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Contractor's Failure To Release Liens Doesn't Forfeit Payment

Wednesday, February 02, 2011 01:35 am

 
CONTRACTOR'S FAILURE TO RELEASE LIENS DOESN'T FORFEIT PAYMENT

Condition Precedent

Solar Appl. Engineering, Inc. v. T.A. Operating Corp., 2010 Tex. Lexis 889; 54 Tex. Sup. J. 238 (Dec. 3, 2010)

Providing the project owner with a lien-release agreement was a covenant -- not a condition precedent -- to a contractor's recovery under the contract. In other words, the contractor didn't forfeit its right to final payment for its work.

After substantial completion of a truck stop construction project in San Antonio, disputes arose between the contractor, Solar Applications Engineering, Inc. (Solar), and project owner, T.A. Operating Corp. (TA), regarding the remaining items to be completed before final payment. Solar and the subcontractors filed liens against the project, and then TA terminated Solar, contending that the contractor failed to keep the project lien free. Solar sued for contract breach to recover its final payment (approximately $450,000), but both a trial court and an appellate court favored TA. The appellate court held that the contra[...]

 
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