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Property owner refuses to pay. What are my options?

MissouriMechanics LienNotice of Intent to Lien

I am a GC who was hired by investors to work on a property in MO. I have done multiple projects for them in the past and everything was going fine until this one. The work was QA'd and they had me do some additional work after that. They promised that they would pay via email and then all of a sudden said that they would not pay. I did not send any sort of preliminary notice. What are my options?

2 replies

Aug 18, 2021

Certainly, pursuing a mechanics lien is one of the best ways to force payment. But, as you may know, there are certain notices required prior to a lien filing. Granted, sending those notices could show the customer that you mean business and are prepared to do what it takes to get paid. So, even just by going through the standard notice steps, that could push a customer to pay what's owed.

Since it looks like you tagged this question with "Mechanics Lien" and "Notice of Intent to Lien," let's first look at some mechanics lien and preliminary notice tools first. Then, I'll share a few other options.

Pursuing a debt via mechanics liens and required notices

In Missouri, a GC must provide the owner a Notice to Owner in order to preserve their right to file a lien. The notice must be given before payment is received. So, if additional work was done on a separate contract (be that written or oral), and if payment hasn't been made for that work, then presumably there's time to send an effective Notice to Owner. The notice has some statutory language that's in all caps and reads a little scary, so it's possible the notice, itself, could lead to payment. More on MO's notice requirements, including the Notice to Owner, here: Missouri Preliminary Notice FAQs.

A Missouri Notice of Intent to Lien is required by most MO lien claimants, but GC's hired directly by the owner won't need to send one. However, regardless of what's required, sending a Notice of Intent to Lien can be a great tool for forcing payment. It acts as a warning shot, letting recipients know that if payment isn't made and made soon, a mechanics lien will be filed. More on that here: What is A Notice of Intent to Lien And Should I Send One? 

If this happens to be a residential project, and if the property owner has recorded a document called a "Notice of Intended Sale," then lien claimants must file an additional notice document called a "Notice of Lien Rights." This has to be done at least 5 days before the property is transferred to a buyer, so if you've worked on a residential property you think might be sold soon, it could be a good idea to get a Notice of Lien Rights filed. Plus, the document would likely make it harder to sell the property without first having the notice removed from the property title - even if a lien filing hasn't actually been done. For an example of what that form looks like: Missouri Notice of Rights Form.

Finally, there are lots of ways a mechanics lien could lead to payment, as Leveset discusses here: How Do Mechanics Liens Work? 17 Ways a Lien Gets You Paid. Missouri mechanics liens are due within 6 months of the last furnishing date on the project, which leaves a lot of time for sending notices and negotiating payment. But, sometimes, a lien will be necessary. For more on Missouri's lien rules: (1) Missouri Mechanics Lien Guide and FAQs; and (2) How to File a Missouri Mechanics Lien.

Other options for payment recovery

Even if mechanics liens aren't on the table of some reason, there are other payment recovery tools that can be effective. For one, sending a payment reminder that enables electronic payment could make it extremely easy to pay, which could be enough to get paid. Or, sending a payment demand letter (perhaps with the help of an attorney) could show the customer you mean business by threatening legal action. 

Pursuing claims in small claims court (like breach of contract, prompt payment claims, etc.) could force payment as well. And, if it's a larger some, pursuing traditional litigation could force their hand as well. And again, simply threatening legal action will often help to move negotiations along.

In deciding how to force payment, note that the advice of an attorney could be valuable. Levelset offers Legal Guard which provides easy access to Missouri construction lawyers. Plus, you can always contact a firm via Levelset's Missouri construction lawyer directory: Top Missouri Construction Law Firms.

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Aug 19, 2021
You may be able to file a lien but at a minimum, you have a cause of action for breach of contract. Contact me and I can assist: 314-862-1720
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