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Monday, July 27, 2009

New Mechanic's Lien Statute: Cure or Just Another Hurdle

Several major title insurers refused to continue writing title insurance in Virginia, citing loses from undisclosed mechanic's lien claims. Since the Virginia Code permits notification of a claim even after settlement, many residential properties would be conveyed prior to notification, which caused problems for the new owners and their title insurers.

With the participation of the title companies the Virginia legislature has amended the mechanic's lien statute, which substantially alters the notification procedures relative to one and two-family residential dwellings. A construction project may have a "mechanic's lien agent" for receipt of notices from potential mechanic's lien claimants. The agent will be identified in the building permit, which must be "conspicuously and continuously posted" on the property. If no agent is designated, the normal rules apply.

A claimant must notify the agent in writing within thirty days of the time he first furnishes any work or materials. An agent may be designated after construction begins, in which case the claimant must provide notice within thirty days after such permit is issued. Notice must be sent by registered or certified mail or by physical delivery. The required contents of the notice are set out in Virginia Code Section 43-4.01(B).

Only title insurance companies, banking institutions, and attorneys may perform the duties of a mechanic's lien agent. Builders who fail to disclose at settlement all claims for mechanic's liens will face criminal sanctions.

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The above article is not meant to replace legal counsel. To speak to a lawyer about mechanic's liens please contact Gross & Romanick directly by filling out our online information request form or by calling (703) 273-1400.

Monday, July 20, 2009

Letters Of Credit

Letters of credit have been in use for over two thousand years, in one form or another. From the time of ancient Greece and Rome up through the present, letters of credit have been mainly used to finance shipping contracts. However, letters of credit have uses that go far beyond just transportation.

In a letter of credit arrangement, the issuing party, usually a bank or insurance company, contracts with one party to pay funds to a third party upon the fulfillment of certain conditions specified in the agreement. Most commonly, they are employed to finance a sale of goods where the buyer and seller have limited contact and experience with each other, such as an international transaction. Because letters of credit are employed so extensively in international trade, they are governed by an international treaty ("Uniform Customs and Practices Governing Documentary Credits"). But utility of letters of credit is not confined to international shipping; they can be quite useful right here in Virginia.

A tenant can obtain a letter of credit which will become payable to the landlord upon a certification from the landlord that the tenant has defaulted on his rent. This arrangement has several advantages over a conventional security deposit. The landlord can demand a much larger security deposit in the form of a standby letter of credit than he could in cash, and the tenant does not have to use his valuable cash reserves to satisfy the security deposit, assuming the tenant has a reliable credit history. In addition, the tenant will not be at risk of losing his security deposit if a foreclosure occurs.

For more information, contact Gross & Romanick directly by calling 703-273-1400 or by filling out our online information request form.

Tuesday, July 14, 2009

Credit Applications: The Smart Way to Extend Credit

Merchants, landlords and anyone who extends credit via note, contract or lease should follow the lead taken by banks when making credit decisions. Make sure your applicant fills out a credit application. The credit application is a fact sheet about the debtor; often, it also includes credit terms. Part of the credit application should be a request for specific documents, such as tax returns, deeds and automobile titles. There are important reasons why you should obtain detailed information before you extend credit.

First, if there is a default, background information and a listing of assets will be invaluable during the collection process. It is imperative to have facts about the person's employment, bank accounts, assets, address and social security number. This information may be difficult to obtain if the account goes into default.

Second, considered decisions regarding extension of credit can only be made based upon complete data. (See box below for tips on how to investigate credit-worthiness.)

Third, if the debtor was untruthful or misleading on the credit application, it may be possible to sue for fraud or oppose the debtor's discharge in bankruptcy.

Finally, the terms and conditions regarding the extension of credit should be included in the application. In the absence of a written and signed agreement, the court will not award pre-judgment interest or attorney's fees.

Make certain the applicant actually signs the credit application. An otherwise completed application is virtually useless against the debtor without this signature. Also, if you want a personal guarantee, prepare separate signature lines for the guarantors. The guarantee should be made clear by the terms of the credit application and the form of the signature.

Investigate Credit Worthiness
  • Call other creditors of applicant
  • Call industry contacts
  • Check with landlords and credit references
  • Obtain a Credit Bureau Report
  • Review Dun & Bradstreet Reports
  • Study court records for information about: Judgments, pending litigation, title to real estate, liens on realty, and UCC financing statements
  • Hire an investigator or attorney Have your CPA review financial records

The above is not meant to replace legal counsel. To speak to an attorney about extending credit to applicants, contact Gross & Romanick directly by calling 703-273-1400.

Monday, July 6, 2009

Assault & Battery

A recent client wrote to Gross & Romanick to offer thanks for the firm's expert handling of an assault and battery case.

Jeff Romanick handled the Assault & Battery Trial. The client was found Not Guilty. Ash Charles Dean handled the expungement: all arrest records were expunged.

The pleased client wrote: “Jeff – I hope this email finds you well. I am thrilled to have the expungement granted and the matter closed. Thank you for your and Ash’s assistance.”

For more information on Gross & Romanick's Criminal Law Practice, please contact the firm directly by calling 703-273-1400 or by filling out their online Information Request Form.