1910 Matterhorn Drive Garland, TX.

75044 214-664-3900

RESIDENTIAL CONSTRUCTION CONTRACT FOR REHABILITATION AND ADDITIONS
Date: Owner: Owner's Mailing Address: Property Address: Legal Description: Contractor: Contractor's Mailing Address: Telephone Number: E-Mail Address:

Parties

Type of Contract
Cost-plus Contract . The Contractor will provide services or repairs to the Owners residence as outlined in the “Scope of Work” section of the contract and contractor will charge a fee for the supervision and construction of the project, which will be done according to the specifications and plans provided by the homeowner. As defined the cost of materials, plus the cost of labor and fees and a reasonable overhead. Contractor shall use reasonable care to stay at or below the budget/Estimate of services for the entire project, but all costs in excess of the budget or estimate are the sole responsibility of Owner. (See Exhibit B – Estimate) Fixed Cost Contract The Contractor will provide services or repairs to the Owners residence as outlined in the “Scope of Work” section of the contract and contractor will charge a fee for the supervision and construction of the project, which will be done according to the specifications and plans provided by the homeowner. As defined the cost of materials, plus the cost of labor and fees and overhead, contingency fees and a reasonable profit. Contractor is responsibility for all associated costs not specified in budget except for change orders. (See Exhibit B – Estimate)

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1910 Matterhorn Drive Garland, TX. 75044 214-664-3900 Definition of Cost Plus (Unit Pricing) 25% Contract Unit pricing n. The pricing of goods and services on the basis of cost per unit of measure. I.E. Square foot/feet, lineal foot/feet, yard, Each, Gallon, etc. Cost of service to include materials and labor as separate costs of the “unit” price including taxes. Turnkey services include the cost of materials and labor and taxes in single unit cost. Overhead is 25% of the unit price. The term overhead is usually used to group expenses that are necessary to the continued functioning of the business but that do not directly generate profits. Overhead expenses are all costs on the income statement except for direct labor and direct materials. Overhead expenses include accounting, advertising, depreciation, indirect labor, insurance, interest, legal fees, rent, repairs, supplies, taxes, telephone, travel and utilities. A man-hour or person-hour is the amount of work performed by an average worker in one hour. It is used in written "estimates" for estimation of the total amount of uninterrupted labor required to perform a task. Initialed by customer:____________________________

Terms of Contract Project Description
1.

Contractor agrees to complete the following described changes to the house on the abovedescribed real estate substantially in compliance with the Scope of Work as described in the contract estimate, time limits for completion as specified in required building permits or as specified otherwise. (See Addendum for Commercial Projects)

Initialed by customer:____________________________

Building Permits and Home Owner Association Approvals
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1910 Matterhorn Drive Garland, TX. 75044 214-664-3900 1. Contractor will, upon direction and approval by homeowner, obtain necessary and required building permits for the project from local building authority. All costs for such permits and required fees are the responsibility of the homeowner, except those fees required by the building authority for the registration of such contractor to do business within the building authority’s boundaries. 2. All requirements and approvals by the Home Owners Association that must be met prior to the start of construction are the sole responsibility of the homeowner. Contractor is under no obligation to meet with or be required to meet any standards required by the Home Owners’ Association unless specified in writing. Initialed by customer:____________________________

Licensing and Insurance
1. Contractors and subcontractors for air conditioning, refrigeration, fire systems, plumbing, electrical work, drilled wells, and installed pumps all require a license from the state of Texas. No state license is required for general contractors however they may be required to register at the local level. 2. Contractor is not responsible for general liability insurance and exclusions for construction defects where excluded by insurance carriers. Expressly excluded conditions are coverage for mold and fungus, EIFS, lead based paint, soil movement or any conditions for which work was performed by any subcontractor for which they may be responsible for. 3. Owner understands that Contractor has no legal liability for premise operation claims, which occur during the operation period or construction period and holds harmless the Contractor for any such claims. It is the homeowner’s responsibility to notify their homeowner’s insurance carrier to add the General Contractor as an additional insured to their homeowner’s policy. 4. Homeowner understands that Contractor has no employees and that all work performed will be completed by sub-contractors who are responsible for their own worker’s compensation and insurance in addition to any bonds that may be required.

