Tennessee Enacts New Construction Legislation in 2020

The Tennessee Construction Industry Payment Protection Act was signed into law on June 22. The Act addresses or reallocates certain risks associated with non-payment on construction projects under Tennessee's Prompt Pay Act (PPA) and is intended to increase clarity and consistency in the PPA and in Tennessee's mechanics' lien law, Truth in Construc...
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New Georgia Law Changes Lien Waivers

Georgia Senate Bill 315 ["SB 315"] amends the lien waiver statute codified under OCGA §44-14-366. It has passed both houses and has been signed into law by the governor with an effective date of Jan. 1, 2021. The reason the law was amended was a recent decision by the Georgia Court of Appeals that held a lien waiver was not limited to lien/bond cla...
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The Risky Business of Material Suppliers

If there's one piece of advice credit professionals in commercial construction should follow, it's knowing who you're getting into business with from the start. Material suppliers must not only assess any and all potential risks of conducting business with a subcontractor (sub) but also understand the consequences of little to no due diligence. For...
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What If the Contractor, Rather Than the Owner, Signs a Notice of Commencement? Is the Notice Defective And, Therefore, Ineffective?

Under Florida lien law, a Notice of Commencement is a form document the property owner is generally required to sign and record in the public record before commencing any improvements to real property. One of the purposes of the Notice is to provide potential lienors with information they will need to file a lien if they are not timely paid. The st...
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Fraudulently Filing Lien Backfires on Contractor

Liens represent one of the primary mechanisms by which contractors, subcontractors, and other downstream parties secure payment rights under a construction contract. When utilized properly, filing a lien may induce an owner to release funds that are undisputedly owed to the lienor. However, when a party's lien filing is delinquent or defective, and...
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Two Paths for Security in California

Organization is key for credit departments whether there's a pandemic or not. Having a system in place can help with issues down the line especially when paperwork is now scattered at the office and at the home office—two locations for problems. Trying to find that one piece of paper with the name of the surety company at the last minute to keep bo...
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Seventh Circuit Court of Appeals Holds Literal Interpretation of 'Within 90 Days' Under the Miller Act

An appeals decision by the Seventh Circuit underscores the importance of strict adherence to the requirements of the Miller Act. A&C Construction & Installation, Co. WLL v. Zurich American Insurance Company and The Insurance Company of the State of Pennsylvania, No. 19-3325, decided June 30, 2020, concerns a Miller Act claim on a payment bo...
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Remembering the Notice of Non-Responsibility

 For so long, a hot economy and commercial leasing market meant that concerns over unpaid tenant improvement construction and related mechanic's liens were closeted like winter clothes in the heat of the summer. In the current "pandemiconomy," many commercial businesses are planning their return to the office. Some tenants need to complete bui...
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Joint Check Agreements: No Two Are Alike

Nothing is ever carved in stone, so business credit professionals should always sleep with one eye open when expecting payments on construction projects. Finding a way to become more secure is always in the best interest for creditors, even if it only slightly improves the odds of being paid and being paid on time. Each security mechanism works a l...
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Material Suppliers Best Prepare for Additional Costs During Construction Projects

If the first half of 2020 has proven anything, it is that the pandemic will leave a lasting impact on how society goes about day-to-day living. Many are working from home, stores are cleaning checkout counters after every customer, and masks are a common wardrobe choice. Several companies are adapting their operations within their existing structur...
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Notice Your Lien or Kiss it Goodbye in Minnesota

Like many states, Minnesota requires subcontractors and suppliers to send pre-lien notices to owners to perfect mechanic's lien rights. Failure to comply with the pre-lien notice statute can prove fatal to a lien enforcement action as one masonry supplier recently learned. In Timberwall Land & Masonry Products, Inc., the Minnesota Court of Appe...
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Construction Impacted by Coronavirus? Know Your Lien Rights in Colorado

The current coronavirus crisis has created unprecedented challenges for those in the construction industry. As a result, contractors, subcontractors, and suppliers must be vigilant to protect their ability to receive payment on projects where cash flow might become problematic. One such way to ensure payment is by availing oneself of the various st...
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New Home Sales Exceed Projections in May

New single-family home sales in the U.S. are on the rise. According to the Census Bureau and Department of Housing and Urban Development, sales increased 16.6% in May to a seasonally adjusted annual rate of 676,000. This is better than expected as MarketWatch reported analysts predicted a rate of 650,000, and Reuters' economists forecasted sales wo...
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Joint Check Agreement Causes Big Trouble in Virginia

Many general contractors manage the risk of a subcontractor's financial instability by issuing joint checks to the subcontractor and its suppliers on a project. These arrangements are usually governed by a separate agreement that sets forth the roles and rights of the parties, and limits the general contractor's liability to sub-subcontractors and ...
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Home Sales Drop

As expected, the sales of existing homes dropped and there has been a significant decline in sales since the record set at the start of the year. Back then, all the factors that tend to drive the housing market were in place. There were low mortgage rates and the majority of the population was feeling pretty good about their employment situation. I...
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Housing Numbers Down

There will be some new housing numbers released this week as well. They are expected to be down again. The homebuyer is still not feeling all that confident about their job prospects. Even low mortgage rates have not been enticing enough. The high-end homes are starting to get some attention again as the markets have bounced back to a degree. That ...
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Housing Starts See Modest Rebound in May

U.S. housing starts have started to rebound; however, they are still well below the data from a year ago. Housing starts increased 4.3% in May, according to this week's announcement from the Census Bureau and Department of Housing and Urban Development. Yet, this is 23.2% below May 2019. Housing starts were at a seasonally adjusted rate of 974,000 ...
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Material Suppliers Experience ‘Heightened Economic Uncertainty’

Everyone has felt the wrath of the pandemic, especially small businesses. The U.S. government started the Paycheck Protection Program (PPP) in April to help businesses keep their employees onboard, according to PBS, only to see the $349 billion in loans fade to nothing in less than two weeks. An additional $175 billion was funneled into the program...
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New Home Starts

The housing market is essentially in free fall at the moment and that is not likely to reverse in the immediate future. Even those who assert that a recovery might develop by the third or fourth quarter of this year are convinced that the housing market will lag that recovery and perhaps for months. There are multiple issues here. The most importan...
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ABC Economist Suggests Construction Industry Focus on ‘Broader Trends’ Due to ‘Erratic’ Input Prices

Construction input prices have yet to establish a trend over the past few months, despite a slight increase in May. Although prices rose 0.8% last month, Associated Builders and Contractors (ABC) Chief Economist Anirban Basu said U.S. construction firms should focus their attention to "broader trends" given the current economic climate.According to...
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