How can a subcontractor force the GC and owner to finalize a change order?

9 months ago

I am a subcontractor providing manufactured casework and architectural millwork for a new veterinary hospital in Wisconsin. In August, after the architect/GC approved shop drawings, the owner requested many scope changes. We submitted the cost impact of those changes as a change order request a couple weeks later. Those changes were followed by revised shop drawings including the new scope, and those drawings were subsequently approved.

Since that time, the owner has asked several rounds of questions about the costs, but also revised their request to reduce total cost…acknowledging that their actions had cost implications. The job went into production in November, without an approved change order. At the GC’s direction, we were asked to meet the schedule and that the customer was committed to the expanded scope and that they would approve the change order.

After many promises to issue the change order, we still do not have that in place. The PM recently expressed concern about whether they would even get paid, but still said he would send the change order. Now the job is nearing an end and the absence of that document prevents me from sending an invoice for the total scope.

Last week I met with the leadership of the GC and had a very friendly and professional conversation about the issue. I think they were quite concerned that their PM didn’t resolve this over the last five months and said they would investigate…though stopped short of promising to resolve to proper satisfaction.

The real question is whether or not I can use the process leading up to a Mechanic’s Lien? There isn’t an actual contractual obligation to pay me without the change order. So can I use a Demand for Payment letter? And can that be followed by a Notice of Intent to file a lien, with the Mechanic’s lien to follow if necessary? If not, what other tools do I have for remedy if the owner continues to stonewall the GC?

Senior Legal Associate Levelset
477 reviews

As you may know, performing work pursuant to a change order that hasn’t been officially authorized or approved could cause problems recovering payment for that work. Specifically, when work is done pursuant to an unapproved or unauthorized change order, the right to file a mechanics lien for that work will often not be present. Levelset discusses that here: Change Orders and Mechanics Lien Rights.

What’s more, it’s worth noting that when materials are specially fabricated but not delivered or incorporated into the project, itself – then lien rights would be questionable on that front, too. For lien rights to arise, the work must typically improve the project property physically – so things may get tricky on that front, as well.

Still, every situation is different, and it’s possible that lien rights could be available in your specific situation – so it might be a good idea to consult with a local Wisconsin construction attorney. They’ll be able to look at the project documentation, communications, and other relevant info and advise on potential lien rights. And, with a better look at your specific circumstances, they might have some additional thoughts on the matter.

Recovering payment for unauthorized change orders

Even if mechanics lien rights aren’t available, a contractor requested that certain work be done even though the owner hadn’t officially approved that work, then the contractor may well be on the hook for making payment. After all, they specifically requested the work. Still, it may take legal claims to force recovery from a contractor – or at least the threat of claims – in order to get paid.

Note that a claim like unjust enrichment might be effective, too – unjust enrichment claims are often available even where there isn’t an actual contract as long as one party benefits from the work of another.

Unfortunately, as mentioned above – for the most clarity, it’d be wise to consult with a local construction attorney, such as one of these Wisconsin Construction Payment Experts. This sounds like a complex situation, and they’d be able to help you navigate potential claims.

Disclaimer: The information presented here is not legal advice and should not be construed as such. Rather, this content is provided for informational purposes. Do not act on this information as if it is advice. Further, this post does not create any attorney-client relationship. If you do need legal advice, seek the help of a local attorney.
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