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1910 Matterhorn Drive Garland, TX. 75044 214-664-3900 Initialed by customer:____________________________

Materials
1.

Unless otherwise noted, all materials used will be new and of good quality. All materials will be listed on the estimate by brand name if applicable, model number, grade or distinguishing terms. The quantity and estimated cost will also be shown. Contractor reserves the right to use comparable materials if the items described are not available.

Initialed by customer:____________________________

Warranties and Limitations
1. Owner acknowledges that except as expressly provided in a warranty addendum (if any) which may be attached hereto and made a part hereof by reference, no warranties, express or implied, are made by contractor concerning the nature, title, condition, construction, value or benefits of the completed project and/or the property; and all such warranties are hereby expressly disclaimed by contractor and waived by owner to the fullest extent allowed by law, including but not limited to any and all express and/or implied warranties of merchantability, habitability, condition, fitness for a particular purpose, and workmanship (expect the warranty of title, if any, contained in the deed, those manufacturers warranties and subcontractor warranties and any implied warranties concerning consumer products expressly provided in the warranty addendum, if any). 2. Owner acknowledges, agrees and stipulates that Owner is not relying upon any warranties, promises, guaranties or representations made by Contractor or anyone acting or claiming to act on behalf of Contractor unless included in the written Warranty Addendum, if any. The laborer, subcontractors, and sales personnel of Contractor are not authorized to make representations or warranties concerning the Property or the Project. Contractor’s agents, servants and employee’s ORAL

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1910 Matterhorn Drive Garland, TX. 75044 214-664-3900 STATEMENTS DO NOT CONSTITUTE REPRESENTATIONS OR WARRANTIES, have not been and shall not be relied upon by Owner, did not induce this Agreement and are not a part of this Agreement.
3.

Limited Statutory Warranties and Building Performance Standards are covered under the Texas Property Code – Section 430.001 as required by statute. Warranty periods for materials and workmanship are for one year. Two years for plumbing, electrical, heating and air conditioning delivery systems. See code for additional provisions.

Initialed by customer:____________________________

Liens and Waivers
1. Under the Texas Mechanics' Lien Law, any contractor, subcontractor, laborer, supplier, or other person or entity who helps to improve your property, but is not paid for his or her work or supplies, has a right to place a lien on your home, land, or property where the work was performed and to sue you in court to obtain payment. This means that after a court hearing, your home, land, and property could be sold by a court officer and the proceeds of the sale used to satisfy what you owe. In order to perfect their lien rights, a contractor, subcontractor, supplier, or laborer must file a mechanics' lien with the county recorder, which then becomes a recorded lien against your property. Generally, the maximum time allowed for filing a mechanics' lien against your property is 90 days after substantial completion of your project. 2. Lien waivers for services rendered by sub-contractors may be requested by homeowner upon payment of any invoice where proof of such payment is not provided with such invoice. Initialed by customer:____________________________

Dispute Resolution
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1910 Matterhorn Drive Garland, TX. 75044 214-664-3900 1. Agreement of Parties. The Contract Documents, together with any attachments, constitute the entire agreement of the parties, and there are no oral agreements.
2.

Amendment of Contract. Only an instrument in writing signed by the parties may amend this Contract.

3. Attorney's Fees. If either party retains an attorney to enforce this Contract, the party prevailing is entitled to recover reasonable attorney's fees, other costs, and related expenses. Binding arbitration is allowed for in this contract in the absence of certified architectural plans that accompany and become part of the overall contract. 4. Binding Effect. This Contract binds, benefits, and may be enforced by the parties and their respective representatives, successors in interest, and, if permitted, their assigns. 5. Counterparts. If this Contract is executed in multiple counterparts, all counterparts taken together will constitute this Contract. Initialed by customer:____________________________

Time of Performance
1.

