HI, We have a client that is not wanting to pay our company the final payment owed for a construction project. We have filed the lien and notified the customer through Levelset and have been told the next step is to file a notice of action with the courts, is this correct and how do we go about it? Also what costs can be recovered? Can the past travel to and from the clients house to collect be included as they are a fair distance away and they didn't pay as promised? We gave discounts in good faith that at the end of the job our company would be paid in full, with the client not wanting to pay does that cause contract issues where the discounts can be recovered? Also interest on company cards for the materials owed on that are collecting fees? I guess we need to know what is recoverable as we're trying to be fair but have to be fair to ourselves as well. Thanks.
Good morning,
I am sorry about the issues. Let's start with an overview of foreclosure of the lien. If the deadline to enforce (it’s called foreclosure) the lien is coming up shortly, you need to contact a construction attorney very quickly. The first thing they will do is order a litigation guarantee from a title company. Getting this certificate can take about a week for the title company and their other projects.
After the attorney gets the certificate, they will then draft a summons and complaint to foreclose the lien in the applicable district court. This must be filed within six months after the later of the following: (1) the last date that work was performed; (2) the last date that materials were furnished; or (3) the date that the building or improvement on the property was completed. This can be a complicated calculation and must be determined exactly as the application of the timeline is strict and you have the burden of proving the suit was timely filed. Your attorney would also file a lis pendens.
Alternatively, you can proceed to sue and then try to win that and proceed to try to collect. A foreclosure action is not the only means to try to collect the amount due.
As to what damages you can claim in the foreclosure or standard suit, the first thing your attorney will review is your contract. Hopefully that includes attorney fee provisions. It could entail liquidated damages and interest on breach. If there is no clause as to interest, the statute provides statutory interest you can claim. Ultimately, for an attorney to know and provide advice on what could be claim requires getting legal advice.
This is a complicated and time-consuming process that is best if the lien at issue is considerable. Regardless, you must hire an attorney and get advice very soon. This is not a DIY project at all given the very strict procedures required in a foreclosure suit.
If you cannot afford a full representation, you should contact an attorney and consider having a limited representation. In this representation, the attorney provides specified services and they do not enter as the attorney of record in the case. This is normally less expensive and requires a smaller retainer. Our office and others offer limited representation. This is a brief overview https://bit.ly/3xY5VJS.
Reach out to attorneys ASAP to help you get started.