Construction Finance Management

            Once the contractor starts your home improvement, the construction costs and payments can quickly get confusing. As the homeowner, you are busy enough just watching the demolition and improvements take place, and making adjustments as necessary. Despite you and the contractor meticulously negotiating the contract, formalities easily deteriorate for change orders.

            The first and most important safeguard is to budget and pay for your own accounting as the job progresses. This should be done before each payment to the contractor by you or your lender. The accounting complexity is enormous if time slips by after payments are made, and the contractor is less than motivated to take the time to review records for overpayments.

            Credits may be due to the homeowner for different reasons. First, the contract may allow a credit if the cost of certain items is less than the contract allowances. Also, the homeowner may have had to pay third parties for work included in the contract price. Third, the homeowner should get a credit for contract items that the contractor did not do.

            Obtain the services of a person (“Construction Finance Manager” or “CFM”) not a party to the contract to oversee all aspects of the construction contract. That person can ensure no work or materials for a change order are started or delivered without an itemized change order showing itemized prices, deadline for completion, and the change order is signed by both the contractor and homeowner. The CFM should monitor all contract deadlines, work completed, contract price as increased or decreased by change orders, payments already made, and advise the homeowner whether or not to approve the draw request of the contractor.

                                                                                                                                                                   

Michael S. Price, Esq., Florida Supreme Court Certified Circuit Civil Mediator, 1616 Jork Rd., Ste. 302, Jacksonville, FL 32207; telephone (904) 396-4445; e-mail mprice@pricerealestate.land. Michael S. Price focuses on disputes related to real estate, contracts, construction, leasing, foreclosure, property defects, binder deposits, probate, family owned property, and business entities (partners, shareholders, and members).

103 Feet Per Second

                 
     Travelling at 70 miles per hour is 103 feet per second. A car of 15 feet in length travels almost 7 car lengths in only 1 second. Kids, cellphone or any other distractions can occupy your attention for way more than 1 second. In just 1 extra second you will travel 14 car lengths. That’s how accidents happen.

Michael S. Price, J.D., MBA is a business strategy and real estate consultant, and Florida Supreme Court Certified Circuit Civil Mediator, located at 1616 Jork Rd., Suite 102, Jacksonville, FL 32207; telephone (904) 396-4445; e-mail mprice@michaelpricelaw.com.

Roof Replacement – Avoid Paying Twice

Roof Replacement – Avoid Paying Twice

Written by Michael S. Price, Esq. J.D. MBA

            When you replace your roof, the wrong procedure for paying the roofer can result in a lien on your property and paying twice for the work. Here are the proper steps:

            1.         From your home insurance company, get its specifications for the roof to obtain the maximum insurance premium discount.

            2.         Get bids from 2 - 3 roofing companies, and share your insurance company’s specifications to incorporate into the bids. Compare the specifications of the roofing companies and combine the best specifications into a list.

            3.         Have a real estate attorney prepare an addendum to the roofer’s contract using your list of specifications and the precautions in the following steps.

            4.         If your roof is a complicated roof, have a professional roof inspector who does not also install roofs (to avoid a conflict of interest) inspect your roof, review the roofers’ bids, and the proposed contract and addendum. The addendum should include that the roof pass your inspector’s inspection(s) before payment.

            5.         Before work is started, the roofer should post a Notice of Commencement with the government permit on your property. This informs the supplier of the roofing material who owns the property. The supplier can then send a Notice to Owner to you as to who the supplier is.

            6.         Do not write a check to only the roofer. Write the check jointly to the roofer and the supplier. This way the supplier will get paid. If you pay only the roofer, the roofer may not pay the supplier, and you will be responsible to pay the supplier again.

            7.         At time of payment, require the roofer to give to you a Final Release and Waiver of Lien. Your real estate attorney should give you the form to look for.

            8.         To avoid feeling awkward in these protective payment steps, you can arrange for your attorney to hold your money in their trust account and then the attorney will pay the roofing company. This and the other steps should be in your contract addendum.

                                                           

Michael S. Price, Esq., Florida Supreme Court Certified Circuit Civil Mediator, 1616 Jork Rd., Suite 102, Jacksonville, FL 32207; telephone (904) 396-4445; e-mail mprice@michaelpricelaw.com. Michael S. Price, J.D., MBA focuses on disputes related to real estate, contracts, construction, leasing, foreclosure, property defects, binder deposits, probate, family owned property and disputes related to business, partnerships and shareholders.            

Buyer’s Rights in Purchasing Property

            1.         Did you know your real estate agent only gets paid if the transaction closes? Would you like to have the benefit of an attorney experienced in real estate transactions and law, whose fee is not dependent on whether you close the transaction?

            2.         Do you know how to determine what restrictions and easements will affect your property after you buy it?

            3.         Would you like to know where the easements are located on your property before you buy it?

            4.         Do you want to know the deadlines in the contract for inspections, financing, objecting to the condition of the property, obtaining and reviewing the title evidence, objecting to the status of the title?

            5.         Did you know that you should be getting title insurance to protect you from liens on the property, from fraudulent conveyances, from anyone who may claim an interest in your property, from encroachments or boundary line disputes, and from any other matters that may affect your title?

