Home>Levelset Community>Legal Help>What can we do at this point to get paid?

What can we do at this point to get paid?

My husband is a subcontractor (Master Electrician) in Virginia and the general contractor is not paying him for two jobs. Unfortunately, he did not get contracts signed... just doing it as he goes along... time + materials. One job the payments is almost two months overdue and the other job the payment was due in June of 2019. I am assuming it is too late to file the mechanic's lien for the older job and my husband doesn't want to file the mechanic's lien on the job with the two month overdue payment because they are really nice people. The GC told my husband some months ago that the homeowner on the older invoice wasn't paying him therefore he couldn't pay my husband for the completed work.

1 reply

Jan 9, 2020

Nobody deserves to go unpaid for the work they perform, and there are a number of tools that may be available to ensure that doesn't happen. Before getting too far along, though, it's worth mentioning the importance of written contracts - they define the scope of work, set clear expectations, and create concrete payment terms. Proceeding without a contract is risky business. Still, it appears that a Virginia mechanics lien claim may be available even without a written contract for work. Let's look at the deadline to file Virginia mechanics liens. Then, we can look at some other recovery tools and ideas.

Virginia mechanics lien deadline

Virginia mechanics lien claims must be filed within 90 days from either the last furnishing of labor or materials or the overall completion of the project - whichever comes first. So, if more than 90 days have passed from the last time labor or materials were furnished by the lien claimant, then a mechanics lien will likely no longer be an option for that claimant.

Recovery tools outside the mechanics lien process

Of course, mechanics liens are just one option for payment recovery. And, some other options might be on the table even if the deadline to file a lien has passed. What's more, note that there are some more gentle options other than filing a lien that can lead to payment, too. We'll break down some options below, but these two articles should be helpful for situations where a claimant doesn't want to or cannot file a lien: (1) Don’t Want to File a Mechanics Lien? Here Are 5 Other Options; and (2) Can’t File a Lien? Here Are Some Other Options For Recovery.

Invoice reminders

Invoice reminders are simple reminders sent to a customer, and they're just like they sound - they request payment for outstanding invoices. They may not always make sense when the customer has acknowledged the debt is outstanding - but sometimes all that's needed to get paid is a little push in the right direction.

Demand letters

Escalating things a little bit can help to show a customer you're serious about getting paid. And, a payment demand letter will generally include specific legal threats and put a deadline on making payment. Just like the threat of a mechanics lien, which we'll discuss in a second, the threat of legal action can be enough to get paid. And, in a situation where a mechanics lien isn't available, demand letters may be valuable for forcing payment without having to pursue a lawsuit.

Notice of Intent to Lien

For jobs where lien rights may still be on the table, note that the mere threat of a mechanics lien claim is a strong tool for payment recovery. Sending a document like a Notice of Intent to Lien to both a customer and the property owner can add transparency to the payment dispute and let an owner know about the issue. Plus, considering the effect that a mechanics lien can have on the owner's property, they'll often put additional pressure on their contractor to resolve the dispute. You can read more about how Notices of Intent to Lien can be beneficial here: What Is a Notice of Intent to Lien and Should You Send One?

Legal claims that can help with for recovery

Naturally, legal claims can be effective for forcing a contractor's hand. Claims like breach of contract may be available against a contractor, or unjust enrichment against a non-paying owner, could be available. And, for disputes under $5,000, Virginia small claims court might help to streamline claims. Plus, as mentioned above, the mere threat of legal claims (via demand letter) may be all that's needed. Lastly: Keep in mind that the best way to get clarity on what recovery options will be available is to consult with a local construction attorney, such as one of the Virginia Construction Payment Experts.

If a contractor doesn't get paid - do they have to pay their subs?

As a final note, keep in mind that, in most states, a contractor going unpaid won't excuse them from paying their subs and suppliers. In some states (including Virginia), if a clear and unambiguous pay if paid provision is present in the contract, then a subcontractor may assume the risk of the owner's failure to pay. However, most states disallow this kind of contractual risk-shifting. Plus, when a pay if paid clause isn't in the contract, then there's little question - a contractor must pay their subs, regardless of whether the contractor, themselves, receives payment. Levelset discusses these ideas in greater detail here: - Pay-When-Paid and Pay-If-Paid Clauses Explained - Risk-Shifting: The Battle Between Policy and Contract - 50-State Guide to Pay-When-Paid and Pay-If-Paid Construction Contracts

0 people found this helpful

Helpful