Episode 9 | Jon Stenquist with Parsons Behle & Latimer
Transcript
00:00:05 Greg Croft with Resin Architecture
Welcome to Vision Driven with Resin Architecture, the podcast where we dive deep into the world of architecture, development, and construction.
00:00:12 Greg Croft with Resin Architecture
I’m your Host, Greg Croft, and my Co-Host is Jamee Moulton, and we are thrilled to have you join us on this journey of learning, inspiration, and insight.
00:00:19 Micki Schwartz with Rudd & Co
When you talk about real estate, I would always recommend that you go into it with the exit in mind. 00:00:25 David Frew with Bank of Idaho
Advice I'd give somebody that's presenting their case, or pitching their loan to a bank, is just to be really well prepared.
00:00:32 Jamee Moulton with Resin Architecture
Whether you're dreaming of building a space for your business or simply curious about the fascinating world of architecture and development, join us on this exciting adventure as we unlock the secrets to successful projects and empower you to turn your vision into reality.
00:00:51 Greg Croft with Resin Architecture
Our guest today is Jon Stenquist. Jon is a commercial and real estate attorney with more than 20 years of experience. He began his career in Houston, TX, where he represented large clients in complex legal disputes and transactions. And now he's a shareholder with Parsonss, Behle & Latimer where he represents clients in Idaho, Utah, Wyoming and Texas.
00:01:12 Greg Croft with Resin Architecture
He's here to talk to us today about the role of an attorney on a commercial project. We're excited to have you here. Thank you for coming. And just to get things rolling, what brought you into law? What sparked that interest?
00:01:29 Jon Stenquist with Parsons Behle & Latimer
Well, thanks for having me. You know, I have always been interested in problem solving and dispute resolution. I had a few mentors when I was younger who were attorneys, and I was exposed to it. And so I decided I'd give it a shot. I was initially going to be an account and maybe get my MBA and maybe a JD MBA. But I decided to go the shorter route and I just got my law degree, but I ended up working for an accounting firm doing international transactions for a while in Houston and that's how I got my start.
00:02:07 Jamee Moulton with Resin Architecture
We're really trying to speak to an audience that is interested in building their first commercial project, maybe a building for themselves to owner occupy, maybe something that they can lease. Can you tell us the roles that a lawyer has in a transaction like that?
00:02:28 Jon Stenquist with Parsons Behle & Latimer
Sure, we will get involved when many of our clients have business partners. So it's always important to have an operating agreement or some kind of partnership agreement with your business partners. Some people do it on their own, but if it's their first project, they usually have some kind of investor or other people who are going to work with them.
00:02:51 Jon Stenquist with Parsons Behle & Latimer
And I always say that it's easy to get into a marriage and hard to get divorced. It's easy to get into a business relationship, but as you do that you need to really decide how are we going to end this relationship? Are we going to buy each other out? Are we going to allow other people into the investment and how is that going to look when one member of a company is older and is winding down. Or are they envisioning a long term relationship? So it's always important to understand not only that you're going into business with someone, but how does it work when we get out? What happens if there's a death? If there's a divorce?
00:03:33 Jon Stenquist with Parsons Behle & Latimer
If one partner becomes insolvent? How does the other partner buy that commercial property? We see that a lot, a dispute as to how do we get out of this deal that we got into because you know on day one everybody's friends, we have big dreams and hopes and we all expect that it will be successful, but what happens if it's not? Who's going to take over? How are we going to get out of this?
00:03:59 Jon Stenquist with Parsons Behle & Latimer
A good operating agreement with some good termination and unwinding provisions is very important. That's the first thing. The next thing I would look at is how does how is the financing going to work?
Many times, you have one of the partners [who] has more assets, more net worth. Are there going to be loan agreements between the two partners or the multiple partners?
