GEORGIA CONSTRUCTION, BOND & LIEN LAW BLOG

by:  Mark A. Cobb

Over the weekend, I was speaking with an older gentleman who had held a prominent job in sales.  He had served in that capacity for decades despite changes in technology, product and the opening of foreign markets.  What were his secrets to longevity?  This question became even more pertinent after he shared with me that his sales were always 10 to 20 percent below the other salesmen who worked for his firm.  His secret?  His collection rate was virtually 100%!!

Frequently, today’s business are divided between sales departments and credit departments, but this gentlemen has been trained in a prior period when salesmen were also directly responsible for collecting on their accounts.  Thus, he shared, he would sell on (i) cash terms to anyone but (ii) credit was reserved for those who had a reputation or character for being honest and trustworthy.  In addition, if bills were not paid promptly (usually at the time of delivery!), he wouldn’t sell to them anymore.  This may sound harsh or contravene the call to sell, sell, sell.  But while other salesmen had quarterly sales of $1M, the company only received revenues of around $650,000, he claimed; whereas, his sales were only $850,000 but his collected revenue was also $850,000.  Thus, his bottom-line margins were much superior to his peers.

This insightful conversation reminded me of all the great things that anyone selling on credit can do to help make sure they get paid.  These suggestions are generally applicable to any business which supplies items on credit, however, they are written particularly with Georgia subcontractor and suppliers in mind!  Here are some ideas to consider and implement before issuing credit:

• Obtain a signed credit application and credit agreement
• Obtain useful information such as the debtor’s tax id number, social security number, home physical address, spouse’s name, bank account information, etc.
• Require a personal guaranty agreement
• Obtain useful information about the guarantor including correct spelling of his/her name, social security number, driver’s license, home physical address, bank account, spouse’s name, etc.
• Make sure your credit terms include interest and attorney’s fees
• If you are a third tier supplier or sub-subcontractor, make certain that you send a Georgia Notice to Owner and a Notice to Contractor (sometimes called a Notice of Furnishing) within 30 days of the first day in which you begin work on the job site
• If you are working on or selling materials to construction projects, you must separate your billing (and invoicing) by project
• Internally, make sure that you consistently use your customer’s full, legal name
• Invoice your customer consistently and timely
• Keep copies of delivery tickets or emails confirming receipt of your labor or materials
• Require any changes in product or costs to be in writing and signed by the party who will be paying you
• When payments are not made (or are NSF), consider re-evaluating the amount of credit your are willing to extend to your customer
• If you are a specialty subcontractor or material supplier working on a Georgia construction project, make sure that your materialmen’s lien and/or payment bond claims are made within 90 days of the last day in which you worked (or within 60 days if you signed a Georgia lien waiver or bond release).
• Contact a reputable Georgia construction collection attorney as soon as possible as “the early bird get the worm”

If your salesman and credit managers work together to recognize the importance of collecting proper information from customer up-front, then your collection rate should improve substantially.  If you need an experienced Georgia construction collection lawyer to review your credit application, credit agreement, personal guaranty or any other document, please feel free to call us at (866) 960-9539 or email us today.

For the fourth year, the Construction Marketing Ideas blog is hosting a competition for the Best Construction Blog.  And, our firm’s blog, Georgia Construction, Lien & Bond Law Blog, has been nominated to compete for this prestigious contest.

Cobb Law Group’s Founding Partner, Mark Cobb, was honored to be included in this competition.  “Construction Marketing Ideas is a great resource for construction professionals, and they are always looking for quality information to share with others.  There are a lot of fine construction blogs on the web–some directly related to construction law and others focusing on other aspects of the construction industry–and Construction Marketing Ideas wants to bring together some of the best.  It’s terrific to be included in a pantheon of other great blogs, and we are grateful to the contest leaders for putting this event together and writing such a wonderful review of our blog.”  To see the great review of our blog from their editors, please click here.

Now, the fun part begins–WE NEED YOUR VOTE: Visitors to the Construction Marketing Ideas’ blog can vote for their favorite blog, and we hope that you’ll  vote for us!  All you have to do is, go here:

https://constructionnrhroup.wufoo.com/forms/r7p3p1/

scroll down to the bottom of the page and tick the box next to the name of your favorite blog (hint-hint, Georgia Construction, Lien & Bond Law Blog by the Cobb Law Group).  The contest begins February 1, 2013 and ends on April 1, 2013, so please get your vote in as soon as possible!

