Why Construction Creditors Must Pay Close Attention to Change Orders

Construction projects do not always go according to plans and are often prone to delays or supply changes. When one of the parties to a contract requests changes to the agreement, a written change order is an effective tool to keep track of these changes; however, they must be carefully executed to ensure payment in a timely manner.A change order s...
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Iowa Court Addresses Notice of Commencement Issues in Residential Mechanic's Lien Case

In Borst Constr., Inc. v. Finance of Am. Commercial, Inc., 2021 WL 3661426 (Iowa Ct. App. 2021), the Iowa Court of Appeals addressed the following three issues under Iowa's mechanic's lien statute in a residential construction dispute: the applicable deadline for a subcontractor to post a notice of commencement; whether work performed by a subcontr...
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New Florida Law Increases Penalties for Certain Construction Late Payments

On July 1, Florida legislation that imposes stronger consequences on late payments throughout the construction chain for certain services took effect. The consequences outlined in Florida Senate Bill 378 include higher interest rates on past due payments and criminal charges for those suspected of misappropriating funds."The statute change was base...
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Prompt Payment Laws Can Bolster Your Chances of Collecting Payments

As a materials supplier, maintaining leverage over some of the higher ups within the contractual chain can be a difficult task. To help mitigate this issue, suppliers should consider all of the tools in their toolbox—including the Prompt Payment Act.The Prompt Payment Act allows suppliers to hold some parties accountable for failing to meet payment...
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Get Paid Through Construction Trust Fund Statutes

Contingent payment clauses like "pay-if-paid" can provide those higher up on a construction project chain with an unfavorable advantage over material suppliers when attempting to collect funds. Fortunately, construction trust fund statutes can help suppliers retain leverage despite these clauses and increase their chances of getting paid in full.A ...
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How to Maximize Your Benefits Through Joint Check Agreements

Agreeing to payment terms and then achieving those terms can be a challenge—particularly in the construction industry, where there are tiers of buyers and sellers. Sometimes general contractors will use joint check agreements to issue payments simultaneously to a subcontractor and its supplier. These agreements clarify the rights of each party rega...
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How to Maintain Your Rights When Exchanging Waivers for Payment

Lien waivers are a tool that can protect creditors and their customers, when they are used correctly. However, it is important to choose the right type of waiver based on the situation because the wrong choice can leave a collections team empty-handed.NACM's Construction Credit Think Tank, comprised of construction credit thought leaders, recently ...
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Missed the Deadline to File a Mechanic’s Lien? Here are Some Options

The best way for material suppliers and subcontractors to ensure payment if a debtor files for bankruptcy is by creating a lien ahead of time. As a general bankruptcy rule, in most states, liens that are filed or perfected post-bankruptcy-petition are not successful.But if a mechanic's lien was not filed properly, or not filed at all, that does not...
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Construction Startup Katerra Files for Bankruptcy, How Are Creditors Protected?

SoftBank-funded construction startup Katerra filed for Chapter 11 bankruptcy this week in the Southern District of Texas, leaving numerous projects unfinished, between $500 million to $1 billion in assets, and $1 billion to $10 billion in liabilities. The company blamed its downfall on a number of factors in a recent statement, including financial ...
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Analysis of Job information is Vital Before Starting Work or Supplying Materials

When it comes to assessing a customer's creditworthiness, information is king. Gathering the critical information upfront helps subcontractors and suppliers set limits, reduces the chance of nonpayment and helps secure lien rights."The security of mechanic's liens and payment bonds afford you greater flexibility in extending the lines of credit to ...
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NACM Southwest Show of Strength Gets Bill Changed

NACM Southwest members recently took a stand against Texas House Bill 2237 during a public hearing last month. Thanks to their efforts, they were able to persuade the Texas House of Representatives' Business & Industry Committee to amend unfavorable language within the bill that they said hurt suppliers."I am pleased to report that the efforts ...
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What Lien Waivers Say Matters

Lien waivers are legal documents designed to protect both parties: the payee and the payer. However, addressing unfavorable language and negotiating the conditions of the waiver is essential to ensure your company receives equal protection in the process.To start, what constitutes conditional and unconditional lien waivers? Conditional waivers beco...
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How to Get the Most Out of Preliminary Notices

Whenever starting a new construction project, subcontractors and material suppliers should always verify state requirements for securing mechanic's lien rights.In most states, the process starts with sending a preliminary notice to the owner and general contractor. Start by determining whether the state in which you are working requires them. Requi...
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Court Supports Pro Landscape USA Lien Claims on Appeal

A Utah Court of Appeals decided in the case of Zion Village Resort LLC v. Pro Curb U.S.A. LLC that the order in which information is presented on a preliminary notice is not as important as having all of the necessary information.Pro Landscape had filed its preliminary notices for the Zion Village condominium project through the Utah State Construc...
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Nike Bombarded with Liens Totaling Over $100 Million

A heap of liens is stacking up against Nike and its general contractor following the construction of its monstrous campus expansion near Beaverton, OR. As it stands, about $110 million worth of liens, across several construction companies, have been filed against the corporate powerhouse.Topping this list is Hoffman Construction, which claims Nike ...
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Pushback on Texas House Bill Gets Pre-Lien Language Dropped

A seemingly innocuous Texas House bill turned contentious after the state House of Representatives' Business & Industry Committee considered a revised version that required subcontractors to send pre-lien notices at the start of each new project.The bill as originally drafted would not have created a lot of problems for NACM members, said Perri...
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NACM Members Testify Against Proposed Mechanic’s Lien Changes in Texas

NACM Southwest members testified last week against proposed legislation that would change mechanic's lien notice requirements and deadlines in Texas during a recent Business and Industry Committee hearing of the Texas House of Representatives.Although HB2237, sponsored by Rep. Dustin Burrows and Rep. Joe Deshotel (D), aims to simplify and modernize...
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Proposed Texas Bill Would Change State’s Mechanic’s Lien Process

The Texas legislature is considering House Bill 2237, which would alter how material suppliers file mechanic's liens within the state. If the bill is approved, it would change notice requirements and deadlines.To provide a quick overview, here's a list of what this proposed legislation would do:Eliminates the subcontractors' and material suppliers'...
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3D Technology Could Overhaul Construction Industry

When you think of commercial construction materials, supplies of concrete, brick, steel and wood stored in warehouses and shipped on demand would likely come to mind. Today, you can add a mix of materials generated on demand and on-site from 3D printing."Three-dimensional (3D) printing is an additive manufacturing process that creates a physical ob...
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Housing Headed for Bubble?

Those of you who remember the housing crisis that precipitated the Great Recession may have been looking somewhat askance at the situation facing the residential housing market. It has been booming throughout what has been an extremely difficult year and that begs the question: Is this another bubble ready to burst?Will there suddenly be a collapse...
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