00:04:24 Jon Stenquist with Parsons Behle & Latimer
What are the loans going to look like with the bank? And we oftentimes see people borrowing money or guaranteeing loans, and there's a lot of work that needs to go into the financing side of it. As a borrower, you have more rights than a guarantor.
00:04:44 Jon Stenquist with Parsons Behle & Latimer
So, for example, a borrower can protect themselves through what in Idaho is called the one Action Rule, and lenders are only allowed to collect debts by looking at the real estate first. And after they've sold the real estate, they're required to give the borrower full credit for the fair market value of the property that was maybe foreclosed. As a guarantor, you don't have those rights.
00:05:11 Jon Stenquist with Parsons Behle & Latimer
A guarantor may have to come out of pocket and pay it out of their own cash reserves, or the lender may decide to go after a guarantor's house first instead of going after the commercial property. So as you look to borrow, you have to think, OK, what is the lender going to do if things go badly, which is when the attorneys get involved.
00:05:36 Jon Stenquist with Parsons Behle & Latimer
The lender should look to the property first and the borrower second, but if you're just a guarantor and not a borrower, the lender can look to the guarantors first and the property second.
00:05:48 Jamee Moulton with Resin Architecture Is there ever an advantage to being a guarantor?
00:05:53 Jon Stenquist with Parsons Behle & Latimer
You know, I don't [think so.] In a commercial context, I can't really think of one. I do believe that whether or not you're a guarantor or a borrower, you have to disclose that debt in future loan applications. Sometimes you think, well, I guarantee a bunch of debts and that won't affect my finances. But I think technically as a guarantor of loans, your financial statements need to really show you as a borrower because that is an outstanding liability. I can't really think of many instances where a guarantor position is better than a borrower position.
00:06:29 Jon Stenquist with Parsons Behle & Latimer
And so if you have an LLC, the members of the LLC could become co-borrowers so you have an LLC that owns the property. You have two members of the LLC, for example, and they could be co-borrowers instead of guarantors, but I think the standard paperwork that a lender might put in front of you is the LLC is the borrower and the members are the guarantors.
00:06:56 Jon Stenquist with Parsons Behle & Latimer
And obviously, to the extent that the LLC is solvent enough, perhaps the lender will just take signatures from the LLC and a security interest in the building, but in my experience they typically want everybody involved on the hook for that loan.
00:07:14 Greg Croft with Resin Architecture
I guess in addition from the legal side, we don't work a lot with lawyers as architects, but the times that we have seen it a little bit would be like if there's a larger development that's being put together typically you guys get involved on the covenants and things like that. What other pieces do you see from that end where it's like a lawyer should have been involved or could be involved a little bit earlier in the process when maybe everybody's actually still feeling rosy, right?
00:07:54 Jon Stenquist with Parsons Behle & Latimer
You know I think it would be good to get a real estate lawyer involved to review the title report and just see what exceptions the title company has listed on the title report. Become aware of the easements that may exist. If you're starting with bare ground, for example, and it's not a development lot you want to know where the canal company’s easement is and whether or not there are existing utility easements where you want to put your building and just go through the process of looking at the property itself to ensure that your building will work on the specific property.
00:08:30 Jon Stenquist with Parsons Behle & Latimer
And so lawyers will get involved in that. Certainly, if there is already a subdivision in place, an attorney could look at the CC&Rs, any covenants, restrictions, guidelines and ensure that that works for the applicant, and the builder and then have a good...
00:08:51 Jon Stenquist with Parsons Behle & Latimer
You know what I've seen a lot of times is the builder builds the building that the customer requests and the customer requests the building, and then neither of them are really clear on who's going to read the covenants and you go down the road and you think, Oh well, the setbacks are 20 feet. Yeah, the setbacks are larger than what the city or the county require, and neither party read the covenants . The builder thinking well my customer would have told me.
00:09:22 Jon Stenquist with Parsons Behle & Latimer
And the customer thinking well the builder should have read this. It just kind of slips through the cracks. So having an attorney involved sometimes helps or just being aware of those issues and ensuring that somebody involved in the process is looking at that.