We are so excited to be a part of this competition, and we thank you for your support.

by:  Mark A. Cobb

In an earlier blog article entitled Joint Venture Contracting in Georgia (Part I), we discussed the advantages and disadvantages of entering into joint venture agreements on Georgia construction projects.  In this article, we discuss some of the key issues involving operational aspects which every joint venturer should consider prior to putting together their JV Agreement.

Joint Venture Agreements Need to be in Writing:

We’ll start with the easiest issue; every joint venturer contract needs to be in writing and signed by the parties; both the AIA construction forms and ConsensusDocs offer agreements which can be used; in addition, construction lawyers and contract lawyers can also customize contract for your specific project or your specific industry.

Key Issue Regarding Operational Aspects:

Every contract to joint venture should include detailed and specific terms regarding the scope of the agreement, the division of labor and services on the project, and payment.  The operational issues of the contract are vital and agreement will help make a project successful.  Some of typical issues include the following:

• proper identification of all of the joint venturers (determine the number of joint ventures and their legal status)
• most parties to joint venture agreements focus on the construction stage; do not forget, however, that your agreement needs to address the bidding/proposal and the contract award stage as well;
• every agreement should be limited in its scope; for example, the agreement is likely limited to one particular project, and the agreement needs to specify this;
• typically, joint venturers are jointly responsible for the performance of the work; if there are exceptions to this, it needs to be addressed; similarly, if there are certain function which are allocated to particular member(s) of the agreement, then you should also address the related financial consequences of their performance;
• the joint venture agreement needs to specifically incorporate the written agreement between the JV and the project owner or developer;
• payment issues include how the parties will submit bills to the Joint Venture and how the Joint Venture will, in turn, submit bills to the Owner;
• The agreement should contemplate payments by the joint venture to third parties;
• Reimbursable costs to the parties to the joint venture need to be identified and addressed;

In future blog posts we plan to address other issues related to joint venture agreement including a discussion of internal management issues and risk allocation issues.  In the meantime, if you have any questions regarding joint venture agreement in Georgia, Georgia lien or payment bond questions, construction contracting or any thing else related to construction law, please feel free to contact our Georgia construction law attorneys by clicking here.

If addition to our previous installment on joint contracting in Georgia (see above for link), if you would like to read our latest installment of this important topic covering joint venture management issues, please click here.  And, if you would like to read our installment discussing risk allocation in joint venture agreements in Georgia, please click here. Our final installmen on defaults to a joint venture agreement and the corresponding remedies may read if you click here.

If you have other terms or key operational issues which you would like to see discussed (or have any comments on this article), please leave a comment below:

by Mark A. Cobb

Cobb Law Group

Most credit professionals involved in the construction industry understand the general rule that there are unique remedies for non-payment issues on Georgia construction projects.  Furthermore, they understand that filing and perfecting payment bond claims and materialmen’s liens are among the most useful tools to ensure payment on bad debt.  Generally speaking, liens are useful when the construction project is owned by a private individual or entity, and payment bonds are a useful collection tool when the construction project is owned by a public entity such as a state or federal government project.

Did you know, however, that payment bonds are not limited to governmental projects?  It’s true, many large private construction projects in Georgia are also covered by a payment bond!

Practical Tip #1: If you are a supplier or subcontractor working or supplying on a private construction project in Georgia, ask whether or not the project on which you are working is covered by a payment bond.

If the project is covered by a payment bond, then if you do not receive payment for your labor, equipment or services, then you may be able to simultaneously file a payment bond claim and file a mechanic’s lien against the real estate where the project is located.  If you are able to do this, then your odds of recovering bad debt increase substantially!

Look at it this way:

• If you do not file a lien or make a payment bond claim, then only the person or entity with whom you contracted owes you the money;
• If you file a suppliers or subcontractor’s lien, then you are adding the owner of the project as another possible source of recovery;
• Similarly, if you make a payment bond claim, then you are also adding the surety as another possible source of recovery.