            6.         Will you be reviewing the Commitment to Insure Title and know how to evaluate it to see what matters will affect your title after you close when it is too late to complain?

            7.         How often have you reviewed a Settlement Statement to be comfortable with the correct allocation of expenses, prorations and pre-paid charges?

            8.         Have you obtained preliminary loan approval?

9.         What conditions need to be satisfied before you purchase the property, e.g., appraisal, financing, environmental, building inspections, plans and permitting?

Michael S. Price, Esq. is a Florida Supreme Court Certified Circuit Civil Mediator, located at 1616 Jork Rd., Suite 102, Jacksonville, FL 32207; telephone (904) 396-4445; e-mail mprice@michaelpricelaw.com. Mr. Price focuses on tenant rights, leases, real estate, contracts, divorce, criminal law, and mediating disputes related to construction, leasing, foreclosure, property defects, binder deposits, probate, family owned property and disputes related to business, partnerships and shareholders.

Tenant's Rights

            1.         What is your experience in reviewing and negotiating leases?

            2.         Do you want to protect your personal assets from financial losses?

            3.         Do you know whether to form a corporation, limited liability company or other entity?

            4.         Do you want to generate only regular income from your business or also have the ability to sell your business for a multiple of your business’ income?

            5.         When you sell your business, do you want to continue to be personally liable for the new business owner’s financial obligations to the Landlord?

            6.         Do you want the ability to extend the lease term in case you want to continue or sell your business?

            7.         Do you want the Landlord to have the uncontrolled ability to charge expenses of the center to you?

Michael S. Price, Esq. is a Florida Supreme Court Certified Circuit Civil Mediator, located at 1616 Jork Rd., Suite 102, Jacksonville, FL 32207; telephone (904) 396-4445; e-mail mprice@michaelpricelaw.com. Mr. Price focuses on tenant rights, leases, real estate, contracts, divorce, criminal law, and mediating disputes related to construction, leasing, foreclosure, property defects, binder deposits, probate, family owned property and disputes related to business, partnerships and shareholders.        

Commercial Tenant Lease Rights

            More and more small businesses are springing up. The businesses usually need to lease space. Existing businesses need to continue leasing. Commercial tenants are at a huge disadvantage and are at the Landlord’s mercy if the Tenants do not know their rights and options in negotiating a new lease or the terms of a lease extension.

            Entity and Guarantee: A lease is a contract as well as a conveyance of the right to occupy a leased space (the “Premises”). The Tenant should not be the individual. The individual or individuals owning the business should create a corporation, limited liability company or other entity to be the Tenant. The individual business owner should consult an attorney or accounting consultant (preferably a CPA) as to which type of entity to use. The purpose of having an entity as the Tenant is to prevent the individual from having personal liability for personal injury at the Premises, personal liability for business obligations, and personal liability for failure of the business to pay the lease rent and other financial obligations of the lease.

            Landlords typically require a personal guarantee for the lease rent and other financial obligations of the lease. By giving a personal guarantee, the individual gives up the protection and purpose of the corporate entity which was formed to be the Tenant. Do not agree to a personal guarantee.

            If you just need to have a location where the personal guarantee is a deal breaker, at least try to limit the personal guarantee. Try to limit the dollar amount of the guarantee, or try to limit the term of the guarantee. For example, if the term of the lease is five years, try to limit the guarantee to one year, or the equivalent of one year’s rent.

            Term:   Many business owners overlook the potential value of their business. Most business owners are focused on creating recurring income to support themselves. But, the real potential income is selling the business. Businesses are valued on the stream of income the business generates. For example, if a business generates $25,000.00 after all expenses, and the market for that type of business will attract buyers wanting a 15% return on their investment, then the business could be worth $166,667.

            If you want to preserve your ability to sell the business, the business needs to have the right to continue to occupy the Premises after the initial lease term. The lease should provide that the Tenant has the right or option to extend the lease term. The rent for the option term should be established in the initial lease, and not left to be determined later. The Tenant’s guarantee should not be extended into the option term, and should terminate if the business is sold. The Landlord reasonably can condition the assignment of the lease on obtaining a substitute guarantee from the individual(s) who own the entity buying the business and assuming the lease obligations.

            Other considerations:  Commercial leases typically are quite lengthy. To the untrained eye, it becomes a blur and confusing to read. In the budget for all businesses, there should be a line item for professional fees, such as legal and accounting. You can save a professional fee now, and pay dearly much more when a problem arises after you have signed a lease. An attorney experienced in these matters vastly increases the chances that the problem is detected and avoided in advance.  

                                                                                                                                                                                               

Michael S. Price, Esq. is a Florida Supreme Court Certified Circuit Civil Mediator, located at 1616 Jork Rd., Suite 102, Jacksonville, FL 32207; telephone (904) 396-4445; e-mail mprice@michaelpricelaw.com. Mr. Price focuses on tenant rights, leases, real estate, contracts, divorce, criminal law, and mediating disputes related to construction, leasing, foreclosure, property defects, binder deposits, probate, family owned property and disputes related to business, partnerships and shareholders.

          

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