00:09:37 Jon Stenquist with Parsons Behle & Latimer
The architect, you'll design the building. You'll have it all ready, and then it's maybe the builder and the owner who decide the exact location and maybe you guys didn't read the CC&Rs where the setbacks are and then obviously it would be your job to coordinate with the owner to ensure that your designs comply with any design requirements.
00:09:59 Jon Stenquist with Parsons Behle & Latimer
If there's an architectural control committee, that they have full sign off. If you're going outside of those that you have the right people signing off on any variants to the CC&R's. You know I've litigated cases where maybe the president of the homeowner's association signs off on a variance, but the covenants require that the board meet and the whole entire board agree. So just being careful that you're in compliance with the CC&Rs. I was involved in a case where judges have said, you know, we might have to remove this building, and that's a pretty scary situation for everybody.
00:10:34 Greg Croft with Resin Architecture
We do put on commercial projects, we always have a site plan with all the setbacks thrown in, but on residential I could see that occurring based on the napkin sketches I've seen right before they get approved.
00:10:49 Jon Stenquist with Parsons Behle & Latimer
Well, and for residential, the legislature has made it clear that homeowner’s associations are disfavored, and they've now put a lot of burden on residential HOAs in particular to hold meetings and comply with the budgeting requirements. There's limitations on what you can - yeah, there's limitations on what you can assess for. The legislature has become heavily involved in HOAs essentially telling the public we don't like them and we're going to make the HOAs jump through a lot more hoops. So that's been an issue as well.
00:11:31 Greg Croft with Resin Architecture
My next question, when a business owner decides to build a facility that they're going to be the owner occupant, 50%+, do you get in and advise them on the different aspects of that process? They're going to have a tenant maybe. They should put a lease together for themselves because it's likely a separate LLC that owns [the property] from both I think a legal and a tax perspective. That's typically how we've seen it done. And then what kinds of skills do you need or would you recommend a lawyer have for kind of navigating those waters?
00:12:18 Jon Stenquist with Parsons Behle & Latimer
It's important to have leases in place and if you're owner occupied it’s good to have a lease with yourself. I mean essentially an LLC that owns the building and then an LLC that operates the business. You don't want those liabilities to cross over between the two entities and to do that you need to ensure that you have what we call a corporate veil. So we have distinctive corporate operations. We have separate bank accounts.
00:12:45 Jon Stenquist with Parsons Behle & Latimer
We have a lease in place and those kinds of things. So if someone tries to pierce that corporate veil, maybe liabilities for their operational company to try to get to the real estate, you can say no, we are a standalone company. We follow the processes correctly. We have our own bank accounts. We have our own meetings.
00:13:05 Jon Stenquist with Parsons Behle & Latimer
And we have a lease in place with the operating company. It's important to have leases for all of your tenants and also to figure out well in advance what the CAM charges are, the common area maintenance charges. So that your tenants will pay for part of the snow removal, part of the parking lot maintenance, and the landscaping maintenance so that it's known in advance and so you have those in place. Putting together a budget for long-term maintenance is important. What's the useful life of the roof? How often do we have to stripe the parking lot?
00:13:42 Jon Stenquist with Parsons Behle & Latimer
Put those funds in in various accounts and budget for those so that when you do sign a lease with a tenant that you're not caught by surprise when you suddenly have an ordinary maintenance issue come up significantly, a roof, or maybe you know, a new parking lot or something.
00:13:59 Jamee Moulton with Resin Architecture
It sounds like some of the skill sets that would be helpful when choosing a lawyer to help with these type of transactions would be a familiarity with the different charges that would need to be included in the lease. Can you think of anything else that a lawyer should be familiar with when they approach helping a first-time developer.
