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What is the next step we need to take to receive our payment?

We are in the horizontal bore drilling industry and we hit 2 water lines one of which was not marked and they are holding our payment for over 6 months now due to the water company invoices for hitting those and lines and they are trying to hold us responsible for several others that wasn't us. We didn't even receive an invoice for the ones we did hit until yesterday and there is still places we aren't responsible for on those invoices. The company that is holding our payment is also not helping the water company figure out what subcontractor is responsible for for their invoices. We are needing that payment and have been because we are about to have to shut our company down due to their holding of payment. What should we do? And they still haven't paid any of the retain-age fees from prior invoices.

1 reply

Dec 19, 2019

Every payment dispute is different, and what may work for recovery on one job might not be effective on the next. With that being said, let's take a look at some payment recovery tools that can help to get paid without having to pay an arm and a leg to initiate recovery. I must mention, though, that your situation does sound pretty complex - and consulting with a local attorney would likely be very helpful in clarifying what options might be most effective. Since there are likely claims for damages available, and because there will likely be some dispute as to who's responsible for what, having a lawyer advocate for your position might help a great deal.

Tools for recovering payment

Let's look at some payment recovery options one-by-one. Certainly, different options will be more appropriate for different situations - so it may be a good idea to mull them over before deciding to go a certain route.

Invoice reminders

For one, simple invoice reminders can be helpful when trying to recover payment. When there's a larger dispute at hand, they may be less helpful - but sometimes, all that's needed is a little push in the right direction in order to get payment talks moving.

Demand letters

Escalating things some and sending demand letters for amounts unpaid can be helpful, too. A demand letter will generally contain specific legal threats that will be undertaken if payment isn't made and set a deadline for making payment. So, they'll essentially show that you're serious about getting paid and willing to do what it takes to obtain payment.

Lien or bond threats

Escalating things even further with the threat of a lien claim may be effective, too. A Notice of Intent to Lien acts as a warning shot - it lets recipients know that if payment isn't made and made soon, then a mechanics lien will be filed. For bonded public works projects, threatening to make a bond claim may be more appropriate. For more on how Notices of Intent lead to payment: What Is a Notice of Intent to Lien and Should You Send One?

Pursuing lien claims, bond claims, or other payment claims

If available, mechanics lien claims are a powerful recovery tool. Mechanics liens encumber the project property and can effectively freeze the cash flow on the project. Nobody likes a lien claim - neither the claimant nor the property owner - but sometimes they're necessary. More on Texas liens here: Texas Mechanics Lien Guide and FAQs. For Texas public works projects, bond claims or liens on the project funds (rather than the real estate, itself) can act in a similar way. They show that there's a serious payment issue at hand and can provide an avenue for recovery. You can learn more about bond claims and liens on funds here: Texas Bond Claim Guide and FAQs. Finally, legal claims like breach of contract, a claim under the Texas prompt payment laws, or some other claim could be on the table, too. So, consulting with a local attorney and having them review your documentation and circumstances could help provide some clarity on what claims may be on the table.

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