Our Jacksonville construction attorneys know that dealing with slow payments is no fun, but it happens frequently between contractors and subcontractors. When you spend time and money on a project only to have to deal with lagging payments, it puts you and your livelihood in jeopardy. Unfortunately, your first thought may be to cut ties and move on, but not so fast. This two-part articles series will cover what you need to think about before you stop work on a construction project. For the beginning of the article, read part one.
Is There a Pay-When-Paid Provision?
Are you not getting paid because the owner has not paid the general contractor? Before you proceed, review your contract. Does your contract have a valid pay-when-paid provision? If you do and the language explicitly states that payment to a subcontractor is contingent upon the contractor receiving payment from the owner, you cannot legally stop working on a project. A pay-when-paid provision is a valid defense against breaching a contract for nonpayment. If there is no pay-when-paid provision, stopping work may be possible.
Do You Have Lien or Bond Rights?
Valid lien or bond rights make a difference. If you provide labor or materials on a project and you do not receive payment, you have lien or bond rights. Before stopping work, you must ensure you have already secured your lien rights. To secure your lien rights. You have 45 days to send a Notice to Owner to the owner. Within 90 days of the last time you worked on the project you must record your claim of lien in the same county the project is performed. No later than a year from your last work on a bond claim or one year from recording the claim of lien, you must enforce your rights in court on the lien or bond.
After you have considered all of the factors in your particular situation, you will have to decide if you will continue working or stopping your work. Have you documented everything to show why you are making the decision to stop work? Have you sent notices to show what is going on over the course of the project? Have you notified your surety? Stopping work should be a last resort and should be done in the most extreme of situations. Our Jacksonville construction attorneys can help you weigh the pros, cons, and risks of a work stoppage so you can make a wise decision.
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.