Barring unforeseen site conditions or severe weather, which might reasonably alter timeof-completion estimates all work will be completed within the time limits allowed by building permits issued by the building authority. Time. Unless otherwise specified, all references to days mean calendar days. Business days exclude all Saturdays, Sundays, and national holidays. If the date for performance of any obligation falls on a Saturday, Sunday, or national holiday, that obligation is performable on the next business day.

2.

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1910 Matterhorn Drive Garland, TX. 75044 214-664-3900 Initialed by customer:____________________________

Change Orders and Amendments.
1.

Change Orders. Contractor is under no duty to make any changes in the Plans requested by Owner. In the event the Owner is requesting additional funds to cover requested Change Order (s) the lending mortgage company and lending institution providing interim construction financing must approve all change orders in advance. All change orders must be paid for in advance of actual work being preformed. Each time a modification to the original agreement is made, regardless how minor, a counter-signed Change Order will be created between the parties, indicating what will deviate from the original plan or assumption, and how much the change will cost. Change orders are legal documents. They should be legally amended to the agreement at the time of the change. Other typical contract amendments include architects' or designers' drawings and materials lists. Each amendment should be identified as Exhibit A, B, C, etc. and be mentioned at the end of the document.

2.

3.

Any deviation from the approved plans, specifications, purchase agreement, or estimate/budget submitted to the homeowner, building authority issuing the permits to construct the project, Bank or Mortgage Company, or any other institution connected or has interests in the project.
4.

Make requested changes as described in estimate and associated plans and as directed by the homeowner. Homeowner understands that this contract is a “Cost Plus Contract” as described in Informational Exhibit B attached to this contract or a Fixed Cost Contract as checked above. In the event that the homeowner elects a Fixed Cost Contract, all change orders will be executed in writing and all expenses associated with the change order will be paid to the contractor in advance.

Initialed by customer:____________________________

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1910 Matterhorn Drive Garland, TX. 75044 214-664-3900

Cooling Off Period
1.

The homeowner has three days from the date of signing of this document to withdraw from the agreement without penalty. No work will begin on the project until those three days have expired except where emergency services are required for the safety of the homeowner or the preservation of the property.

Initialed by customer:____________________________

Definitions
A. Plans mean all plans and specifications for the Improvements (dated and initialed by Owner and Contractor) along with any and all other supporting documents required to complete the project. B. Improvements mean the improvements to be constructed on the Property according to the Plans and scope of work, unless otherwise specified, utilizing standard building materials. C. The Scope of Work means the physical activities, materials, and equipment relating to the construction of the Improvements as listed below; D. Commencement Date means the date on which the Contractor and Owner agree that the Improvements can commence. E. Concealed Conditions means preexisting physical conditions situated below the surface of the ground, or concealed or unknown conditions in an existing structure, at variance with the conditions indicated in the Contract Documents or differing materially from those ordinarily encountered and generally recognized as inherent in Work of the character provided for in the Contract Documents. F. Contract Documents means this residential construction contract, the Plans, warranty documents, and any other documents governing the Work (collectively, the Contract). G. Change Orders means any deviation from the approved plans, specifications, purchase agreement, or estimate/budget submitted to the homeowner, building authority issuing the permits to construct the project, Bank or Mortgage Company, or any other institution connected or has interests in the project. H. Home means the real property and improvements and appurtenances for a singlefamily house or duplex. I. Payment Deadline means 2:00 p.m. on the third business day after Contractor's request for payment is received by Owner. Homeowner understands that payment will

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1910 Matterhorn Drive Garland, TX. 75044 214-664-3900 be made upon substantial completion. J. Delay of Payment for Services Fees is a service fee, which may be charged to Owner for each day payment is not received by Contractor past the Payment Deadline. K. Not to Exceed Fixed Contract Costs are defined to mean a minimum of 25% Overhead, 15% Contingency Fee and 25% Profit or as stated by Owner and Contractor in this document.

