Home>Levelset Community>Legal Help>At the owner's reps and contrator's request I have adjusted the style of stone masonry. No change order was presented or signed. The work has increased my labor costs substantially, they are refusing to pay for the extra labor. What can I do to get paid?

At the owner's reps and contrator's request I have adjusted the style of stone masonry. No change order was presented or signed. The work has increased my labor costs substantially, they are refusing to pay for the extra labor. What can I do to get paid?

I contracted to install stone veneer according to a sample panel. The Rabbi insisted that I adjust the style. This adjustment cost me substantially more in labor expense than my original bid. I have asked for payment and am being refused. I have invested personal funds to continue the project but have no more money to pay my workers. I have stopped work on the job and am facing possible legal action from the general contractor. There was never a work order presented by myself or the general contractor. There are no clauses in the original contract that deal with "Change Orders". How should I proceed ? Continue to work and invest without guarantee of payment ? Stop work and risk litigation ?

1 reply

Apr 8, 2019

I'm very sorry to hear about that. It's incredibly frustrating when owners and contractors request or demand changes, then refuse to pay for the changes themselves. As hinted at above, best practice is always to get change orders in writing - preferably in a more-formal format. But, simply because a change order wasn't in some formal document doesn't mean it's unrecoverable. For one - if the change order was demanded via text, email, or some other format where it's easy to provide a physical reproduction of the request or demand for the change, that might suffice as "in writing" and could serve as proof of the change order. But even if it isn't - that might not necessarily prevent the inclusion of a change in a potential lien claim, and lien claims are generally a powerful option for payment recovery. Looking to the Arizona lien statute, § 33-981 establishes who can lien, and for what amounts. Under § 33-981(A), every person who's furnished labor or materials to the project "shall have a lien on such building, structure or improvement for the work or labor done or professional services, materials, machinery, fixtures or tools furnished, whether the work was done or the articles were furnished at the instance of the owner of the building, structure or improvement, or his agent." Further, under § 33-981(B), "the owner shall be liable for the reasonable value of labor or materials furnished to his agent." Based on those sections, it would appear that the value of the materials and labor provided to the owner will be subject to lien, even if that work differs from what was originally contracted, as long as the change was authorized by the owner and/or their agent. Note, however, that Arizona does have a unique notice rule that could affect the ability to make a claim. In Arizona, in order to preserve the right to lien, a claimant must send preliminary notice within 20 days of first furnishing labor or materials. This notice must include an estimate for the total price of the work being provided by the party sending notice. In a situation where the party sending notice exceeds that original estimate by more than 20%, additional revised notice must be sent in order to preserve the right to lien amounts in excess of 120% of what was originally estimated. So, in a situation where changes are requested in the middle of a project, and where those changes are substantial, it's easy to imagine a situation where revised notice would be required in order to preserve the right to lien for changes. Finally, it's also worth noting that regardless of whether a lien claim could or would be filed, sending a warning or threat of lien can work to compel payment. Because a mechanics lien is such a powerful remedy, the mere threat of a lien claim will often put pressure on an owner and a customer to resolve the payment issue in a fair and equitable manner. More on that idea, here: What is a Notice of Intent to Lien? As for whether to stay on a job or walk off - that's a tough business decision, and it's up to each construction business to decide what their best option is in a given situation. But, it's a decision that should be taken seriously and made under careful consideration. As mentioned above, the situation could potentially backfire and spark a more serious dispute. This article provides some more information on the decision of whether to walk off the job: Can you Walk Off the Job? | The Right to Stop Work for Non-Payment. Of course, consulting a local construction attorney might help to evaluate potential outcomes, and they might be able to help decide on how best to recover payment, as well. For more info on Arizona lien claims, this resource should be valuable: Arizona Lien & Notice Overview. For more on other recovery options, this resource should help: Other Options for Payment Recovery.

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