It is important to note that payment bonds on private sector projects are similar–but not the same–as payment bonds on public projects.  Public payment bonds are required by statute and must meet statutory obligations.  Since construction liens are the statutory remedy for privately-held projects, private project payment bonds are not governed by statutes.  Instead, they are a contract between the surety and the project owner or general contractor for the benefit of subcontractors and suppliers.

Practical Tip #2: Since payment bonds on private projects are governed by contract law, you must read the bond very carefully to ascertain your rights and obligations under the bond.  Failure to comply with the payment bond’s requirements could result in a denial of your claim.

For example, a private project payment bond may require that the notice of your claim be sent to a particular address or via a particular method.  In order to seek payment pursuant to the payment bond in this example, you must provide the notice as required by the payment bond.   If you do not carefully read–and follow–the requirements in the bond, your claim may be lost forever.  But, if you meet the requirements, you may find yourself in a great position to recover the debt more easily and more quickly.

If you have any questions about filing a claim against a payment bond on a private project, please contact the Cobb Law Group to discuss your situation with one of our construction lawyers today!
This is a general information article and should not be construed as legal advice or a legal opinion. The content above has been edited for conciseness and additional relevant points are omitted for space constraints. Readers are encouraged to seek counsel from a construction lawyer for advice on a particular circumstance.

Georgia Business Lawyers The Cobb Law Group

Proper business skills are an absolute necessity in today’s competitive economy, and the Cobb Law Group is frequently asked some of the essential characteristics of a well-run business.  The principles which we espouse are true whether you are a start-up company or an established business seeking to improve your market share, image and professionalism.

Tip #1: Keep things separated:  Georgia allows many different types of businesses including sole proprietorships, partnerships, limited partnerships, corporations, and limited liability companies.  Regardless of the size of your business, we urge clients to form a distinct, legal entity for your business rather than operate as a sole proprietorship or a general partnership.  A Georgia corporation (perhaps an S-corporation) or a Georgia limited liability company (“LLC”) are generally great options.   There are many reasons why we recommend forming a corporation or LLC, some of the most important reasons include:

• limited professional liability
• limited personal liability
• tax advantages

Again, keep your business entity and your personal life distinct.  If you do not separate your personal finances from your business finances, you could become personally liable for your business debts!

Some clients are afraid that the costs to form the new business are too expensive.  The Cobb Law Group offers Georgia incorporation packages and Georgia LLC formations online through our virtual law firm at very affordable rates.  Click here for more information.

Tip #2: Open professional bank accounts: Most businesses need a minimum of two business accounts–an operating account and a payroll account.  By separating these two accounts, you’ll help make sure that your tax obligations are met.

Tip #3: Run your business like a business: There are innumerable tools online, in books, and magazines that help your business grow; take the time to read and understand basic management, accounting, and marketing concepts.  Then, perhaps most importantly, IMPLEMENT these principles.  Do not take short cuts; consult with your lawyer to draft or review your business contracts, make certain that your invoices contain the proper terms, professionally print your materials and make certain that your customer and you sign the proper documentation; if the contract changes, invest the time to obtain and sign a written change-order.  Send your invoices in a regular and timely fashion.  Finally, and this is important: discuss your own compensation with your tax advisor as the method or payment you receive from your own business may have different tax consequences.
This is a general information article and should not be construed as legal advice or a legal opinion. The content above has been edited for conciseness and additional relevant points are omitted for space constraints. Readers are encouraged to seek counsel from a construction lawyer for advice on a particular circumstance.

By:  Mark A. Cobb

Cobb Law Group

Most of the subcontractors and specialty trade suppliers we speak to understand that all materialmen’s liens filed in Georgia must be filed within ninety days of the last day in which they worked or supplied materials to the job.  However, very few of them understand that signing an interim lien waiver (or a final lien release) SHORTENS the deadline for filing a Claim of Lien in Georgia!

PRACTICAL TIP # 1: Change your mindset from 90 days from the last day worked to 60 days from the date of the lien waiver or 90 days from the last day worked–whichever is shorter!

That’s right, if you sign either a Interim Waiver & Release Upon Payment (a/k/a Interim Lien Waiver) or  Final Waiver & Release Upon Payment (a/k/a Final Lien Release), then you have only 60 days from the date of the lien waiver in which to either (i) file an Affidavit of Nonpayment or (ii) file a lien pursuant to the Georgia Mechanics and Materialmen Lien Act.

