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3 Benefits of a Demand Letter Written by an Attorney

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If you’re a contractor having trouble obtaining payment for completed work from an owner, a demand letter could be exactly what you need. Depending on the situation, a demand letter may be more appropriate than a lawsuit. Sending a demand letter rather than pursuing litigation against a business partner as a first course of action can even help preserve your reputation.

Read on to learn about the benefits of having a Houston contractor attorney from Cotney Law draft a demand letter for you.

1. Can Result in Payment

The ultimate goal is to get you the money you’re owed. A demand letter written by an attorney lets the project owner know you are serious about collecting payment and will persevere until you get compensated fairly. To impress the gravity of the situation on the owner, your attorney can add references to specific laws and contractual obligations that were not upheld. This may be all that’s needed to recover funds owed to you.

2. Saves Time and Costs

If you’ve spoken in person or on the phone to a nonpaying project owner, the situation can get heated and convoluted quickly. Before you know it, you’ve lost half a day to arguing without gaining any traction. A letter gives you the time and separation to state your case cooly and logically.

Having an attorney draft the demand letter shows that you are prepared if further action is necessary, and that’s often all it takes. Using courtesy and professionalism, your attorney will create a calculated, diplomatic demand letter as a means to an end. Taking the demand letter as a stepping stone instead of skipping ahead to a lawsuit has another upside too: drafting a demand letter takes less time and costs less than a lawsuit. That’s time back that you can use to work on paying projects.

3. Establishes Documentation

If there’s still no sign that the project owner is going to pay you, a demand letter can be used as an exhibit during litigation to prove that you provided notice. Drafting a letter also encourages the nonpaying party to write you back, providing further documentation. Sending the letter through certified mail with return receipt requested is another way to add to your evidence to prove that the project owner knows you made an effort to resolve the payment issue before litigating.

If you would like to speak with one of our Houston contractor attorneys, please contact us today.

Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.

Even the most seasoned contractors are often baffled by the sheer volume of knowledge required to skillfully handle construction pricing and contracting. If you feel like you’re losing out on your contracts, consult a Houston construction lawyer from Cotney Law to assist you with contract drafting, review, and negotiation.

In part one of this two-part series, our Houston construction lawyers introduced the topic of construction pricing and contracting by discussing some of the factors that influence pricing and the best procedures for submitting a competitive bid to procure lucrative contracts. Now, we will discuss negotiated contracts and speculative residential construction.

Negotiated Contracts

Unlike projects that seek out the best contractor through competitive bidding, private owners can opt to select a contractor directly. Negotiated contracts are more flexible with pricing arrangements and allow contractors more freedom when working on projects of substantial cost and complexity. Additionally, these contracts are ideal for repeated projects such as those that reuse apartment building design schemes. In this case, if one particular contractor has proven their efficacy with a past project, there’s little reason to seek another contractor unless price considerations come into play.

As a contractor, negotiated contracts can be extremely lucrative, especially if you are duplicating a past project. Calculating the price of a negotiated contract typically follows one of these methods:

  • Cost plus fixed percentage
  • Cost plus fixed fee
  • Cost plus variable fee
  • Target estimate
  • Guaranteed maximum price or cost

Speculative Residential Construction

When building houses or condominiums in new communities, contractors often build units prior to purchase. This is because contractors anticipate the demand of these units. If you build quality units, they will typically sell, so speculative residential construction can be quite lucrative. Plus, since there’s no fixed price of housing, you can scale the price to meet the current demand. Finding financing for these types of projects is relatively easy when working with lending institutions because these types of projects have been proven to make a considerable return on investment over time.

Whether you’ve been a contractor for two years or twenty years, it’s always smart to partner with a Houston construction lawyer to assist you with a broad range of services including bid proposals, bid disputes, contract review, contract negotiation, and more.

If you would like to speak with our Houston construction lawyers, please contact us today.

Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.

When constructing multiple facilities, each unique in their own way, it’s important to calculate independent pricing for each facility to account for the variable nature of construction projects. At the most basic level, the construction contract price is determined by the direct project cost. This cost includes the cost of field supervision and the contractor’s markup for overhead expenses and profit.

