Performing a construction project for a homeowner is a rewarding experience for a contractor. However, this satisfaction can quickly turn to frustration if the homeowner is not willing to pay for the work performed.
It’s unfortunate that even when a project is rewarding, the reality isn’t always sunshine. When a payment is not made in a timely manner, a contractor may wonder what legal options are available to get paid. Fortunately, the contractor has several potential options.
Try to resolve the dispute amicably.
A good place for a contractor to start when addressing an unpaid invoice is to directly communicate with the non-paying homeowner. Trying an amicable approach before resorting to more aggressive tactics can save contractors from getting involved in a lengthy dispute if the homeowner is cooperative.
When communicating with a non-paying homeowner, a contractor should first discuss their construction contract with legal counsel. The terms of the construction contract will likely contain clauses on what steps need to be taken to get the homeowner to pay. For example, is the work for which the contractor is seeking recovery included in the scope of work? If not, did the contractor and homeowner execute a Change Order expanding or deleting the scope of work?
Consulting with legal counsel will assist the contractor to can get accurate interpretation of the contract, and this will provide a “blueprint” for what steps the contractor needs to take in order to get paid for its work.
Take legal action if the amicable approach fails.
If the informal attempts to resolve the dispute fail, the contractor may wish to take legal action. At this point, the contractor should have its legal counsel send a formal demand letter to the homeowner that outlines:
- The amount of money that the homeowner owes the contractor;
- What terms of the contract that the homeowner has violated;
- What steps will be taken if the homeowner fails to pay the outstanding monies owed to the contractor.
In many cases, a demand letter is enough to convince the homeowner to pay the outstanding balance due. However, if this approach isn’t successful, the contractor may be able to file a mechanic’s lien against the homeowner’s property. There are several requirements that the contractor must satisfy before filing a mechanic’s lien, so the contractor should consult with legal counsel to determine if this option is available.
Dealing with a homeowner who refuses to pay can be frustrating, especially for a small company. However, as discussed above, contractors have several options to take to try to get the homeowner to pay for the work performed.
By understanding these options and seeking appropriate legal feedback, contractors can better protect their financial interests and help ensure they receive compensation for their work.
