Do I have a leg to stand on if I file a suit? Don’t companies have 120 days max to pay out contractors? Thanks!
1 reply
Sep 24, 2019
When work is completed, and payment has not been made, there is generally some path forward to recover what is owed. The particular path chosen, though, depends on a lot of factors.
First, one of the most powerful remedies available to construction participants is a mechanics lien. A mechanics lien secures the amount due for construction work or materials through an encumbrance on the property itself. The property can be foreclosed upon and sold to satisfy the debt if the construction participant is not paid. However, in order for a mechanics lien to be available, many strict requirements must be met. There are notice requirements; mechanics lien timing requirements, and form, content, and service requirements. Since the time in which a mechanics lien must be filed in Oregon in order to be effective is 75 days after last furnishing labor or material to the project, it is unlikely that a valid lien could be filed when payment is withheld for 6 1/2 months - at least unless work continued throughout that time period.
However, there are other avenues that may lead to recovery, as well. Oregon has prompt payment laws that govern the time in which contractors must be paid on both private and public projects. On private projects, GCs must be paid progress payments within 14 days after invoice, and final payment within 7 days of completion and approval of the project. And, subcontractors and suppliers must be paid within 7 days of payment being received by the party who must pay them. Interest and attorneys' fees may be awarded to any party who files suit due to non-payment within the appropriate time period. There are also time requirements for payment on public projects.
Also, a general breach of contract action is generally available to a party who has performed construction work pursuant to an agreement to do so and who remains unpaid in violation of that agreement. Depending on the amount due, it may be possible to file in small claims court to avoid some of the time and expense of general "regular" litigation.
There are multiple ways that a construction participant can "have a leg to stand on" to recover the payment owed, and it may be worth having a local construction attorney take a look at your specific situation and see which may apply.