Although determining the cost to build a facility is dictated by many factors, it’s imperative that you have a comprehensive understanding of how these costs are calculated to ensure that your profits are maintained throughout a broad range of distinctive projects. In this two-part series, the Houston construction attorneys at Cotney Law will take an in-depth look at construction pricing and contracting.

Factors Influencing Price

Depending on the type of facility you are contracted to build and the location of the proposed project, your pricing will vary greatly. There are four major categories of construction:

  • Residential housing
  • Commercial buildings
  • Industrial complexes
  • Infrastructure

It’s vital to procure an accurate cost estimate before proposing a price to the owner. Once you have signed the contract, you will be legally responsible for fulfilling the contents of the contract. The cost, pricing scheme, and payment terms should be clearly explained in the contract. Since projects across these four categories can range from thousands to billions of dollars, you should always consult with a Houston construction attorney to make sure that you clearly understand your responsibilities before proceeding to sign a contract.

Submitting a Competitive Bid

If you want to procure lucrative contracts, it’s imperative to build a fundamental understanding of the bidding process. Submitting a competitive bid requires the contract to procure a detailed plan of the proposed project and any specifications to help illustrate how the job will be completed. This must take into consideration the objectives and requirements of the owner. You should also reflect on your prior jobs to see if the bid seems like a good fit. While submitting a cheaper bid might help you procure a contract, if you are unable to meet the requirements of the contract, you could find yourself embroiled in a legal dispute. Plus, another contractor could hire a Houston construction attorney to dispute your bid. If you want to protect your bid, a Houston construction attorney can assist you.

How do you establish that you are a “qualified contractor?” First, you will need to present evidence of past projects and exhibit financial stability. Procuring a bid for a private project is often easier than a public one since owners have the freedom to choose a contractor at will. They can allow contractors to openly compete for jobs or restrict applications to pre-approved contractors.

When it comes to public projects, the rules governing bid proposals are closely monitored by the government to give all contractors an equal chance of winning their bid. This process is enforced strictly to eliminate collusion or any other unethical or illegal actions.

To learn more about construction pricing and contracting, read part two.

If you would like to speak with our Houston construction attorneys, please contact us today.

Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.

When it comes to filing and perfecting a lien against a property, the property’s classification can have an immense influence on the tools available at your disposal to collect your overdue payment. As a result, before you can pursue a lien, you must first determine whether you supplied labor or materials to a residential property or a commercial property. Although the difference between these two types of properties is quite drastic, it’s not unthinkable to believe that you could find yourself occupying a gray area without a clue as to how you should proceed. When this happens, it’s important to have a Houston construction lien attorney on your side to clarify your legal recourse for pursuing a lien against an owner who refuses to pay.

Texas Property Code Section 53.001

The term “residential construction project” is defined under the Texas Property Code Section 53.001(10).

It states: “Residential construction project means a project for the construction or repair of a new or existing residence, including improvements appurtenant to the residence, as provided by a residential construction contract.”

In the State of Texas, lien laws offer greater protections to residential properties, especially if the property is utilized as the owner’s homestead. By comparison, commercial properties are protected, but not to the same degree that residential properties are. Since there are only two classifications for building construction, if a structure qualifies as commercial, then it is inherently non-residential, and vice-versa.

Similarly, Texas Property Code Section 53.001(9) defines a “residential construction contract” as “a contract between an owner and a contractor in which the contractor agrees to construct or repair the owner’s residence, including improvements appurtenant to the residence.” Put plainly, a commercial construction project will not be occupied as a homestead by its owner after completion.

The Residential Versus Commercial Debate Can Be Complicated

As we mentioned above, the key to determining whether a project is residential or commercial in nature depends largely on its use. For example, if you are contracted to build a custom home for a homeowner, the project is considered residential. However, if the property is later rented out to a tenant, the property would no longer be considered a residential property according to Texas Property Code. Additionally, building a spec house might seem like an example of residential construction, but it is actually considered a commercial project. In fact, building homes in a large scale development is considered commercial construction until the units have been sold to owners. Finally, apartment complexes are commercial properties despite being occupied by residents.

If you would like to speak with our Houston construction lien attorneys, please contact us today.

Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.