00:14:26 Jon Stenquist with Parsons Behle & Latimer
I think a lawyer should be familiar with a lot of accountants in town because the accountants are going to drive the bus for a lot of these things. You know, the accountant’s going to give advice. Maybe you talked to your builder about the useful life of various aspects of the building and make sure you have a maintenance plan in place. So having an accountant involved in the beginning of the process to work with your builder and look at your long-term budget is important.
00:14:50 Jon Stenquist with Parsons Behle & Latimer
I also think that your lawyer needs to be familiar with construction contracts, so at some point the owner will enter into an agreement with a contractor to build and you guys will provide a design. There'll be a budget and contractors will often have standard forms that they use.
00:15:13 Jon Stenquist with Parsons Behle & Latimer
There are national forms, AIA agreements and things like that, but just to really understand in the beginning what's going to happen if we go over budget? How do we deal with change orders? What is the warranty like after we close? Who's responsible for increases in materials and costs, which has been a big issue sometimes? Sometimes people get into a construction contract and believe that it's a set price because there will be a number. But as you read through the fine print, you realize it's not set. It's not really a set price, it's really a goal.
00:15:52 Jon Stenquist with Parsons Behle & Latimer
Certainly the contractor does not want to be tied down to price increases, but the owner will believe that they have kind of a fixed cost not understanding that materials have not yet been ordered and paid for and prices do move and subcontractors may change. The subconscious themselves may be different, and then the cost may go up because of their costs. And we've seen that with our recent inflationary environment where people just below through their budget.
00:16:26 Jon Stenquist with Parsons Behle & Latimer
The home builder or the owner of a commercial contract is looking at it thinking how am I going to afford this? I thought it was going to be X and now my costs have increased. Early on, I think everybody needs to be prepared for change orders, increased costs and just understand where is this money going to come from.
00:16:50 Jon Stenquist with Parsons Behle & Latimer
Most lenders will bake into their loan some variants. They'll certainly [include] some contingencies, but even then our environment has outstripped even some of the lender's estimates. And it's been a problem. So understanding what your contract is and what it means. And we've also seen issues where there's not great communication between the builder and the owner. The builder kind of understands that they're over budget and they're running over budget. The owner may not understand that.
00:17:20 Jon Stenquist with Parsons Behle & Latimer
Sometimes builders become a little bit too optimistic and think, well, we'll make it up. We'll make these over overruns up later on in the project and sure enough inflation is across the board. The owner should really communicate with the builder. Are we on target? Where are we off? What's lumber doing? What? What are tile [costs]? You know, what does it look like? Do we need to lower our lower our budget in some areas to stay under budget for the whole project? So it's really important to communicate.
Lawyers really don't get involved until everything's gone south, until the communication is broken down, until there's some misunderstanding of the contract. But having a lawyer involved in the beginning can alert people to those issues.
00:18:07 Greg Croft with Resin Architecture
What would you consider the next steps to be? Or what would you recommend the next steps for a business owner as they prepare to build their own space?
00:18:15 Jon Stenquist with Parsons Behle & Latimer
Certainly hire good architects, good accountants. Find a good builder, a reputable builder. Get a good lender who understand your finances and that you can work with. And once you have those people in place, then you can utilize your attorney to help with the contracts. Maybe have them read the loan documents, talk to them about the issues between guarantors, make sure that a lawyer has gone over your business, your business dissolution plans in your LLC agreement.
00:18:49 Jon Stenquist with Parsons Behle & Latimer
And you know, we can certainly read any contracts between them and the architects , between them and the contractor and make sure that everything covers them as they move forward. Having all of your professionals in place and then to the extent you need help ask for a lawyer to maybe review things and go over the different contracts that you're signing.
00:19:10 Greg Croft with Resin Architecture
Yeah, I would imagine that even having that up front then it's like, oh, I've got a lawyer that I'm already working with. If there's anything that pops up as a red flag during construction or during the design that it's like, hey, is this is this normal? We can have a conversation and they've already got that relationship and a little bit of that background knowledge that you've got on that.
