What to do when I’m owed for repairs after fixing another sub’s damage/defects?

2 weeks ago

I am a utility contractor. We completed our preliminary work on the project. Then the grading contractor came in to do his work. We then came in to finalize our phase of the project. Upon arrival we discovered numerous damages done by the grading contractor and I made him and the engineer aware of the damages and made necessary repairs, and calculated and shared the repair total. The grading contractor made a partial payment to me but has not paid the outstanding balance.

I have made several attempts to contact him with no success. I have been told I cannot lien the job and instead I have to file a lawsuit against him. What is the best way for me to get paid? What should I do first?

Senior Legal Associate Levelset

It’s common for customers, owners, or other leaders on the project to allege that lien rights aren’t available, and they’ve got a vested interest in making sure mechanics liens aren’t filed on their job. So, it’s probably healthy to take things with a grain of salt when another project participant asserts that lien rights can’t be used.

North Carolina mechanics lien rights basics

With that being said, North Carolina mechanics lien rights are pretty broadly available available “to secure payment of all debts owing for labor done or professional design or surveying services or material furnished or equipment rented pursuant to the contract.

Further, note that lien rights are available to those who furnish labor, materials, or equipment under contract – whether that contract is express or implied. So, if someone with the authority to authorize work gives the go-ahead to perform additional work, then that work may well be lienable – even if it’s to repair an issue caused by someone else on the job.

Now, there’s some grey area regarding informal change orders and lien rights – and, in some cases, the ability to lien for amounts not contemplated in the contract may be limited if the change order isn’t made in a way that’s consistent with the contract. But again, if a customer or other party in charge of the project authorized the work themselves, then that may point toward the work being lienable.

For more on North Carolina liens: North Carolina Mechanics Lien Guide and FAQs.

It’s also worth shedding some light on another potential issue. If a contractor repairs some other party’s work, it will be hard for the contractor to recover payment from the other party when there’s no contract between them. Often, claims between different construction businesses can be made as set out under their contracts, and legal claim might be made if the dispute gets ugly. But, when there’s no official or contractual relationship between two construction businesses, the recovery options will probably be quite limited.

Threatening to file a mechanics lien could get everyone’s attention and create pressure to make payment

Because mechanics liens are so powerful, the mere threat of a lien claim is a powerful tool for getting paid. So, if a contractor is getting strung along and no one is willing to make payment, using a tool like a Notice of Intent to Lien can have a powerful effect.

Nobody likes liens – customers, owners, other project participants, even claimant. When a lien is filed, project funds often freeze and it creates problems for everyone involved. So, threatening to proceed with a lien can show other contractors, customers, and the project owner that you’re serious about getting paid and willing to do whatever it takes to obtain payment.

What’s more, the potential for a lien claim will put additional pressure on everyone on the job to resolve the dispute, including parties who might not directly be affected by a lien claim (like another contractor). If other higher-tiered parties are putting pressure on another contractor who’s supposed to pay, that might be the final push they need to finally make payment. Or, alternatively, the potential for a lien claim might push a customer or owner to step in and resolve the issue to keep the project moving.

Other payment recovery tools available

It’s completely normal to want to avoid mechanics lien talk, if possible. So, pursuing other options first might make sense, too.

Sending something as simple as an invoice reminder to a party who owes you payment could work. Nobody likes the feeling of owing someone else payment, and a little reminder could be all it takes.

Alternatively, escalating things a little with a payment demand letter could be effective, too. Demanding that payment be made, or else legal actions be taken, can also push another party to do the right thing and pay what’s owed.

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