The following conditions are stipulated:
1. Consumer Products. Consumer Products, as defined by the Federal Trade Commission, are excluded from Contractor's warranty only to the extent individual manufacturers' warranties are passed through Contractor and assigned to Owner, with a copy received by Owner. Contractor assigns and passes through to Owner the manufacturers' warranties on all appliances and equipment. In the case of passed-through and received manufacturers' warranties on Consumer Products, Owner's recourse is directly to the manufacturer, and Contractor will have no responsibility for them, except for problems relating to Contractor's installation and hookup of the items. Warranty for workmanship as required by law. 2. The homeowner shall pay to Contractor the Contract Sum and any additional charges for all valid bills and charges to Contractor for material or labor relating to the Improvements or any approved and accepted change order, disbursed according to the payment schedule and no later than the Payment Deadline and Pay to contractor a Delay of Payment For Services Fees of $150.00 per day for each day after the Payment Deadline. Owner will not pay any subcontractor for any invoice for any service preformed regardless of nature. 3. Substantial completion is the point in the project where the building is fit to be used for its intended purpose. Any remaining work that needs to be completed is generally referred to as punch list work. Completion of the punch list work usually constitutes final completion.

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1910 Matterhorn Drive Garland, TX. 75044 214-664-3900 Note: Substantial completion is defined in AIA Document A201-1997, General Conditions of the Contract for Construction, in Section 9.8.1, and in AIA Document G704-2000, Architect’s Certificate of Substantial Completion, as: “the stage in the progress of the Work where the Work or designated portion is sufficiently complete in accordance with the Contract Documents so that the Owner can occupy or utilize the Work for its intended use.” 4. Place of Performance. All payments due under this contract shall be paid to Contractor in Dallas County, Texas. The place for construction for the Project is Dallas County, Texas. 5. Notices. Any notice required or permitted under this Contract must be in writing. Any notice required by this Contract will be deemed to be delivered (whether actually received or not) when deposited with the United States Postal Service, postage prepaid, certified mail, return receipt requested, and addressed to the intended recipient at the address shown in this Contract. Notice may also be given by regular mail, personal delivery, courier delivery, facsimile transmission, or other commercially reasonable means and such notice shall be effective when actually received. Any address for notice may be changed by written notice delivered as provided herein. 6. Time. Unless otherwise specified, all references to days mean calendar days. Business days exclude all Saturdays, Sundays, and national holidays. If the date for performance of any obligation falls on a Saturday, Sunday, or national holiday, that obligation is performable on the next business day. 7. When the context requires, singular nouns and pronouns include the plural. 8. Lead Abatement – Under the EPA guideline summary shown below, contractor specifically declines to perform demolition services to homes or renovation projects that fall under this requirement. Customer fully understands that contractor is not certified for lead abatement and that these services will be provided by such certified sub-contractor on behalf of the customer:
EPA is issuing a final rule under the authority of section 402(c)(3) of the Toxic Substances Control Act (TSCA) to address lead-based paint hazards created by renovation, repair, and painting activities that disturb lead-based paint in target housing and childoccupied facilities. ``Target housing'' is defined in TSCA section 401 as any housing constructed before 1978, except housing for the elderly

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1910 Matterhorn Drive Garland, TX. 75044 214-664-3900
or persons with disabilities (unless any child under age 6 resides or is expected to reside in such housing) or any 0-bedroom dwelling.

Initialed by customer:____________________________ TEXAS DECEPTIVE TRADE PRACTICES-CONSUMER PROTECTION ACT Customer understands his customer’s rights under the DTPA and has signed and verified that the customer is fully aware of their rights under the law. Customer affirms that contractor has not intentionally mislead the customer in any way concerning the terms and conditions of this contract. Customer further understands that in the event that they elect to use a cost plus contract, there may be additional charges unknown to the contractor that may be required to complete the service requested and the customer is fully responsible for all charges regardless of reason incurred.

