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Did You Know?


When property owners (commercial or residential) have construction work done on their property, they should be aware that contractors, subcontractors, and suppliers can put liens on their property for lack of payment, even if the general contractor has been paid in full. That means, before a property owner pays the general contractor, the property owner needs to verify that the subcontractors and suppliers received timely payment. If the general contractor fails to pay the subs and/or suppliers, those third parties can lien the owner's property because it received the benefit of the labor and/or materials. One way, and arguably the best way, for property owners to protect themselves from liens, during a construction project, is to require the general contractor to provide signed Releases of Lien from each of the subcontractors who worked on the project, or the suppliers who provided materials, through the date of each payment.


In the purchase and sale of a business or the purchase and sale of real property, one of the more common mistakes involves contract provisions that leave the contract open ended. People think if they include a closing date, they have a binding contract. However, if the contract has a condition that has to happen before the closing occurs and that condition does not have a time limit for being accomplished, then the contract is unlimited, "illusory", and not binding. A common example is when one party agrees to do a certain act (build a road, get a boundary line adjustment) conditioned on obtaining government agency approval, but the parties fail to describe in the contract the scope of the effort, or the time limit, required to obtain that approval.

Business Agreements

People who enter into business ventures together should have a written agreement, signed by all the parties, which sets out how certain difficult situations will affect the business or be treated by the business. Shareholders in a corporation need a Shareholder Agreement, the members of an LLC need an Operating Agreement, and partners in a partnership need a Partnership Agreement. For example, one of the more difficult issues for business partners to resolve without an agreement is how a partner can withdraw from a company when the disagreements between the business partners become so difficult they cannot reasonably be expected to conduct business together anymore. Or, what happens when your business partner dies suddenly and that person's heirs become your new business partner(s). The agreements addressing these issues can be as general or as specific as the parties desire. Having an agreement in place provides invaluable guidance to the business by making what could be a difficult or controversial issue simply a matter of procedure.