00:19:35 Jon Stenquist with Parsons Behle & Latimer
Yeah, I think that's it's always good to have your lawyer familiar with your project and what you're doing. And in my experience, you know, legal fees are not a significant portion of the cost. If you think about 6% realtor fees and the builder fees, maybe a cost plus 10% contract. The lawyers in my experience where we're not ever really 1 or 2% of the project in overall cost. But usually because the lawyers are paid upfront in cash maybe [the client is] coming in with maybe not the greatest cash position they may scrimp on the lawyer and then kind of regret in the end. But you know, my involvement in construction throughout in these projects is relatively minimal compared to the grand scheme of the project.
00:20:29 Jamee Moulton with Resin Architecture
Are the fees that you are discussing are the hourly fees for the amount of time that you spend on the project or is it a fixed fee for we will oversee the project for the life of the project?
00:20:44 Jon Stenquist with Parsons Behle & Latimer
Mine are typically hourly. I'm not sure of anyone who does a fixed fee or a contingency fee on a construction contract only because everyone is so different and who knows what it's going to be cropped up. It's hard for the lawyer to take kind of the risk of the unknown, but you know that the hourly fee I think is oftentimes better than a set percentage because people are going to err on the side of over bidding a percentage than just charging an hourly fee. And if things get a little messy, it will get more expensive. But you know, reviewing contracts and giving general advice is typically not something that should break the bank.
00:21:22 Jamee Moulton with Resin Architecture
Can you think of any red flags that might indicate that a certain business is not quite ready to start construction for their own space and they should continue leasing?
00:21:34 Jon Stenquist with Parsons Behle & Latimer
You know that's a good question. On the financial side, obviously the accounts are going to say a lot about are they overextending themselves to have these great dreams that they can't really afford. From the legal perspective, I think people need to just be aware of the risks, the problems with just general partnership disputes. Everybody needs to be getting along. Be on the same page. Everybody needs to be kind of pulling in the same direction to ensure that the project is successful from a legal standpoint.
00:22:03 Jon Stenquist with Parsons Behle & Latimer
When someone comes into my office, maybe there's two or three people, one or two people. I want to make sure that they're in complete agreement about everything. Let's resolve our differences now.
What is your vision? Do you have the same vision? What does it look like on dissolution? Who's putting in the money? Are you OK with that? How are you going to get your money out?
00:22:25 Jon Stenquist with Parsons Behle & Latimer
Once the business starts making lease payments, are we allocating those appropriately within expectations? Those kinds of things that people aren't really thinking about that will cause problems down the road.
00:22:38 Jon Stenquist with Parsons Behle & Latimer
Let's talk a lot in the beginning about how this is going to look. I want to see that everybody's in agreement as the lawyer moving forward and then obviously just business experience, financial well- being is another aspect.
00:22:55 Greg Croft with Resin Architecture
What can you perceive from your seat? You've probably seen a plethora of legal suits in the real estate and construction realm. What do you feel like would help mitigate those? I mean, beyond some of the things that we've talked about where it's like, yeah, if you have a good agreement up front then, but what else would do you see that could help mitigate some of those arguments that pop up? Does it really come down to good contracts?
00:23:30 Jon Stenquist with Parsons Behle & Latimer
Good contracts. Having a good contractor, an experienced contractor, a good builder. That's key. Having a sufficient budget to deal with our inflationary environment right now is important, especially if we anticipate that interest rates are going to rise. And we've seen some people not be able to afford the finished house that they started because interest rates have risen.
00:23:55 Jon Stenquist with Parsons Behle & Latimer
They didn't lock in their rate, for example. I know that there's a lot of risk as a first-time commercial owner. There's a lot of risk of the unknown, and you're frankly you're not very good at it. And so if you have a lot of good advisors around you, especially a good builder. That's great. One way to mitigate that risk is seek out maybe a developer who will give you a turnkey product for a set price.
