They won’t pay

Answered 4 weeks ago

1542 Answered Questions

Matt Viator

Legal Associate Levelset

I'm sorry to hear you're having trouble collecting payment here - no one should have to fight tooth and nail just to be paid what they've earned. Ultimately, what kind of interest penalties may be available will come down to what's allowable in the contract. If the contract states that a certain interest rate will be applied to late payments, then a construction business will be able to apply that rate to any outstanding amounts. But, if the contract is silent as to whether interest is allowable for payments made late, there might not be an opportunity to unilaterally apply interest penalties.

However, taking a step to notify a customer that interest will begin to accrue if payment isn't made might be helpful to compel payment. Further, by putting them on notice that interest will be charged prior to actually applying interest penalties, it might be easier to argue that the interest amounts are recoverable. At the very least, even if it doesn't help to actually obtain interest penalties, it should help to grab the customer's attention.

Finally, if the property where work was performed was in Arkansas (or elsewhere in the United States), mechanics lien rights may have arisen. If that's the case, warning or threatening to use lien rights might help to speed up payment. By sending both the customer and the property owner a document like a Notice of Intent to Lien, a claimant can show the customer that they're serious about payment and that nonpayment won't be tolerated. Further, by bringing the property owner into the dispute, it should put extra pressure on the customer to resolve the dispute. And, if push comes to shove, actually filing a mechanics lien might be an option.

Though, if the project actually took place in Canada - Canada has its own lien laws, and threatening to utilize the local lien laws or actually pursuing them might be an option, too.

For more information on Arkansas' lien laws and on the Notice of Intent to Lien document, these resources will be valuable: Arkansas Lien & Notice Overview; and (2) What is a Notice of Intent to Lien?

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