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Where’s the Line Between a Demand Letter and Extortion? Part 2

The line between a demand letter and extortion can become hazy for contractors who are desperate to secure payment on a project that they have dedicated themselves to. In part one, we discussed what constitutes extortion and the penalties that can be expected for committing it. Below, a Houston contractor attorney will discuss how you can write an effective and persuasive demand letter while avoiding the use of threatening language that can get you in trouble. For assistance with all construction-related legal matters, including drafting demand letters, reviewing contracts, and filing mechanic’s liens, consult our Houston contractor attorneys at Cotney Law. 

Threatening Language to Avoid 

When drafting a demand letter, it is imperative that you check your emotions at the door. If you are faced with the pressures of paying for subcontractors, materials, and your own crew, it’s only natural to become angry when an owner refuses payment, but you must not let that cloud your judgment. 

Your demand letter cannot threaten an owner’s safety, family, friends, or reputation. You cannot threaten repercussions from a government agency, you can only present them with evidence of what you are owed and the deadline for when it is due. As far as threats go, you can only threaten future litigation. 

Writing an Effective Demand Letter Without Resorting to Threatening Language

Remember, your goal is to get paid. Everything included in your demand letter should work towards this outcome. Your demand letter should be typed and appear professional in every regard. It should clearly state the owed amount, the dates it was incurred, and the date it should be paid by. Include invoices and any pertinent documents that backup your claim. 

The most effective demand letters instill in the reader the reality that litigation will occur unless payment is received. Usually, a demand letter with a legal letterhead from a law office is enough to bring an owner to their senses and resolve matters without the need to go to court. 

Have an Attorney Draft Your Demand Letters 

The only way to guarantee that your demand letter is effective and non-threatening is to have it drafted by an experienced attorney. It is simply too easy for firm language to turn threatening, especially when your livelihood is on the line. And, as we discussed in part one, the penalties for committing extortion range from hefty fines to time in prison. Having your demand letter drafted by one of our Houston contractor attorneys is your best chance of securing payment while avoiding the pitfalls that have ensnared other contractors. 

If an owner has withheld payment, don’t allow them to get the upper hand. Partner with the team of attorneys at Cotney Law for legal counsel that will fight to secure your payment with a skillfully crafted demand letter.

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.

You may be thinking that the “demand” part of “demand letter” entails a strongly worded argument. But while your demand letter should be clear regarding impending legal action, it should never be threatening in any other way. Even when the other party is in the wrong, contractors can find themselves unintentionally committing a felony if they write a demand letter that is too strongly worded. 

This line between a firm demand letter and extortion isn’t always clear cut. In this two-part article, we will be discussing this distinction in detail. For aid in drafting demand letters and moving forward with subsequent legal action, consult a Houston construction lawyer from Cotney Law. 

What is Considered Extortion? 

Extortion is defined as the practice of obtaining money by threat of violence, damage to property or reputation, or unfavorable government action. Essentially, extortion is theft that threatens future consequences. While the injured party is not placed in immediate danger, an implied threat can target their personal safety, family, property, or reputation. Extortion doesn’t have to be committed in person. Telephone calls, emails, social media messages, and demand letters can be avenues for committing extortion. 

Furthermore, what can be considered extortion is far more nuanced than a threat of violence. In some cases, just accusing someone of a crime in a demand letter can be considered extortion. If you accuse an owner of committing a crime and threaten to embarrass or expose them, you may be committing extortion. 

What Are the Penalties for Committing Extortion in Texas? 

While extortion is illegal all throughout America, the penalties for it vary from state to state. In the State of Texas, the severity of the penalty for extortion depends on the amount stolen. The penalties for committing extortion in Texas are as follows: 

  • Third-degree felony: Between $30,000 and $150,000 stolen. A fine of up to $10,000 and a prison sentence of up to five years. 
  • Second-degree felony: Between $150,000 and $300,000. A fine of up to $10,000 and a prison sentence of up to 20 years. 
  • First-degree felony: Greater than $300,000 stolen. A fine of up to $10,000 and a prison sentence of up to 99 years. 

As evidenced above, going over the top and accidentally committing extortion can be an easy and costly mistake for contractors to make. As we continue this discussion in part two, we will discuss how contractors can avoid threatening language and write an effective demand letter. To ensure that your demand letters are clear, professional, and non-threatening, partner with the team of Houston construction lawyers from Cotney Law.  

