4 Options for Collecting Payment on Construction Projects Part 1
Today’s construction industry comes with many risks and challenges. Many construction professionals may find themselves in a predicament regarding payment for services. On one end, owners agree to pay for services, labor, and materials upfront, which solves the payment issue for the contractor. However, there are contractors who have found themselves on in a dilemma when an owner fails to pay them for services rendered.
As Sarasota construction lawyers we understand the frustration contractors feel when having to fight for what rightfully belongs to them. In this first part, we’ll discuss the importance of the Prompt Payment Act as well drafting a strong contract. Visit Part 2 for four options for collecting payment on your construction projects.
Understanding the Prompt Payment Act
First, you must understand the Prompt Payment Act. The Prompt Payment Act pertains to governmental projects, which includes their agencies and institutions. Under Florida Statutes 218.735, construction professionals have the legal right to receive payment for the labor, materials, and service they provide for the construction or improvement of a governmental real property. In addition, the act provides dispute resolution as well as interest for late payments. The statute outlines the rules and regulations and the rights and responsibilities of parties involved. To receive prompt payment, proper procedures and timelines must be followed.
A solid contract is a must on any project. The Prompt Payment Act aids you when dealing with nonpayment on governmental level projects, but you also need to protect yourself on private level projects. Your contract is one of the best weapons for safeguarding yourself in the event you have trouble securing payment. Following is a simple list of the provisions to include in a contract to help you secure your payments.
- Lien provisions
- Payment terms
- Attorney fee liability
- Cancellation provision
- Change order provisions
We advise strong legal counsel when drafting any legal document and recommend you consult with one of our expert Sarasota construction attorneys for an extensive review of your unique needs.
Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.