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Legal options to obtain payment

Completed construction project on a residential property in Glen Mills PA. Customer owed 10,000 apon completion but stated they would not pay because there were some minor issues but would not allow me to fix items they claimed were not perfect. Stated they are going to hire another contractor and will pay me only after new contractor completed. Over 28 yrs in business this has been most bizarre situation.

1 reply

Oct 16, 2018

I'm sorry to hear about that. When work has been performed and unpaid, even when there's a dispute over workmanship, a claimant can file a mechanics lien to recover unpaid amounts. Note, though, that when there is a withholding due to dispute over quality of work, the Pennsylvania Contractors and Subcontractors Payment Act (CASPA) will likely come into play. While this Act was just amended, because the contract was likely executed prior to October 10th (its effective date), the prior version of CASPA should apply. Under that version, an owner may withhold payment for deficiency items according to the terms of the contract. Meaning, if items are not performed as required by contract, those amounts may be withheld. However, CASPA requires an owner to pay their contractor for any item which is involved and has been satisfactorily completed - so, amounts for work that is not in dispute should be released. Regarding options for payment, one option may be to send a Notice of Intent to Lien. Depending on the unpaid party's role on the job, sending a Notice of Intent to Lien might even be a prerequisite to filing a Pennsylvania mechanics lien (all parties not under direct contract with the owner must provide a Notice of Intent). If required, a Notice of Intent to Lien must be received by the property owner (or owner's agent) at least 30 days prior to the lien claimant filing the lien. This won't extend the timeframe for filing a lien, though - so it takes some planning. If a Notice of Intent to Lien is not required, it can be sent at any time. But again, regardless of whether a Notice of Intent to Lien is required, it's a good idea to send one - a Notice of Intent to Lien can help resolve disputes before a lien filing or legal action becomes necessary. Of course, if push comes to shove, a mechanics lien may be the most powerful tool for recovering payment. You can learn more about that option here: How to File a Pennsylvania Mechanics Lien. Another option may be to send a demand letter setting out specific threats of legal action (such as a breach of contract, unjust enrichment, or a claim under prompt payment laws, to name a few). When a demand letter is sent via an attorney, it tends to carry a little more weight. Finally, if all else fails, taking the dispute to court is always an option - albeit an expensive and potentially risky one.

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