The reasoning behind this oft-misunderstood rule is based upon the purpose of the lien waiver.  In Georgia, lien waivers are essentially a document that a subcontractor or supplier signs which states (i) the amount due through a certain date and (ii) if the entity executing the lien waiver doesn’t let the construction project owner know that payment has been received with 60 days, then (iii) after 60 days, the owner can assume that payment was received (even if you didn’t receive the payment!).  Thus, it is reasoned, that if you execute any lien waiver or Release, and you are not paid within 60 days of the date of the lien waiver, then Georgia law presumes that you received payment; and you are prohibited from filing a Claim of Lien after the expiration of the sixty days from the date of the lien waiver.

So how do I calculate the deadline for filing a mechanic’s lien in Georgia?

• First, calculate the 90th day from the date that you were last physically working on the Georgia project or delivered materials to the project; your deadline to file a Claim of Lien is before the 90th day (remember that weekends and holidays do not extend the deadline to file so you may actually only have 87 days following your last day worked to file your Materialmen’s Lien in Georgia–> click here for more information on calculating deadlines!)

• Second, if you signed a lien waiver, then calculate the 60th day from the date you signed the lien waiver; your deadline to file a Claim of Lien (or file an Affidavit of Nonpayment) is before the 60th day you just calculated (weekend and holidays probably to do not extend this deadline!)

• Third, compare the two deadlines which you just calculated–the first deadline to expire is your deadline to file your lien in Georgia!

For example, let’s analyze the lien deadline for  a concrete supplier who provided materials to a Georgia construction project (private or public works); the last day they delivered materials was March 1; on March 15, they were asked to execute a Final Waiver and Release Upon Payment.  If the concrete supplier does not receive payment, what is the deadline for filing a construction lien?

• Calculate 90 days from last day worked:  Since they last delivered materials on March 1, the 90th day following this is May 30; in fact, however, the lien must be filed prior to May 30 (therefore, the lien must be filed on or before the last business day before May 30);

• Calculate 60 days from Lien Waiver: Since the lien waiver was signed March 15, the cement supplier has until May 14 in which to file an Affidavit of Nonpayment or file a Claim of Lien.

• Compare the date and go with the shortest! Thus, there is a May 29th deadline and a May 13th deadline.  Since the May 13 deadline to contest the lien waiver expires first, the concrete supplier’s deadline for preparing and filing a supplier’s lien in Georgia is the last business day before May 14.

These deadlines can be very tricky, so it is very important to calculate your deadlines carefully so that you are not caught without payment and without recourse.  If you have questions about filing and perfecting any type of construction lien in Georgia, please give us a call!

This is a general information article and should not be construed as legal advice or a legal opinion. The content above has been edited for conciseness and additional relevant points are omitted for space constraints. Readers are encouraged to seek counsel from a construction lawyer for advice on a particular circumstance.

By:  Mark A. Cobb

Cobb Law Group

This economy has forced many Georgia businesses to review their practices and make adjustments for the economic realities associated with today’s market place.  Clients frequently contact us about collecting a debt they are owed for services, labor or material which they have provided.  In these instances, one of the first documents we want to review is the contract.  I am constantly amazed how many businesses, contractors, and suppliers fail to use written contracts!

There is some good news, Georgia law does allow some oral contracts to be binding.  Simply stated, this means that if you sold some supplies or if you provided labor or services to another and you haven’t been paid, you may be able to recoup your damages.  Without a contract, however, you may face greater difficulty in proving the terms of your transaction, the costs of collection may be higher or more time-consuming, and you may prevent you from collecting interest and attorneys’ fees.

Not just any oral contract is binding, however.  Georgia’s Statute of Frauds requires that certain contracts be in writing in order to be enforceable.  Specifically, O.C.G.A. § 13-5-30 states the following contract must be reduced to writing:

(1)    A promise by an executor, administrator, guardian, or trustee to answer damages out of his own estate;

(2)    A promise to answer for the debt, default, or miscarriage of another;

(3)     Any agreement made upon consideration of marriage, except marriage articles as provided in Article 3 of Chapter 3 of Title 19;

(4)     Any contract for sale of lands, or any interest in, or concerning lands;

(5)     Any agreement that is not to be performed within one year from the making thereof;

(6)     Any promise to revive a debt barred by a statute of limitation; and

(7)     Any commitment to lend money.