00:24:22 Jon Stenquist with Parsons Behle & Latimer
And maybe that builder will reap the benefits of maybe higher margin, but they take all of the risks so you could go to somebody in a development in a commercial area. They have their pads available. They have their lots available and you say look, I don't want to deal with construction. I don't want to deal with contractors.
00:24:43 Jon Stenquist with Parsons Behle & Latimer
If you build this for me, what will my lease payment be? And maybe not the cheapest option, but certainly the one that mitigates the risk because you can lock into a set lease payment, a set price from the outset, and then you can just worry about running your business and not worry about being an owner builder at the same time. Which frankly, if you think about someone who's operating a business, their greatest value is the business that they know.
00:25:11 Jon Stenquist with Parsons Behle & Latimer
Then if you're going to add on top of that, why don't you learn how to work with the builder and build your own building in your free time? That adds a lot of unnecessary stress. So sometimes just pay a little more and get the product that you want at the end and focus on your core business and your business acumen to make more money during those times that you would normally be spending building a building.
00:25:38 Jamee Moulton with Resin Architecture
Are there suits associated with owning a building that owners need to be aware of and avoid? I'm thinking about compliance or injury or access. Does a lawyer play a role in protecting a building owner from suits like those?
00:26:06 Jon Stenquist with Parsons Behle & Latimer
My first and my first advice is always get a good insurance policy. And get a list of the additional coverage options - the additional riders - that the insurance company can provide to you and there's riders for almost anything. Just say look, what do I want to be protected against? Do I want to be protected against ADA lawsuits? Do I want to be protected against additional things: maybe employee lawsuits, sexual harassment lawsuits? And so a relationship - we haven't talked about this yet, but a relationship with your insurance provider is very important to say I want coverage for all of these unknowns. I'm willing to pay a little extra to be covered for these things.
00:26:57 Jon Stenquist with Parsons Behle & Latimer
Having a builder that has a good relationship with the city or county wherever you're building is in important. They do a good job. The city does a good job. The counties do a good job of inspecting properties, ensuring compliance with the current code. That's part of your job too is to ensure that your designs comply with the ADA and other and other things.
00:27:20 Jon Stenquist with Parsons Behle & Latimer
From my perspective, I would much rather an insurance company come defend a client than the client to come to me and have to pay out of pocket for some incident. Obviously, there's a lot of unknowns, but a good liability policy and a good D&O policy kind of employment policies really do help and then ensuring that you know you get all the sign offs and things from the from the city and the county and you comply with the code is very important.
00:27:53 Greg Croft with Resin Architecture
You'd mentioned earlier homeowners associations and we come across those and design review boards pretty frequently in what we're doing. So my question is with them what kind of authority do they have legally what kind of authority do they have? How have you seen...? Are there any interesting cases that you've seen in in that regard where there's some arguments that maybe they are overstepping their bounds?
00:28:29 Jon Stenquist with Parsons Behle & Latimer
Well, there's kind of a seminal case called Adams versus I think, Kimberley One Townhomes and it was in Boise. This case was a set of townhomes near the football stadium and during home games, one of the owners in the association would rent out his townhouse to people there to attend the football games, and if you can imagine a lot of drinking and people stealing vegetables from the neighbors and staying up late because it's a football party.
00:29:02 Jon Stenquist with Parsons Behle & Latimer
And so the homeowners association decided to ban all short term rentals, and this was kind of right at the beginning of the Airbnb, VRBO craze. And so the homeowners association said, guess what? You cannot rent your property even though previously there was nothing in the covenants that prohibited it. They just made-up a new covenant.
00:29:25 Jon Stenquist with Parsons Behle & Latimer
And that case was litigated and went to the Supreme Court. I personally thought that the Supreme Court would say that homeowners associations can't regulate the use of your property. Idaho is very pro property owner. We encourage the free use of land, and unless there's a specific restriction in a zoning ordinance or a CC&R that you know about when you buy your property, you should be able to use it how you want. But the Supreme Court, they came back and said no.
