actually I’ll get into that. Seth, I think you’ve got a question,

Seth:
Lisa, just asked a followup. But I think you just answer it and said, do change order. There’s need to be physically signed as an email. Okay. And I think you were, you were saying that if it’s reduced down to writing, that would be sufficient.

Aaron:
Yes. Okay. So do they need to be signed? Having a signature on them is the best way to do it. But having an indication of approval by whatever means is second best. Okay. So the litigation is not a very, I try and make it as linear process as I can, but there’s a lot of very soft aspects of it. And so it’s like, okay, you can’t get somebody, you know, you’re the person, you know, let’s say that you’ve got a single owner and they’re off in a completely different state, but they need you to change something and they, they’re calling you to do it.

Aaron:
Okay. Well, again, you don’t have to have a signature, but go ahead and send them a text message while you’re on the phone with them or send them an email before you touch anything. Okay. And get them to approve it. And once they say, yeah, go ahead, or I approve this, or yes, then I will take that out. I will take that back. And when I’m doing my discovery process, I will print that out to say here is a change order because what it is is somebody wants something done, they are offering to spend extra money on it or whatever it is that they’re doing, you know, basically an exchange of services for money. And then they’re indicating approval. That is a valid contract. That is a valid change order. Okay. Seth, questions?

Seth:
Yeah, I think you answered it. Another one. But can you put something in a contract that says, you know, any work under let’s say $500 is not necessary to have a change order. Can you do that?

Aaron:
You can absolutely do that. You can put anything into a contract that two adults can agree to, but that’s not going to keep them from suing you. You know, that’s not gonna keep them from saying, okay, well if it was a, if it was a change requested, well I didn’t request this change or I expected him to give me some sort of a, you know, give me like three choices before you just go ahead and spend $450 of my money. Because I mean a lot of times you know, the property owner’s situation will change and when the property owner’s situation changes, you know, at the beginning they were super flushed with money. They had the ability to pay you. Next thing you know, COVID 19 hits, they lose their job. Now when they were super flushed with money, that’s now grocery bills.

Aaron:
Okay, that’s, that’s light bill. They don’t have anything incoming. So $450 or anything under $500 becomes material. But they wouldn’t have, they wouldn’t go back to the contract. In my experience, and I hate to tell it to you, people don’t go back to the contract until something happens and by the time something happens, you know, now you’ve executed on this thing using the authority that you had under the contract. Well, they’re still going to drag you into the, they’re still going to drag you into court, which is going to cost you money saying that well I didn’t order this or I thought that I’d be given some options or I wanted to you know, pick the cheapest option and I wasn’t given that opportunity. You just kind of want to head that off at the past. Obviously you can put it in your contract.

Aaron:
I will definitely, you know, put things in contracts that people ask for that are reasonable. That’s a reasonable request. I can put that into a contract. No problem. Just understand that, that that itself isn’t going to prevent you from being sued. It’s going to help set you up to win. But the, the thing that will kind of tip you over the edge into a higher likelihood of winning, I can’t guarantee wins. Obviously. I’m still a lawyer. But the thing that will tip you into a higher likelihood of winning is a is having that person to prove it in real time. Okay. Which, you know, text message, email, however you want to do it. So both work, but having them approve it in real time is definitely a better way to go. The other reason why you want to get text messages and emails is because number one, people like to feel involved in the process.

Aaron:
But number two, it’s dirty, tricky, whatever the heck you want to call it. When somebody is absolutely raving about the absolutely wonderful job that you did, get that on paper because when they come back at the end and they say, you did a terrible job on everything, you’re like, no, 25% of the way through this project. You love the work that we, okay 50% of the way through this project, we invited you back on site. We walked the property with you. You loved it. You told us how awesome a job we were doing and how many other properties you wanted us to do. Get that in writing because your affirmative defense in case I Sue you is what’s called waiver. And waiver… Well, there’s several affirmative defenses. We’ll just go with waiver for the moment. Waiver means that they had the opportunity to exercise a known right and they chose not to. So they have the right to fire you from the job if you’re doing a bad job, but with them raving about the first 50% and how awesome a job that you did. It’s like, okay, well I mean you can’t complain about the first 50% when you saw it. You loved it and you paid us for it.

Seth:
Aaron, have you seen even beyond texts and emails, have you ever seen anyone do a video? Like I’ve seen personal injury attorneys suggest that and I’ve seen cases where basically the, the person would get out of the car and start talking about the accident and you’d have them all on video, you know, basically explaining the whole things. They couldn’t change their story. Would you suggest people take some videos of people you know, raving about the work?

Aaron:
So you… That one is a business decision. All right? So people are going to get real weird on camera when they realize that you’re videotaping them. It’s like, Oh, well why are you videotaping me? What, what is your purpose? Is there something that I don’t know about? If you can do video, by all means I’ll use it. If, if it’s valuable, I will absolutely 100% use it. But then there’s still a likelihood like, okay, well what are you actually going to capture on video and is that discoverable? So just you want to, you want to be careful about that. One special note in line with that question is, Texas is a one party recording state. Okay. I have had a contractor who had a particularly difficult client and the client basically admitted that they did something to damage the actual structure of the property.