Initialed by customer:____________________________ IMPORTANT NOTICE: You and your contractor are responsible for meeting the terms and conditions of this contract. If you sign this contract and you fail to meet the terms and conditions of this contract, you may lose your legal ownership rights in your home. KNOW YOUR RIGHTS AND DUTIES UNDER THE LAW. ______________________________________________ Owner ______________________________________________ Owner

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1910 Matterhorn Drive Garland, TX. 75044 214-664-3900 X ______________________________________________ Spencer K. Smartt Blazerwolf Construction Services 1910 Matterhorn Drive Garland, Texas 75044 214-664-3900 Phone E-Mail: bcs.estimates@gmail.com

General Contractors General Liability Insurance A Question of Control
The following excerpt from the Texas Supreme Court decision concerning General Liability insurance coverage is provided for your information. Your General Contractors contract does not provide this coverage under the terms of its contract. “A party can prove the right to control in two ways: first, by evidence of a contractual agreement that explicitly assigns the premises owner their a right to control; and second, in the absence of a contractual agreement, by evidence that the premises owner actually exercised control in the manner in which the independent contractor's work was performed. For a general contractor to be liable for its independent contractor's acts, it must have the right to control the means, methods, or details of the independent contractor's work. Further, the control must relate to the injury the negligence causes, and the contract must grant the contractor at least the power to direct the order in which work is to be done. Determining whether a contract gives a right of control is generally a question of law for the court rather than a question of fact for the jury.

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1910 Matterhorn Drive Garland, TX. 75044 214-664-3900
... the contract between the general contractor and the independent contractor the case would be analyzed. The court held that after reviewing the terms of the contract as a matter of law the agreement did not impose a duty on the customer (Dow Chemical) because the customer (Dow Chemical) did not retain the right to control the means, methods, or details of the subcontractor (Bright's) work. This becomes a key detail in the area of construction law/contractor's liability because it appears that the Supreme Court is indicating that the only way a general contractor can be held responsible under contract is to specifically find language that imposes a duty, which poses a right to control the means, methods, or details of an independent contractor's work.”

Dow Chemical Company v. Bright, 89 S.W.3d 602 (Tex. 2002).
As a result of these types of lawsuits many insurance carriers refuse to insure general contractors especially GC’s with no employees other than the GC himself. Labranza Homes, Inc. and it’s associated companies ie; Blazerwolf Construction Services, Rock Hard Siding, Labranza Wood Products, Kitchens Now! being a corporation with no employees other than the General Contractor is unable to secure Contractor’s General Liability Insurance declares as such and assumes no liability for incidents while contracting jobs to subcontractors. Customer fully understands that they are fully responsible for any an all claims and all such claims will be filed on the Homeowners insurance policy. Homeowner waives all such claims against General Contractor. (See Page 5, A.1 Pre-commencement Matters of contract) Homeowner:_______________________________________________________Date_____________________

Cost Plus Contracts
Often individual projects are more suited to this type of project delivery method over other more conventional contract methods. A project such as various types of remodeling projects, Insurance and fire repair and other emergency projects that face a lot of unknown conditions such as site conditions, concealed conditions and other unknown issues may be a candidate for a cost plus contract. Projects with these conditions make providing accurate contract drawings and estimates unrealistic. Cost plus contracts are easy. Build this project for cost plus this fee! Work can start almost immediately without waiting to develop 100% design drawings.

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1910 Matterhorn Drive Garland, TX. 75044 214-664-3900 When unknown conditions are encountered designers can make quick decisions without having to negotiate change orders. Work continues without disruptions and lost time that cost owners money! Cost plus contracts are easy for owners and designers to manage in allowing the focus of all efforts to be targeted on completing the work as quickly as possible with quality workmanship. Cost plus contracts free up designers and contractors to perform at their best in order to meet an owner's specific project needs. The amount of fee charged for a project can either be a percentage of the cost of the overall project or a negotiated fixed fee plus cost. This also allows you to save money over more conventional contracts which are normally overly marked up to “off set” unforeseen problems during the construction project. Homeowner: _________________________________________Date: ____________________