Georgia’s Statute of Frauds applies to many types of contacts in several areas of law; however, our business law clients and construction law clients probably recognize that many (and maybe all) of their contracts need to be in writing in order to not violate the Statute of Frauds.

PRACTICAL BUSINESS TIP # 1: With the assistance of a Georgia contract lawyer, develop a standardized business contract relevant to your industry, your customers, and your needs.

PRACTICAL BUSINESS TIP # 2: Review your existing contracts periodically (every year or so) and ask a Georgia contract lawyer to review it as well.  Occasionally, there are changes in the law, judicial holdings, as well as changes in business practices which need to be incorporated into your existing contracts.

PRACTICAL BUSINESS TIP # 3: Repeat certain contract terms in the “small print” on your invoices including such items as (i) your payment terms, (ii) interests, (iii) collection costs, (iv) waivers and warranties–if you do this, however, make sure they are consistent with your contract as inconsistent terms may result in your inability to enforce the terms of your contract.

If you have any questions, please feel free to contact any of us at the Cobb Law Group. And, please share with us your stories or comments regarding any successes or failures you have had with your own contracts.

by:   Mark Cobb

Cobb Law Group

This afternoon, our expected highs will be in the mid 90′s!  This is hot!  It doesn’t matter whether you are sitting in your house by an air conditioning vent, running errands or working outside, this is hot!.  Because many of our clients are construction professionals and many of their employees work outside, we thought you might appreciate learning about a new mobile phone app for those who spend time outside.  In fact, OSHA’s website has some useful tools for those outside in the heat including a mobile phone app that helps calculate the heat index.  Click here to download the heat index app for your iPhone or Droid mobile phone!

According to the OSHA website:

“When you’re working in the heat, safety comes first. With the OSHA Heat Safety Tool, you have vital safety information available whenever and wherever you need it — right on your mobile phone.

“The App allows workers and supervisors to calculate the heat index for their worksite, and, based on the heat index, displays a risk level to outdoor workers. Then, with a simple “click,” you can get reminders about the protective measures that should be taken at that risk level to protect workers from heat-related illness—reminders about drinking enough fluids, scheduling rest breaks, planning for and knowing what to do in an emergency, adjusting work operations, gradually building up the workload for new workers, training on heat illness signs and symptoms, and monitoring each other for signs and symptoms of heat-related illness.”

For more information about safety while working in the heat, see OSHA’s heat illness webpage, including a new online guidance about using the heat index to protect workers

If you try this new app, we’d enjoy hearing your response about its effectiveness.  Please leave us a comment today!

Today, the Cobb Law Group is pleased to welcome a guest post from a consultant to the construction industry; we hope that you will leave us comments and feedback regarding this article!

During tough economic times, cost-cutting is essential in order to stay competitive. However, if done the wrong way, cost-cutting can have a detrimental impact on the project’s outcome. Construction project management techniques can help keep the costs of a project down without losing quality in your work. In fact, with the right management and smart choices, finding ways to save money can lead to improvements in field operations and business as a whole.

Clearly Communicate with Divisions and Workers

Moments of miscommunication can easily create complications which take valuable time to resolve. Communication between divisions of your business should be clear and effective. You may want to research technologies to find out if there are new ways you can streamline your communication process to increase efficiency. Of course, you also need software that is within your budget and that has benefits which will lead to savings over time.

In field operations, make sure your foremen provide objectives and clearly state time limits for every task. Sometimes foremen create a deceptive impression of being effective as managers even when they do not state daily goals in numbers. In general, workers respond best to specific, measurable tasks with reasonable deadlines. This keeps everyone on track and focused.

Have a Plan of Action for All Team Members

Develop daily action plans that fully utilize your labor force. Make sure that your workers are putting energy in the places where they work most efficiently in order to save time and money. In the construction business, daily plans change according to outside factors such as suppliers and weather conditions. Create action plans with built-in flexibility, and use daily logs to record progress, note barriers to completion and log the effectiveness of your plans.

Always Improve Field Performance

Try to lower construction costs over time rather than gradually raising them. This is a key difference between being an employee and being a business owner or manager. An employee can gradually ask for more money as expertise grows. A business needs to become increasingly competitive in order to maintain position in the market. The companies that prove successful tend to adopt this strategy. Use all the experience you gain to find ways of improving efficiency levels for future projects.