Aaron:
It was one of the load bearing one of the load bearing walls that the contractor specifically told them, you need to not do this because if you do, you’re going to damage that wall. And when you do, a whole bunch of stuff is going to start shifting out of place. Right. Well, the the property owner did it. Sure enough,uthe low bearing wall got damaged, things got shifted. It was gonna require a whole bunch more money to fix all the other little parts, you know, that were, that come with, you know, moving a load bearing wall while there’s a load on it. And so what my contractor did was he actually had an app on his phone that was recording the conversation and he basically, you know, called the client up and he was telling them about how there were some things or they were discussing it.

Aaron:
And on that phone call that was being recorded, the property owner admitted that it’s like, yeah, you know, you told me not to do it. We did it, it got damaged. I’m sorry. You know, we’ll do this, that and the other. Okay. Now that was a very contemporaneous thing where, you know, it worked out, know the owner did you know, apologize paid for it. You know, didn’t blame the contractor, but what could have happened without that scenario is that the property owner could come back later and say, Oh well you know, you damaged this wall. Right? Well, without that recording then where would he admit? So am I saying go record all of your conversations? No. if you think that it would be a good idea to do that, Texas is a one party recording state and you do not have to let the other person know that you’re recording them.

Aaron:
So always speak to your history when you’re speaking to your clients. You never know when that’s going to show back up. Alright? One of the other ones, and I absolutely love this my favorite people do this. Not that you can’t be one of my favorite people too, but a construction journal. Okay? So if you’re running multiple crews and you’ve got, you know, that person that’s just your best guy, your, your super your project manager. But he’s going out and he’s making sure that everybody on all your projects is doing what they need to be doing. I highly recommend a construction journal. Okay. I know that there are people out there who just buy a spiral and write in it and all that other wonderful stuff. That’s great. But there is a such thing as a formal construction journal. I have sheets that I use and that I give to contractors if they want them, which is basically, it’s a single sheet of paper and it just has like a line item for date.

Aaron:
You know, the person filling out the journal entry. Whether if weather is a factor in your project, if you’re doing all interior work, there’s a likelihood that weather isn’t going to be an issue. But if you’re digging up a yard if you’ve got a place, you know, pulling underground heavy rain is going to be an issue. Okay. So every single day they note the weather. They know any permits that may need to be required or permits that were gained. They note the subcontractors that were on site, they know the materials that were delivered. They also know whether or not the owner was onsite. That was a big one because I’ve had some where the owner accused the contractor of not being on site every single day. And I’ve had some where the contractor accused the owner of never being there.

Aaron:
Okay. So it’s just like, was the owner on site snap a picture of him? You know, it’ll also, there’s also line items for like any potential problems that may have arose. Like, Hey, we, we ran out of our, our tools broke. I don’t know. We had to go to home Depot. It cost us, you know, two or three hours, we’re gonna pick this up later. Any potential delays that would have come up just during that day. Were there any change orders, even though change orders can be done on a separate thing, if the rest of your, you know, sheet is light, just go ahead and write down the change order. That was requested right there so that you have a just a reminder that there was a form, a change order, request it again, some writing goes farther than no writing.

Aaron:
The best writing is obviously formal writing, but if you’re not going to do that, just make a note. And then of course my favorite picture reminders, your best guy whenever they’re going through their construction journal entry is reminded to take pictures. Okay. And since this is like an everyday thing, you’ve a couple of pictures of the area that you’re working on and the progress that’s being made so that can be used later. It shouldn’t take too much time, but it might. So just keep that in mind. I see Seth coming back with a question.

Seth:
Well, I don’t have a question yet, but I just want to remind you the time. I don’t want to take up too much of it because we’ve gone over the 30 minutes. But yeah, wrap up and we’ll see what questions come through.

Aaron:
I think I’ve got two or three slides left or two or three big slides left. But I’ll see if I can roll through those real quick. Okay. next slide. Alright, so final walk through and punch list pictures. Again with the pictures, the reason that you have punch list items is because someone has said that there is something that was not being done right or something that needs to be corrected. Take a picture of that thing as it currently stands and then take a picture of it whenever you finish it. Okay. That way they can’t say, Oh well this is busted. And then they left it busted. You know, you got a picture of it being, you know, busted according to the customer and then you’ve got a picture of it after you’ve taken care of it, it resulted on your punch list. Okay. So just remember that your pictures tell your story. The less pictures you have, the less story you’re able to tell.

Aaron:
Okay. Because once it gets, once it turns into a lawsuit, it’s, it’s all what I can prove. So you know, I’ll put you on the stand and have you talk about it, but they’re going to put you, but they’re going to put themselves on the stand too and you will have never heard such stories. It’s going to be stuff that you didn’t know existed that happens all the time. Payments, your final payment has to be inclusive of all change orders and discounts or your final invoice has to be inclusive of all change orders and discounts. If you’ve been doing this beforehand, you know, as each payment was or is each invoice was issued, you were, you know, giving discounts for stuff that you didn’t do or you know, any change orders that were taking care of. If you were doing that contemporaneously, that’s perfectly fine.

