We have had some projects where we were kicked off the job so the owners could avoid payment. Is there any type of documentation we can send to attempt to retrieve payment?
1 reply
Nov 21, 2019
There are a number of potential recovery routes for a contractor, sub, or supplier who's been kicked off a job before receiving payment. But, by and large, a lot of the same payment recovery tools will apply - regardless of whether you've been kicked off the job.
Sending invoice reminders and demand letters
When unpaid on a construction project, sending a document like an invoice reminder might be enough to compel payment. Invoice reminders act as a nudge in the right direction, reminding the customer of their obligation to make payment. Certainly, something more serious might be needed to recover payment, but other times that might not be the case. So, starting the recovery process with a document like an invoice reminder might be a good first step.
Escalating things a bit with a payment demand letter could be effective, too. Effective demand letters contain specific legal threats (such as, potentially, some discussed below) and warn recipients that if payment isn't made, further action will be taken. As a result, a claimant may be able to push their customer to do the right thing and pay what's owed before things become more serious.
Leveraging the ability to file a mechanics lien
When payment is owed and unpaid for work that's been done, a mechanics lien claim could still be on the table (assuming all relevant requirements were followed). But, as you may know, leveraging the right to file a mechanics lien can be just as effective as filing the lien, itself.
Because mechanics liens can have such a drastic impact, sending a document like a Notice of Intent to Lien can work to compel payment. More on recovery via Notice of Intent here: What Is a Notice of Intent to Lien and Should You Send One?
Of course, there are always options outside of the mechanics lien process that could be helpful when attempting to recover payment. And, as mentioned above in the "Invoice reminders and demand letters" section, threatening to pursue legal claims could be effective - just like a Notice of Intent to Lien.
Breach of contract
Any time the terms of the contract aren't followed, a breach of contract claim could be on the table. This is true of payment terms, termination provisions, and really any material provision of the contract that a customer has gone awry of.
Just because a customer has terminated you doesn't mean you aren't entitled to be paid for work you've already done. And, there are a number of different avenues a claimant could pursue, including those discussed above, in working to recover payment.