Post Harvey Update

September, 2017

Reviewing the Obligations Under Your Commercial Lease
By Patrick Hayes

Although we have had sunshine in Houston for the last several days, flooding continues in parts of our region from the draining of the Addicks and Barker reservoirs as well as from several rivers.

If you are either the landlord or tenant of commercial property that has suffered flooding or other water damage from Harvey, among the many other things that you are having to address, please review the obligations under your commercial lease. Generally, a tenant is required to notify the landlord if a casualty has occurred at the leased premises. This notice is usually required immediately or within a certain period of time after the casualty occurs.  After the landlord receives the notice, the landlord then has a certain period of time to respond to the tenant as to how or if it will repair the commercial property.

Remember, the terms of the lease control in situations like these.  Don’t assume that the other side will be lenient after an event like this, especially when money is involved (and that money may be necessary for one of the parties to recover as well).    

If you are a landlord, also remember to notify your lender if your property has been impacted.  Your loan documents likely require you to notify your lender within a certain period of time after a casualty event has occurred.  Review your loan documents carefully to make sure you have complied with the terms of the loan.

The following information was previously shared on August 30, 2017:

Resilience, Rebounding and Rebuilding
By Bill Andrews

Our wonderful City survived a storm unprecedented in its breadth and destruction.  The stories of neighbors rescuing those stranded and trapped by rapidly rising flood waters are the stuff of legend. In the face of all of this, Houston is already rebounding--no surprise given the can do attitude of our City.  And, Andrews Myers has rebounded and is up and running to serve our client's needs.
Our amazing family at Andrews Myers was not immune to Harvey's destruction and harm. We have families with homes severely damaged by Harvey. They are already rebuilding.  
Houston's can do spirit is manifest at our firm as we address our client's needs and as we rebuild our damaged homes.  We are grateful to be able to reach out to our clients so quickly.  Harvey is now in our rear view mirror.  
Finally, many of you have reached out to us offering help and support.  All we can say, is thank you and please keep Houston in your thoughts and prayers.  

On Filing Insurance Claims
By Ben Westcott

House Bill 1774 becomes law on September 1, 2017. One provision of the bill may have the effect of decreasing the interest rate on a claim where an insurer improperly withholds payment, and of changing the interest calculation from compound interest to simple interest. 

Under the current law, the penalty interest to the insurance company for underpayment of a claim is set at 18%. Under the new law, it will be a floating rate between 10-20%.  Some noted insurance lawyers in the state are advising their clients to report Harvey claims to insurers by email prior to September 1 because of this change. 

It is important to note that this provision does not apply to Texas Windstorm Insurance Association claims.  It is certainly true that if there is a lawsuit that results from the insurance company’s failure to adequately pay a claim, the current law is more advantageous to the policy holder than the law that takes effect on Friday, September 1st.

Notice of Request for Time Extension and Claim for Builder's Risk Coverage

AIA A201 2007 provides for relief for weather delays, but you should be sure to provide notice within 30 days of Friday, August 25th.  Some contracts may have shorter notice periods, such as the City of Houston's 48-hr notice requirement, so please review them to ensure you don’t miss any deadlines. An example of a standard notice letter might look like this:

Re: Notice of request for time extension and claim for builder’s risk coverage

We hope that you and your families are safe and recovering from the effects of Hurricane Harvey.  As you know, the Houston area was severely impacted by impacted by Hurricane Harvey.  Some areas of town received in excess of 50” of rain over the weekend and into the early part of this week.  Specifically, we received ______ inches of rain in the area where the project is located.

We are requesting an extension of time for _________ days to deal with the adverse effects of this major storm on the schedule for the project.  These effects could not have been reasonably anticipated or avoided.  (Attach current photo of project site if available/helpful).

Also, the following materials/work in progress have been damaged.  (Attach photos/list of damaged items).  We are requesting that you present a builder’s risk claim to your carrier on our behalf and copy us on the transmittal.  If you would like for us to communicate directly with your carrier/adjuster, please let us know.

Please contact me with any questions you may have.

Pay for Employees During Work Closure for Inclement Weather
By Tony Stergio

As a result of the recent flooding events, many of you were likely forced to close your business for several days.  Keep in mind, however, that wage and hour laws require that employers must pay exempt employees their full salary for any week in which they worked for any portion of a workweek.   Thus, you cannot dock exempt employees pay for days not worked due to Harvey-related office closures.  

However, the law also states that employers need only pay non-exempt employees (generally hourly) for time actually worked, so their pay can be affected by Harvey if the employer so chooses.

Employers can also require both exempt and non-exempt employees to use PTO in times of inclement weather or natural disasters.

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