Aaron:
But just remember that as of your final invoice, you need to have everything that you forgot to bill for earlier. Everything that you expected to bill for and any discounts that you’ve given. And the reason why I do that or the reason why I like that or I like to see that is because it’s called a rule 185 sworn account. And it needs are. And what that means is that if you have everything kind of line item down as far as what you need to be paid for, usually usually we can end the lawsuit a little bit faster, which means that you get paid a little bit faster, which means that it costs you a little bit less. So just keep that line item detail there. All right, I promise you all about a section here. It is the worst bonus section in the world.

Aaron:
I’m terrible. It’s lien deadlines. Lean deadlines are huge because if you miss them, you’re out. Okay? You lien deadlines are basically steps one, two, three, four and five. If you miss step number one, you cannot do what’s called perfecting your lien. And so when you can’t perfect your lien, I can’t sue to foreclose. I’m left with, you know, breach of contract action, which are great, but then I can’t take the property and sell the property and you obviously want to be paid, you know, if your property owner becomes judgment proof or your general contractor becomes judgment proof, I speak like I’m, you know, representing subcontractors. But if somebody up the chain, if the person that was supposed to pay you becomes judgment proof and you don’t have the property to execute on, you can pay me. But all you’re going to get is a piece of paper that says if somebody owes you money.

Aaron:
So there are two parts of a lawsuit. First part is winning. Second part is collecting. Okay, so you got to pay attention to your lien deadlines. For residential, you have to have your lien filed by the 15th day of the third month after indebtedness accrues. For commercial, you have to have it filed by the 15th day of the fourth month after indebtedness accrues. And for retainage you have 30 days to get a notice out of a retainage late. Okay. All in the property code. Here’s the rule of thumb. If you have issued an invoice and you have not been paid within 30 days, start moving towards a lien. Contact Levelset because I believe that Levelset does prelim notices. I know for a fact that they do the liens themselves, but contact somebody like Levelset, contact an attorney, but make sure that you start moving towards that.

Aaron:
The cost of the prelim notice and the lien requirement is minimal compared to the benefit that you would gain by making sure that you’re preserving your interest in the property. Okay, and if you can, all right. Next rule there is in the property code it says that you know you have until this day to provide notice to this person and this date to provide notice that this person pay no attention to that. The reason why I say that is because if you are a third tier subcontractor, what you need to be doing is you need to be providing notices of intent to lien to everybody in the chain above you. It costs you $4 and 10 cents per certified letter, okay? So if you’ve got four people above you send four letters, it’ll cost you 20 bucks total, okay? Plus the time it takes to write the letter.

Aaron:
And what it does is it makes sure that there is no argument later, okay? So there can be an argument if you’re a third tier. So it was like, well, was this person required to be provided notice? And what day did you provide this notice? Everyone that you send a notice to send it to everybody. Make sure it’s nice and polite because you’re speaking to everyone and your history, but send it to everyone above you in the chain. Okay. Alright, so last part, you see now why this timeline is important. Okay. Why everything as you’re going and as I’m building a case, what I will do is I will put in the records of payments where the change orders are by day. You know, I will attach my evidence to this timeline so that I can tell a judge and a jury, this is what happened. This is where things started to go wrong. You know, this is where we weren’t paid. This is where this change order was made. But nobody ever formalized it and therefore we didn’t do it. You know, that’s, that’s why this timeline is important and why everything that, you know, I do kind of builds toward that timeline. Hopefully it makes a little bit more sense now than it did in the beginning. Questions, comments, concerns?

Seth:
I don’t see any new questions, but I know a lot of times after one of these webinars, they kind of percolate.

Aaron:
I mean, that could also mean, but I was just really, really, really clear. I mean, we were aware that one,

Seth:
You were exceptionally clear and exceptionally thorough and I want to be respectful of everyone’s time. Most importantly yours, Aaron, for giving us this opportunity this afternoon to host a webinar. So I wanted to thank you. If any other questions do come in and you can post them on our expert center Aaron can answer them from there or you can ask Aaron directly. His information is up on the screen right now. Yes. these slides and this presentation will be made available afterwards. Again, my name is Seth bloom. I’m the senior director of attorney services at levelset. And thank you so much Aaron. We really appreciate it today. We hope for you to participate in more webinars. We want to see out there answering questions and I look forward to it.

Aaron:
Yup. And this is me in the flesh guys. I know that, you know, for the past 45 minutes, y’all been staring at an apparel at a PowerPoint presentation, but here I am. Thank you all for inviting me.

Seth:
Arlington Arlington, Texas near Dallas. There you go. All right, everyone. Have a nice day. And we’ll look forward to our next webinar. Thanks so much.