Closely Manage Indirect Labor

Indirect labor costs needs to be clearly calculated in order to improve field performance.  Indirect labor can include time spent on paperwork and in meetings, time spent driving on the job or briefly repairing equipment and preparation or light work time in the yard.

To manage costs, make sure to include these tasks in your cost codes. Have your laborers report the time they spend on each one. If you are not currently monitoring your indirect labor costs, you may be able to save anywhere from 10% to 30% of your project budget.

Know When to Negotiate

When saving money, it is better to have a few suppliers and maintain strong relationships with them rather than to have many suppliers and weaker networking ties. With strong relationships, you can often negotiate better deals when you need them. If your suppliers feel invested with you, they will be more likely to work with you to maintain your business and theirs.

Maintaining Your Construction Business

Cost-cutting always needs to be done wisely and with future business in mind. Basically, you want to optimize your construction work so that when economic times change, you are simply more seasoned and more competitive. Use your new initiative to improve your field performance and better manage your budget, saving money, maintaining quality and strengthening your business.

Erin Palmer works for University Alliance and writes about many of their PMI certification prep courses. Each of UA’s partner schools offers helpful articles on topics such as construction project management training.

This is a general information article on Georgia construction law and should not be construed as legal advice or a legal opinion. The content above has been edited for conciseness and additional relevant points are omitted for space constraints. Readers are encouraged to seek counsel from a construction lawyer for advice on a particular circumstance.

So many people contact us regarding nonpayment issues on Georgia construction projects, and I thought you might appreciate reading a summary of options we usually discuss during our first conference with our clients:

First, we assess some fundamental issues by asking the following questions:

•    What type of services, labor or supplies did you provide?
•    What was the last day you actually provided services, labor or supplies to the project?
•    Have you been given any notices regarding failure to perform, defects, or other notices?
•    Were you providing services, labor or supplies on a privately-owned project, a project owned by a governmental entity (local, State of Georgia or federal project)?
•    Are they payment bonds covering the project?
•    Was your contract written or oral?
•    With whom was your contract (what tier are you)?
•    Did you have a personal guaranty from someone guaranteeing payment of the amounts you are owed?

Assuming that you were a general contractor, subcontractor or supplier who provided quality services, materials and labor in a timely fashion, then whomever you contracted with probably owes you the money you are due.   And, that is great.  However, Georgia construction laws, when correctly applied, may allow you to seek recovery of the debt from a third party.  Thus, our next assessment is whether there is any viable third-party who may also be liable for the debt.  This can get very technical and complex, but here are some of the common areas we explore:

•    Can a materialmen or mechanic’s lien be filed (which may make the real estate where your services, materials or labor was provided liable for the debt)?  Click here for more information on this topic!
•    Can you make a payment bond claim (which may make a third-party insurer liable for the debt)?
•    Can a Constructive Trust be claimed (which may make retainage or other monies owed to a higher tier) which may make provide a source of recovery for your debt?
•    Are there circumstances which allow a quantum meruit claim (which may make a third party liable for the debt based upon “fairness” issues)?
•    Is there a guarantor which can be pursued?

Needless to say, the more opportunities there are for recovery, then (i) the more likely the recovery will be made, (ii) the higher the recovery is likely to be, (iii) the more quickly the recovery will occur, and (iv) the lower your costs of collection will be.

Ultimately, then, how do you and your Georgia construction lawyer work to improve your recovery?

•    Periodically, review your contracts to make sure they comply with current regulations and statutes;
•    Obtain a personal guarantee and other useful information (click here for details!);
•    Learn all the various deadlines in Georgia for filing Lien Claims and for making payment bond claims (click here for some important Georgia Lien & Bond deadlines);
•    Learn the statute of limitations for filing suits to perfect your Georgia Mechanic’s Lien Claims, your private project payment bond claims, your local municipality, State or Georgia and federal government payment bond claims;

If you are looking for a Georgia Construction Law Firm who can handle your files anywhere in the State of Georgia and who understand Georgia’s Construction Lien Laws, Subcontractor Laws, Miller Act and Miller Act Claims, please contact the Cobb Law Group to see how we can improve your collection rate!