If you would like to speak with one of 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.

Construction professionals who fail to review the contents of a lien waiver are not only signing away their mechanic’s lien rights but also putting their very livelihoods on the line. If they signed an unconditional lien waiver, there’s very little that can be done in the event that only partial payment is received. Conditional lien waivers do away with this problem entirely. 

In part one, we discussed unconditional lien waivers. Below, a Houston construction lien attorney will discuss conditional lien waivers as well as the rights of contractors, subcontractors, and material suppliers that are faced with signing either type of lien waiver. To ensure that your lien rights are protected and properly exercised to secure full payment, partner with the team of Houston construction lien attorneys at Cotney Law. 

What Is a Conditional Lien Waiver? 

A conditional lien waiver becomes effective only when payment has been received in full from either the owner or general contractor. Unlike an unconditional lien waiver, you are being paid upfront. For this reason, it is always in your best interest to sign only conditional lien waivers.

Know Your Rights

Fortunately, Texas is one of only twelve states to have statutory lien waiver forms and laws in place to define their validity. Texas Property Code Sec. 53.281 states that a conditional waiver is only effective if there is evidence of payment. Additionally, Texas Property Code Sec. 53.283 states that a person may not require you to sign an unconditional lien waiver until you’ve received either full or partial payment. Failure for an owner or contractor to abide by these laws could result in a lien waiver becoming invalid. If you believe a lien waiver you signed is invalid and you would like to dispute it, consult with one of our Houston construction lien attorneys

Bottom line: only sign a lien waiver if you’ve received the exact amount stipulated in the waiver. We further recommend that you only sign conditional lien waivers to ensure that you are paid in full for the services you provide. 

Consult an Attorney

In a perfect world, a lien waiver would simply be a receipt of payment. You do the job, and you get paid. Unfortunately, payment disputes are a common occurrence. And while Texas has passed laws to protect the rights of those in the construction industry, there will always come a time when contractors and subcontractors must preserve and exercise their lien rights. For aid in protecting your lien rights, reviewing and disputing lien waivers, and filing mechanic’s liens, partner with the experienced Houston construction lien attorneys at Cotney Law. 

If you would like to speak with a Houston construction lien attorney, 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.

The mechanic’s lien is perhaps the most powerful tool that a contractor, subcontractor, or material supplier can employ to receive payment. However, signing a lien waiver and forfeiting lien rights is often the cost of doing business in the construction industry. In the event that full payment is not received on a project, a contractor’s options will be determined by which one of the two types of lien waivers they signed: conditional or unconditional. 

In this two-part article, we will discuss the difference between a conditional and unconditional lien waiver. Before you sign anything, consult with a Houston construction attorney from Cotney Law to ensure that you aren’t signing away your right to payment. 

What’s a Lien Waiver? 

A lien waiver is often described as a receipt for project payment, but it’s much more than that. It’s a legal document that effectively forfeits the mechanic’s lien rights of those that sign it. In signing this document, you are signing over your lien rights. Ideally, you’ll receive payment in full at the same time that you sign a lien waiver. But that’s not always the case. In those instances, you’ll be faced with signing an unconditional lien waiver, a waiver that you are not required to sign under Texas law unless you’ve received at least partial payment. 

What’s an Unconditional Lien Waiver? 

While both lien waivers forfeit your lien rights, an unconditional lien waiver does so immediately, regardless of whether or not you’ve received full payment. If you have not received full payment, you will be unable to file a mechanic’s lien in the future if there is a payment discrepancy. Remember, nonpayment can occur for any number of reasons ranging from bankruptcy to intentional refusal. For this reason, you should only sign an unconditional lien waiver not only upon receiving a check but also once it clears the bank. Additionally, you should only ever sign an unconditional lien waiver after reviewing its contents to ensure that the payment amount and the date in which labor is performed are accurate.  

We will continue to highlight the differences between conditional and unconditional lien waivers in part two. As we will cover, the type of waiver you sign can mean the difference between receiving full and partial payment. Consult with a Houston construction attorney from Cotney Law to ensure that you know what you’re signing and what you’re signing over. 

If you would like to speak with one of 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.