A GUIDE TO THE TEXAS DECEPTIVE TRADE PRACTICES ACT
Prepared as a Public Service by the Texas Young Lawyers Association and distributed by the State Bar of Texas 1998 Please read the complete text of this guide which can be found at: http://www.tyla.org/pdfs/Dtpa.pdf The following are some of the high points of the act for which you are being made aware of in this exhibit. This excerpt is only intended to make the customer aware of the requirements of the law. 1. The primary purpose of the DTPA is to protect consumers against false, misleading, and deceptive business and insurance practices, unconscionable actions, and breaches of warranty. It does so by prohibiting certain acts and practices that tend to deceive and mislead consumers. The DTPA provides that "false, misleading, or deceptive acts or practices in the conduct of any trade or commerce are hereby declared unlawful." The DTPA defines an "unconscionable action" as one that "takes advantage of the lack of knowledge, ability, experience, or capacity of a person to a grossly unfair degree."

2. 3.

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4. 5. 6.

The phrase "consumer" means an individual, partnership, corporation, or governmental entity who seeks or acquires by purchase or lease any goods or services The DTPA provides both public and private remedies for violations. Public remedies are those enforced by the Consumer Protection Division of the Texas Attorney General's Office. The consumer may face certain defenses and even be liable for certain damages if he or she loses the lawsuit. If the court finds that an action by a consumer was groundless and brought in bad faith or brought for the purpose of harassment, the court shall award to the defendant reasonable and necessary attorney's fees in defending the action plus all court costs.

1910 Matterhorn Drive Garland, TX. 75044 214-664-3900

Customer declares that they have been informed of their rights under the DTPA and fully understands that making false or unsubstantiated claims could result in legal action. Customer further affirms that the contractor has not knowingly mislead the customer to their knowledge in order to induce the customer into signing the contract to which this exhibit is attached. Signed:_____________________________________________Date:______________________

Contractor's Disclosure Statement Know Your Rights and Responsibilities under the Law. You are about to enter into a transaction to build a new home or remodel existing residential property. Texas law requires your contractor to provide you with this brief overview of some of your rights, responsibilities, and risks in this transaction. Conveyance to Contractor Prohibited. Your contractor may not require you to convey your real property to your contractor as a condition to the agreement for the construction of improvements on your property. Know Your Contractor. Before you enter into your agreement for the construction of improvements to your real property, make sure that you have investigated your contractor. Obtain and verify references from other people who have used the contractor for the type and size of construction project on your property.

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1910 Matterhorn Drive Garland, TX. 75044 214-664-3900 Get It in Writing. Make sure that you have a written agreement with your contractor that includes (1) a description of the work the contractor is to perform; (2) the required or estimated time for completion of the work; (3) the cost of the work or how the cost will be determined; and (4) the procedure and method of payment, including provisions for statutory retainage and conditions for final payment. If your contractor made a promise, warranty, or representation to you concerning the work the contractor is to perform, make sure that promise, warranty, or representation is specified in the written agreement. An oral promise that is not included in the written agreement may not be enforceable under Texas law. Read Before You Sign. Do not sign any document before you have read and understood it. NEVER SIGN A DOCUMENT THAT INCLUDES AN UNTRUE STATEMENT. Take your time in reviewing documents. If you borrow money from a lender to pay for the improvements, you are entitled to have the loan closing documents furnished to you for review at least one business day before the closing. Do not waive this requirement unless a bona fide emergency or another good cause exists, and make sure you understand the documents before you sign them. If you fail to comply with the terms of the documents, you could lose your property. You are entitled to have your own attorney review any documents. If you have any question about the meaning of a document, consult an attorney. Get a List of Subcontractors and Suppliers. Before construction commences, your contractor is required to provide you with a list of the subcontractors and suppliers the contractor intends to use on your project. Your contractor is required to supply updated information on any subcontractors and suppliers added after the list is provided. Monitor the Work. Lenders and governmental authorities may inspect the work in progress from time to time for their own purposes. These inspections are not intended as quality control inspections. Quality control is a matter

