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What can I do to get paid on some past due invoices

CaliforniaCash FlowPayment Disputes

I’m a subcontractor for a larger company and I was a large project for them throughout 2020 and until May 14 2021 back in January they informed me that their budget was getting thin and well on May 14 a project manager showed up and said that they didn’t have any money left and they were taking over the project and my services were no longer needed. I asked them to do an inventory check and a Jobsite walk to turn the project over to them appropriately and they did not I then followed up with a few emails and text asking for a Jobsite walk and they didn’t respond. I also asked for payment and they either ignored my request or gave me the run around. Finally I was able to contact someone hire up and he had a meeting with me and the people involved they started saying that a lot of the work was wrong and they are doing rework and there will be charge backs and I even asked them to give me a list of items and I would repair them as I warranty my work and they refused. All the work that was done throughout the time we were onsite was inspected and signed off by the LADBS electrical inspector and there was quality control walk with the general contractor. But they are claiming that there are major repairs being done. That’s why I wanted a site walk to turn the job over to them and see if there were any issues while I was still on site. I believe that they are doing this to try and not pay the remaining invoices the total was 142,500 and I was issued a check for 30,000 a few weeks back but there still hasn’t been any resolution I would like to know what are my options if any. Thank you

1 reply

Jun 23, 2021

If a customer is refusing to make payment, then leveraging mechanics lien rights can be an extremely powerful option. That's particularly true when they're giving the run-around and aren't taking the matter seriously. 

So, one option that might be good would be to threaten a mechanics lien by sending a Notice of Intent to Lien. Notices of Intent act like a warning shot. They let the customer know that you're serious about getting paid, and that you're willing to pursue a mechanics lien if that becomes necessary. What's more, by sending a Notice of Intent to Lien to the customer, to any other parties in the project chain (like the GC, the architect, and the owner), you can let them know that there are payment issues present that could result in the project being liened. More on Notices of Intent here: What is A Notice of Intent to Lien And Should I Send One?

Obviously, if a simple threat isn't effective, then filing a mechanics lien could be a powerful option, too. When a lien claim is filed, it grabs the attention of the lender (if applicable) and the owner. As a result, mechanics liens quite often lead to payment. Plus, note that a lien claim is on the table even if the customer has made some claim that the work wasn't sufficiently done (especially when they can't actually back that claim up). 

For additional discussion on CA lien claims, these articles should be useful: (1) Can I File A Lien If My Workmanship Is In Dispute?; (2) How to File A Mechanics Lien in California – Step By Step Guide To Get You Paid; and (3) California Mechanics Lien Rules & FAQs.

Claims outside of the mechanics lien process

Obviously, mechanics liens are only one tool in the payment recovery toolbox, and pursuing other claims could be very effective, too. 

For one, threatening to bring claims under California's prompt payment laws could help. If payment isn't timely made, and if those prompt payment laws come into play, then the customer may be liable for interest on top of what they owe you. More on CA prompt payment laws here: California Prompt Payment Guide & FAQs.

Another option could be to threaten legal claims by sending a payment demand letter. Threatening to pursue legal claims, such as breach of contract, could show the customer that nonpayment won't be tolerated and that they need to deal with the issue at hand. And, having a lawyer help with the demand letter could help provide some extra "umph." 

Consulting with a CA construction lawyer can help identify recovery options

I think the above information should be pretty useful, but consulting with a CA construction lawyer could help to identify which options make the most sense for your specific situation. They'll be able to review your contract documents, as well as any communications sent regarding nonpayment, and decide what options make the most sense for your situation. On that front, Levelset offers Legal Guard, and it also has a directory of California construction lawyers who could be able to help.

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