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Contractor/owner claiming bank denied pay app

I'm a plumbing subcontractor working on a commercial renovation on which the property owner is also the general contractor. I finished a job which also had a very large change order included- which was approved- doubling the contract amount. The pay app is already overdue for payment, and the contractor is someone whom I have worked with many times. This is common practice for him to try and re-negotiate after the work is completed, and only one payment has been made. I did file the 20 day prelim when the job started, but there is no written contract. How would you suggest I proceed- I was hoping to salvage whatever is possible to continue working with him in the future. (if even worth the effort-not afraid to file the lien if it comes to that.)

2 replies

Dec 2, 2020

I almost forgot! This is the email I received from the contractor regarding payment which sparked my concerns: Hello! Hope you had a great Thanksgiving! I have some not so good news, our funding request was denied as the costs for ******** were significantly over budget due to delay, extras etc. Having said that, I have been wrestling with the Lender for a resolve. So here is where we are at: (1) The Change order was entirely denied. The Lender did a quantitative survey and felt your original bid was excessive and any of the change order items should have been incorporated. (2) They are compelling me to ask for a 15% reduction in the original invoice to adhere it to the budget. So effectively about a $**K reduction. For some reason, the banks are getting a little edgy...they are not so bullish on the economy and are being very tight with purse strings...let me know. The good news is, if we can come to a quick conclusion, they will try to get the funding out before Christmas break...still plenty of $ for you... Let me know...I hate asking but have no choice...

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Dec 3, 2020

If you are done with your work and you know the total amount you are going to be owed, then record the lien and send it to the owner and the GC. You have six months from the date of recording the lien to file suit to foreclose on the lien. What happened with the bank isn't really your problem unless there is a pay if paid clause, but even that would not affect the mechanic's lien, which secures the reasonable value of your services with the value of the property.

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