Home>Levelset Community>Legal Help>Should I file lawsuit or lien ?

Should I file lawsuit or lien ?

Greetings, I am a small contractor based in NY City. I was working on a big project for a client based in Ny City. We completed 80 % of the work. I was paid 15 % of the total contract in 09/19. I requested for another 45 % of payment in 02/20. I reached out to the client last week, 03/23/20 to get an update on the payment status. I was informed that due to Covid 19 all the operations has been closed and they are not sure when will they be able to make payment. I was informed that they are not sure if they will be able to make the payment and they might end up selling the building. What should I do to get my payment ? Please advise. Regards

1 reply

Mar 25, 2020

Businesses all over the country have been shutting down due to COVID-19. While New York construction sites can apparently still operate, a lot of businesses have still slowed or stopped due to this coronavirus outbreak, making it harder to coordinate, get paid, or really do anything - including getting paid. While delays in getting paid are understandable, that doesn't mean a construction business shouldn't prepare themselves for potential disputes.

Payment recovery options for New York projects

Before jumping to a mechanics lien filing, there are some payment recovery tools that might help to get paid. But, keep in mind that it's safest to assume that lien deadlines won't be pushed back despite the issues posed by coronavirus. And, that means a claimant should likely be ready to pursue a lien claim if payment isn't made before the lien deadline. With that in mind, let's look at some alternatives. Though, keep in mind that it's probably a good idea to put a lot of thought into how recovery will be pursued based on the current climate.

Invoice reminders

Sending simple invoice reminders can work to get paid. When your invoice is top of mind for a customer, that tends to make it more likely that payment will be made. So, providing regular reminders that they must make payment can go a long way.

Demand letters

Escalating matters by threatening legal action can be effective, too. So, sending a payment demand letter could be the push that's needed to force a customer to pay what's owed.

Notice of Intent to Lien

Mechanics liens are extremely powerful. As a result, the threat of a lien claim - like a Notice of Intent to Lien - can be powerful, too. The threat of a lien claim will let the customer and the property owner know that this issue is serious and that nonpayment isn't an option.

Filing a lien claim

Finally, pursuing a mechanics lien can be a strong option, especially in uncertain times. If the property does end up being sold, having a lien claim secured on the land can help to make sure that your rights don't just disappear - and it may even force the seller to resolve the dispute before the seller will move forward. If things are getting ugly and payment must be secured, filing a mechanics lien may become necessary. And, it's a good idea to keep an eye on the lien deadline at all times when trying to resolve the dispute anyway. For more on New York liens: (1) New York Mechanics Lien Guide and FAQs; and (2) How to File a New York Mechanics Lien – Step By Step Guide to Get You Paid. Plus, since it appears that most New York City county recorder offices are closed, this resource should be valuable too: County offices closed? How to record a lien or notice remotely.

Legal claims

In addition to the above, keep in mind that legal claims will generally be available if payment is owed but hasn't been made. Options like breach of contract, under New York's prompt payment laws, or other legal claims could be on the table. And, consulting a local New York construction attorney could help to determine what kinds of claims may be available.

Collections

Yet another option might be to send the debt to collections. While it isn't a perfect recovery tool, it could ensure that at least partial payment is made. Here's some information on top collections agencies, and here's a directory of construction collectors who might be able to help you get paid if you decide to go that route.

0 people found this helpful

Helpful