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1910 Matterhorn Drive Garland, TX. 75044 214-664-3900 for you and your contractor. To ensure that your home is being constructed in accordance with your wishes and specifications, you should inspect the work yourself or have your own independent inspector review the work in progress. Monitor Payments. If you use a lender, your lender is required to provide you with a periodic statement showing the money disbursed by the lender from the proceeds of your loan. Your contractor is also required to furnish you with a statement at least once each month of money disbursed to subcontractors and suppliers for this project. Review these statements and make sure that the money is being properly disbursed. Claims by Subcontractors and Suppliers. Under Texas law, if a subcontractor or supplier who furnishes labor or materials for the construction of improvements on your property is not paid, you may become liable and your property may be subject to a lien for the unpaid amount, even if you have not contracted directly with the subcontractor or supplier. To avoid liability, you should take the following actions: 1. If you receive a written notice from a subcontractor or supplier, you should withhold payment from your contractor for the amount of the claim stated in the notice until the dispute between your contractor and the subcontractor or supplier is resolved. If your lender is disbursing money directly to your contractor, you should immediately provide a copy of the notice to your lender and instruct the lender to withhold payment in the amount of the claim stated in the notice. If you continue to pay the contractor after receiving the written notice without withholding the amount of the claim, you may be liable and your property may be subject to a lien for the amount you failed to withhold. 2. During construction and for thirty days after final completion, termination, or abandonment of the contract by the contractor, you should withhold or cause your lender to withhold 10 percent of the amount of payments made for the work performed by your contractor. This is

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1910 Matterhorn Drive Garland, TX. 75044 214-664-3900 sometimes referred to as ”statutory retainage.” If you fail to withhold the 10 percent for at least thirty days after final completion, termination, or abandonment of the contract by the contractor and if a valid claim is timely made by a claimant, you may be personally liable and your property may be subject to a lien up to the amount that you failed to withhold. If a claim is not paid within a certain time period, the claimant is required to file a mechanic's lien affidavit in the real property records in the county in which the property is located. A mechanic's lien affidavit is not a lien on your property, but the filing of the affidavit could result in a court imposing a lien on your property if the claimant is successful in litigation to enforce the lien claim. Some Claims May Not Be Valid. When you receive a written notice of a claim or when a mechanic's lien affidavit is filed on your property, you should know your legal rights and responsibilities regarding the claim. Not all claims are valid. A notice of a claim by a subcontractor or supplier is required to be sent, and the mechanic's lien affidavit is required to be filed, within strict time periods. The notice and the affidavit must contain certain information. All claimants may not fully comply with the legal requirements to collect on a claim. If you have paid the contractor in full before receiving a notice of a claim and have fully complied with the law regarding statutory retainage, you may not be liable for that claim. Accordingly, you should consult your attorney when you receive a written notice of a claim to determine the true extent of your liability or potential liability for that claim. Obtain a Lien Release and a Bills-Paid Affidavit. When you receive a notice of claim, do not release withheld funds without obtaining a signed and notarized release of lien and claim from the claimant. You can also reduce the risk of having a claim filed by a subcontractor or supplier by requiring as a condition of each payment made by you or your lender that your contractor furnish you with an affidavit stating that all bills have been paid. Under Texas law, on final completion of the work and before final payment, the contractor is required to furnish you with an affidavit stating that all bills

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1910 Matterhorn Drive Garland, TX. 75044 214-664-3900 have been paid. If the contractor discloses any unpaid bill in the affidavit, you should withhold payment in the amount of the unpaid bill until you receive a waiver of lien or release from that subcontractor or supplier. Obtain Title Insurance Protection. You may be able to obtain a title insurance policy to insure that the title to your property and the existing improvements on your property are free from liens claimed by subcontractors and suppliers. If your policy is issued before the improvements are completed and covers the value of the improvements to be completed, you should obtain, on the completion of the improvements and as a condition of your final payment, a “completion of improvements” policy endorsement. This endorsement will protect your property from liens claimed by subcontractors and suppliers that may arise from the date the original title policy is issued to the date of the endorsement. __________________________________________________________________________ ____ I have received a copy of this contractor's disclosure statement for residential construction. Initials____________

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