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How do I get paid from a GC who has become unresponsive?

CaliforniaPayment DisputesRecovery Options

Hello - We've completed work on an extensive remodel of a commercial bar / restaurant. The work has been installed and the restaurant has been opened. We are a subcontractor of the GC. We have submitted invoices for our last progress payment as well as our retention payment. The GC has not acknowledged receipt of either invoicing package, and isn't responding to snail mail, e-mail, or phone call inquiries as to status. We submitted these invoices approximately 30 days ago. We've asked if there is punchlist work requiring attention, but have heard nothing from the GC, their project manager, or their accounting department. What is our best course of action to receive payment at this point?

1 reply

May 23, 2018
I'm really sorry to hear about that. Unfortunately, that situation happens more often than it should in this industry. Luckily, there are a number of routes to help recover unpaid amounts. First, a Notice of Intent to Lien is an inexpensive and rather effective way to speed up payment. It's a non-required document that, when sent, serves as a warning shot. It essentially states "If payment isn't made, and made soon, a mechanics lien will be filed on this property" If a Notice of Intent to Lien is ineffective, actually filing a mechanics lien is a strong option (and I'll discuss that more below). Other threats of legal action can be effective too - such as threatening to make a claim under the California prompt payment laws, retainage laws, or just a more general legal threat for breach of contract. Under any of those principles, a claimant may be able to recover unpaid amounts - but if a threat to recover under those methods for recovery isn't effective to spur payment, legal action would be required to pursue those claims. Of course, that also means that hiring (or at least consulting) an attorney would be required. Back to mechanics liens. Mechanics liens are the most effective method to recover nonpayment in the construction industry. By filing a lien, which is done via a recording with the county recorder rather than via lawsuit, a claimant actually creates an interest in the title to the property. As a result, the property owner and the general contractor for a given project will have to take action to resolve the dispute. Because a mechanics lien is filed in the property records (rather than brought by lawsuit), mechanics liens are a less expensive, and often more effective, alternative to pursuing legal action for unpaid amounts. Of course, if payment isn't made after a lien filing, legal action may become necessary. For more information on mechanics lien claims in California, take a look at these resources: California Mechanics Liens: 5 Things You Need To Know and How to File a California Mechanics Lien: A Practical Guide.
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