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What is the most promising way to collect money for a homeowner

We have completed our contract amount of 191,513.95 on a home damaged in Hurricane Michael The homeowner received 288,000.00 from insurance. The final inspection passed three weeks ago and the man assures us that the bank said the final funds of 78,000.00 of which 18,000 is to pay the public adjuster. will be available this week however he is indebted to us $125,198.00 and has not made a payment since September. Is there a form/contract that we can have him sign promising to pay the remaining amount due for materials and services performed?? I do not feel a lien would be beneficial since he resides in the home Please let me know what you suggest we do to protect our company from being underpaid such a large amount of money

1 reply

Jan 8, 2020

If a contractor can push the project owner to sign additional documentation promising to make payment, then that could certainly be helpful later on if there's a struggle to get paid. Granted, keep in mind that's what the contract for construction is, itself - a document promising to make payment. If all agreements for work haven't been put to writing, though, it'd be a good idea to make sure that happens. Anyway - it's normal to want to avoid the mechanics lien process when recovering payment, and Levelset has actually written on the topic before: Don’t Want to File a Mechanics Lien? Here Are 5 Other Options. Still, let's look at some payment recovery tools and strategies - including leveraging lien rights - below.

Executing an additional signed agreement

As mentioned above, a construction contract is, quite literally, a promise that payment will be made for the work that's been done. Of course, when insurance gets involved, things get a little hairier as to where funds are coming from and who will ultimately be responsible for making sure funds get from point A to point B. If an owner isn't on the contract for work, or if a restoration contractor wants to double down and make sure that payment will be made - it may be helpful to memorialize the debt with something like a promissory note or a personal guarantee.

Sending reminders and demands to speed up payment

Before something more serious becomes necessary, like leveraging lien rights, there are some less-adversarial means that might be useful.

Invoice reminders

For one, sending a document as simple as an invoice reminder will often be effective to get an owner's attention. An invoice reminder is a pretty gentle document, and its purpose is to simply help your invoice stay on top of the owner's mind. Sometimes, that's all that's needed to get paid.

Demand letters

If necessary, escalating things a bit with a payment demand could get the job done. A payment demand isn't as friendly as an invoice reminder, so it may be worth sending a few reminders before stepping up to a demand. But, if it's looking like a payment dispute will be unavoidable, sending a demand letter with legal threats and a deadline for making payment can help to get paid.

Leveraging mechanics lien rights into payment

Nobody likes dealing with lien claims, but that's what makes them such a powerful tool. Even in a situation where the property owner has no intention of selling or taking out a loan against the property - a lien filing can lead to payment. And, leveraging the ability to file that lien can, too. More on how liens lead to payment here: How Do Mechanics Liens Work? 17 Ways a Lien Gets You Paid.

Notice of Intent to Lien

The mere threat of a lien claim will often lead to payment. Sending a document like a Notice of Intent to Lien is a shot over the bow - it's an indication that the payment dispute has gotten serious and will only escalate if payment isn't made soon. With the legal costs and potential outcomes of a lien claim (like foreclosure), the threat of a lien can't be taken lightly. Plus, if the threat isn't taken seriously, other options - like filing a lien claim - will be on the table.

Filing a mechanics lien claim

Actually pursuing a mechanics lien claim is certainly a strong option. It's unfortunate when things come to a lien claim, but if push comes to shove, it's a good way to ensure payment gets made. As mentioned briefly above - lien claims can be effective even if there's no commercial interest in the property and even if an owner has no intention of moving. An owner will have to handle a lien against their home in one way or another - otherwise they may potentially be forced out via foreclosure. So, even if a claimant doesn't intend to pursue the claim all the way to foreclosure - filing a lien and threatening to proceed with a lien enforcement suit will often be enough to get paid. More on Florida liens and the complications insurance can make, here: - Florida Mechanics Lien Guide and FAQs - How to File A Florida Mechanics Lien – Step By Step Guide To Get You Paid - Waiting on Insurance Proceeds To Get Paid? Get Security With A Mechanics Lien - The Payment Perils of Property Restoration Companies

Other recovery options

If a payment dispute does get out of hand and if a lien isn't a great option for one reason or another, there will generally be legal claims available for payment recovery, too. And, consulting with a local Florida attorney - like one of these Florida Construction Payment Experts - could go a long way on that front.

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