00:29:56 Jon Stenquist with Parsons Behle & Latimer
Homeowners associations have the authority to take away that property right and can require that you have long-term rentals only and that kind of sent shockwaves through the legal community because this because the Idaho Supreme Court sided on the side of homeowners association essentially indicating that homeowners associations are very powerful, and that decision Adams versus Kimberley One had many repercussions. The following year, maybe the following legislative session, the legislature undid that and said specifically in the statute that homeowners associations do not have the power to regulate short-term rentals unless it's already a rule in the CC&Rs at the time you buy it, and every owner in the subdivision sign off on it.
00:30:43 Jon Stenquist with Parsons Behle & Latimer
Not just a majority vote, which is normal or a super majority that you see in a lot of HOAs. So every single person has to agree and essentially sign off on the fact that their property cannot be rented on a short-term basis.
00:30:57 Jon Stenquist with Parsons Behle & Latimer
That has progressed to what I mentioned earlier, the legislature has, you know, limited homeowners associations even more. And the short-term rental question is probably the hottest issue with homeowners associations. But homers associations, because of that Kimberley One Townhomes the one decision the legislature only reacted to the court's decision on short-term rentals.
00:31:26 Jon Stenquist with Parsons Behle & Latimer
The legislature didn't do a whole lot more other than try to force HOAs to act more like cities, but what it tells me is that our current Supreme Court, if you, if you had a case, our current Supreme Court would probably side with the power of the homers association unless the legislature has somehow undone that. And so homeowners associations are very powerful.
00:31:54 Jon Stenquist with Parsons Behle & Latimer
I will say, however, that because we have a public policy of free use of land in Idaho that the CC&Rs, the covenants and the restrictions, are construed against the drafter and are not given. If there's any ambiguity at all. The court doesn't have to really follow it. So in the cases that I've seen where a homeowners association is trying to enforce something, that enforcement provision better be very clear. Otherwise, the court doesn't need to enforce it. If it's a little bit vague, it's probably not enforceable.
00:32:28 Greg Croft with Resin Architecture
You mentioned that you started your career out in Texas. So where? Tell me a little bit about the background from that firm and then what brought you to Idaho and tell me about the current firm that you're at too well.
00:32:40 Jon Stenquist with Parsons Behle & Latimer
My father was born in Idaho Falls and my wife is from Idaho Falls and I've always enjoyed the lifestyle and the lack of traffic and the lack of incredible heat of Houston. I came here about 20 years ago, started working for a law firm called Moffatt Thomas Barrett Rock & Fields, and about six years ago, that firm split up and a group of us went to our current firm, Parsonss, Behle & Latimer. We have nine offices in four states and 185 lawyers.
00:33:17 Jon Stenquist with Parsons Behle & Latimer
We have experts in mining, banking finance, air quality, experts, patents, intellectual property, lots of corporate lawyers, lots of litigators, and so my firm now is fairly large, but it helps us to garner resources and get answers to questions faster because we have a wide area of expertise.
00:33:42 Greg Croft with Resin Architecture
Are the specializations that you guys have are those somewhat regional, or do you kind of have a specialist? I mean in real estate construction you probably have a specialist pretty much in every office, but mining I imagine is maybe less so.
00:33:58 Jon Stenquist with Parsons Behle & Latimer
Right. Our Salt Lake Office has a lot of mining attorneys and our Reno office has mining attorneys and we have some dental and medical specialists in our Lehi office and some tax specialists in our Missoula office.
00:34:15 Jon Stenquist with Parsons Behle & Latimer
We do have specialists kind of spattered throughout our various offices, but we have a large Boise office. It's very supportive big water law, a group over there in intellectual property, so it's been nice to be part of a larger firm, so I don't have to know everything. I just have the resources to find out answers to questions and help clients. We found that prior to Parsonss, Behle & Latimer coming to Idaho Falls, a lot of the more sophisticated businesses and questions went to Salt Lake because that's where the larger firms were, and it's nice to have a larger firm here in Idaho Falls. We've really enjoyed being part of that group.
