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Can Levelset help us with a job that is completed but we have not been paid the full amount of retainage?

TexasCollections

We have a couple of jobs that we never gave notices on -- now we are finished and one job did not pay us the full amount of retainage we are due -- they claimed some back charges that we were not aware of. On another job, it has been complete for some time, but the GC owes us for a couple of change orders and will not return calls/emails. Thanks!

1 reply

Nov 4, 2019

There are a number of different recovery options that may be helpful for recovering construction debts that are owed but have not been paid. The strongest tool available will typically be a mechanics lien - and, in order to preserve that lien right, claimants must typically send monthly notices and abide by deadline requirements. Still, outside of the mechanics lien process, there are still other recovery options that may be available. Let's look at the notice and deadline requirements associated with lien filings, then at some other recovery tools outside of the mechanics lien process.

Texas notice requirements

Subcontractors and suppliers on Texas construction projects must generally send notices to preserve their lien rights. Generally, a Notice of Contractual Retainage (where the contract provides for retainage) and monthly notices (on all projects) will be required in order to preserve the right to lien.

Notice of Contractual Retainage

A retainage notice is a pretty simple notice. Essentially, the notice simply states that retainage is being withheld on the job, pursuant to the contract for work. It must be sent within the earlier of: (1) 30 days after the agreement for retainage is completed, terminated, or abandoned; or (2) the 30th day after the original contract is terminated or abandoned. Even if other contract amounts weren't properly preserved with monthly notices (more on those in a second), a claimant may be able to preserve their right to lien retainage amounts if the notice is properly and timely sent.

Texas monthly notice requirements

Texas has burdensome monthly notice requirements. Sub-tier claimants must regularly send notices in order to preserve the right to lien later on. Monthly notices really only become due after a debt becomes owed but goes unpaid - they'll need to be sent either the 2nd or 3rd month after work is performed but not paid for. Note, though, that retainage amounts can but don't have to be included in monthly notices. So, as mentioned above, a claimant can still preserve their right to lien retainage amounts even where monthly notice wasn't properly sent. Levelset has extensive content on monthly notices, including on timing requirements. So, for more information on what notices are or would have been required, these resources should be valuable: (1) Texas Preliminary Notice Guide and FAQs (2) How To Prepare & Send Texas Monthly Notices – Texas Notices Explained

Texas mechanics lien deadline

Texas mechanics liens must be filed by the 15th day of either the 2nd or 3rd month (depending on the project type) after the month during which work was performed but not paid for. But, if the deadline to file a lien passes and no lien has been filed, then the claimant will generally need to look to some other remedy to help recover payment. For more clarity on exact timeframes and the rules for residential vs. commercial projects, here's an excellent resource: When is the deadline to file a Texas Mechanics Lien?

Recovery options outside of the mechanics lien process

For one, sending invoice reminders can go a long way toward getting paid. Sometimes, all that's needed is a little push in the right direction. And, reminding a customer of an outstanding debt may be enough to get them to do the right thing and make payment. In a situation where that customer is actively disputing payment, something a little more confrontational - like a demand letter - might make sense. When it comes to actually making a claim, there are plenty of tools outside of the mechanics lien process that may lead to payment (though a lien claim will typically be the strongest and most efficient recovery tool). Levelset discusses many of those other tools here: Other Options For Recovery. For one, when payment is owed under a contract but not actually paid, then there's a solid chance that would result in a breach of that contract. Further, even where there isn't a contract in place, recovery by way of unjust enrichment might be on the table, too. Plus, keep in mind that the Texas prompt payment laws create a set timeframe for payments and institute interest penalties when payments aren't made on time. As a final note, keep in mind that small claims court may provide an avenue to bring a payment claim against a customer without the time and expense that comes with traditional litigation. So, if legal action will be brought, Texas small claims court could help to streamline that claim process.

Levelset products that help to recover construction payments

We try not to discuss the Levelset platform too in-depth here at the Expert Center since it was established to answer more broad construction law and construction payment questions. But, if you'd like to browse what recovery tools may be available for your situation, feel free to explore Levelset's Payment Rights Advisor to see what may be on the table, or the Document Navigator to see what Levelset tools might help you to get paid.

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