Home>Levelset Community>Legal Help>We have a GC that owes us over $750,000 total for work completed over 6 months ago and refuses to pay for work performed unless we give up almost $140,000 for work we performed lWhat is my next options to take to apply pressure to get paid and not have to concede to a large discount? What can I do to avoid this action or strengthen our position?

We have a GC that owes us over $750,000 total for work completed over 6 months ago and refuses to pay for work performed unless we give up almost $140,000 for work we performed lWhat is my next options to take to apply pressure to get paid and not have to concede to a large discount? What can I do to avoid this action or strengthen our position?

The GC is attempting to mitigate their losses on the entire project on us because they can't get the owner to pay for some of the costs of the project . They have taken since last August to come to the table to negotiate after we submitted the final invoice. We applied the lien at the end of November 2018 .

1 reply

Feb 28, 2019

This sounds like a very frustrating situation, especially since it involves such a significant amount. When there are issues with the funds on a project, it seems like those issues are passed down to the subcontractors more often than would be reasonable.

In Pennsylvania, a mechanics lien must be filed within 6 months after the claimant's last furnishing of labor or materials to the project in order to be valid. Additionally, there are strict service requirements for Pennsylvania liens that can be complicated to comply with.

If a lien meets the requirements to be valid and enforceable, an action to enforce a Pennsylvania mechanics lien must be initiated within 2 years from the date on which the lien was filed. The proceedings to obtain judgment on the claims must be commenced in the county in which the claim was filed. Enforcing a mechanics lien is a full-blown lawsuit which can result in the foreclosure and sale of the underlying property, so the general rules with respect to lawsuits apply. While an individual can represent him/herself in court, it is rarely a good idea - and an LLC or corporation is forbidden from self-representation, so getting a lawyer involved is a good idea.

Since the period to enforce the lien is rather lengthy in Pennsylvania, a lien claimant may be able to attempt other means to recover the amount owed prior to initiating an enforcement lawsuit. At the very least, sending the GC and the property owner a notice of intent to foreclose may help in providing some urgency to the process. Letting people know that a lawsuit may be imminent, and that their property may be at risk can help move payment along in some situations.

Other than enforcing the mechanics lien, there may be other avenues to urge the payment due for construction work on a private project. Pennsylvania has enacted the Contractor and Subcontractor Payment Act, 73 Pa. C.S. §§ 501-516, which sets forth PA's "prompt payment" requirements. While some of these prompt payment requirements are based on the timing of the payments to the GC from the owner, that is not always the case - so there may be requirements to pay under prompt pay statutes even if the GC has not yet been paid (or fully paid). These statutes also provide for 1% interest per month on amounts improperly withheld.

Also, there are the regular breach of contract and unjust enrichment claims, and the like that may be filed when a party breaches its obligations to pay under a contract. Sending a letter, whether internally or from an attorney, stating the options available in the event of continued nonpayment, the path forward, and the timeline to avoid such action may be useful in prompting payment.

While breach of contract lawsuits and statutory protections against nonpayment and slow payment can add weight to requests for payment, mechanics liens and the ability to enforce the mechanics liens, are extremely powerful. Informing the GC and the property owner of the ability to foreclose on the filed mechanics lien may be a way to apply a bit of pressure to get compensated for the work performed without writing off a significant chunk of it.

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