00:34:53 Greg Croft with Resin Architecture About how many lawyers are here in Idaho Falls?
00:34:55 Jon Stenquist with Parsons Behle & Latimer
We have 13 lawyers and four paralegals in Idaho Falls, and then we just opened a Rexburg office with several lawyers. And we're kind of looking to expand from there. We've run out of space in our current office and we're looking for more space.
00:35:13 Jamee Moulton with Resin Architecture You need to design a new one.
00:35:15 Jon Stenquist with Parsons Behle & Latimer We'll have somebody design us a larger space, yeah. 00:35:19 Jamee Moulton with Resin Architecture
Well, our final question to all of our guests is always if you had one piece of advice that you would give to someone who is starting off on the journey of building a building for their own business, what would your piece of advice be?
00:35:36 Jon Stenquist with Parsons Behle & Latimer
It would be find the best contractor you can. Get references. Go look at other buildings that they have built and constructed. Maybe talk to those owners. I think in our environment where we've had this construction boom, we've had a lot of newer builders and inexperienced builders and I've seen a lot of problems where maybe someone has come out of a trade and become a general contractor thinking they can do it on their own and owners have not done the due diligence necessary to select a reputable builder.
00:36:14 Jon Stenquist with Parsons Behle & Latimer
Look at their prior projects. Look at their history, get references and to kind of top it all off, make sure that that contract between you and the builder is sophisticated - not verbal - and contains all the provisions that you think it should contain. I can't tell you how often we'll have a one page construction agreement or a two page construction agreement and everything else is verbal. And then when something goes wrong, the lawyer is stuck with trying to figure out what the true agreement between the parties is. And that's very expensive.
00:36:50 Jamee Moulton with Resin Architecture
So along those same lines, are emails, are texts, those types of – they're written agreements, but it's not signed and official. Do those add to the contract or are they not binding?
00:37:07 Jon Stenquist with Parsons Behle & Latimer
Well, that's an expensive way to enforce an agreement by using text messages and emails to prove your case.
00:37:10 Jamee Moulton with Resin Architecture I agree.
00:37:18 Jon Stenquist with Parsons Behle & Latimer
And so typically you're stuck to the four corners of your construction agreement unless there's an ambiguity in that agreement, and if there's an ambiguity, you can look outside the agreement to resolve that ambiguity. Texts and emails are typically disclaimed, most contracts having what's called an incorporation clause, where it incorporates all the terms. All of those texts, all of those discussions, all of the phone calls should be incorporated into the four corners of those documents, and if that docume nt is unambiguous, you don't get to add additional evidence. It's only if there's some kind of ambiguity in the contract that the court needs to resolve. OK, we'll go look at the emails and texts, but again, that is a very expensive way to enforce a contract.
00:38:01 Jon Stenquist with Parsons Behle & Latimer
By having missing terms ambiguous terms and then trying to supplement with testimony and out of context texts and incomplete emails and all of the things that you deal with in litigation, it's very expensive.
00:38:15 Jamee Moulton with Resin Architecture
Well, thank you so much for helping us to understand how a lawyer can add to the clarity and simplicity of a commercial project. We appreciate it.
00:38:23 Jon Stenquist with Parsons Behle & Latimer You're welcome. My pleasure. Thank you.
00:38:27 Greg Croft with Resin Architecture
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00:38:40 Jamee Moulton with Resin Architecture
Remember, at Resin Architecture we are dedicated to teaching and learning and are committed to helping business owners like you navigate the exciting journey of building. Stay tuned for more episodes where we'll continue to bring you engaging conversations, expert insights , and actionable advice to fuel your real estate aspirations.
