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What if... GC forces us to sign CCO agreeing to credit before billing client and contract is "paid when paid"?

As subcontractor, we agree to install OSB on a section of ceiling instead of drywall as previously discussed. We agree to rush timeline in exchange for not being credited off change of scope (but no written agreement detailing this). Our contract calls for $x drywall work and $y OSB sheathing, but no specifications as to scope except our estimate. We are in process of collecting and now GC wants us to sign (-$500) Change Order agreeing to credit for change before they bill client (even with prior verbal agreement). If I don't sign, they won't bill and payment terms remain open since they haven't been paid yet. Should I refuse to sign CCO and file lien to expedite payment?

1 reply

Apr 23, 2018

That's sounds like a tough situation, and I'm not completely sure I follow. However, leveraging lien rights is a great way to avoid bad outcomes - such as underpayment, late payment, or nonpayment altogether. While filing a mechanics lien might be the most powerful move available, beginning with a more subtle approach can be helpful in both preserving relationships and preventing unnecessary burdens and costs. Sending something like a Notice of Intent to Lien can show a customer that a claimant is not afraid to pull out all the stops when it comes to securing payment. It can signal that a claimant means business without having to actually file a mechanics lien. Then, if the dispute is not resolved and payment is still not made, a lien claim is still an available option. Granted, a claimant should always keep an eye on the deadline to file since lien deadlines are strict and will not be extended. However, if parties are unreasonable and payment will clearly not be made, filing a lien claim might be a good option. Ultimately, deciding how to move forward will be up to each individual claimant, and will be based on their specific needs and interests.

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