Here's How You Can Protect Your Business

Tips to Secure Prompt Payments from Clients in the Construction Industry and Avoid Liens

How your company handles payments is one of the most important parts of completing contracts. A variety of problems can arise when trying to collect and manage payment processes. In some cases, these issues lead to a lien being placed on a property, which often requires the assistance of one of our Nashville construction attorneys to resolve. If that happens, it becomes a major problem for everyone involved. You can avoid liens by improving the way that your company collects payments from clients. In this article, a Nashville construction law firm discusses tips to secure prompt payments from clients in the construction industry.

Related: Dealing with Non-Paying Owners

Negotiate Favorable Contract Terms Upfront

Recruiting a team to work on your project will require a compromise in the construction contract. Both sides will want favorable terms, which is not unusual. If you can find a way to effectively compromise on the terms so that both parties benefit from favorable terms upfront, it will be easier to have a contract signed. 

There are a number of resources available online that can help you in your quest of how to negotiate favorable construction deals. You can use the services of construction negotiation firms to learn about each and every aspect of the construction market and its nuances. These firms are well equipped with a team of professionals who have a lot of experience in this field. The firm will then guide you through every single stage of the negotiation process and help you achieve what you want from the negotiation. Negotiation is a very difficult process to undertake but, if you know the secrets of successful negotiation, you can go a long way towards achieving all your construction plans.

Related: 5 Tips for Negotiating Superior Contracts

Understand Mechanic’s Liens

Prompt payment depends on the relationship between the contractor and subcontractor. Subcontractors have the ability to file a mechanic’s lien against the property. Once the lien is filed, the contractor and the property owner have to deal with the problem. Otherwise, the property may not be sold or used in some cases. Mechanic’s liens are used sparingly since they can break the relationship between the contractor and subcontractor but are useful in cases where non-payment becomes a major problem for the subcontractor. Contractors can avoid liens by making sure that payments are made quickly and on time. If a subcontractor is paid, he or she does not have the ability to file the lien. 

Related: 3 Ways to Seek Payment on a Construction Project Aside From Filing a Mechanics Lien

Partner With a Construction Law Firm

If you are having trouble with payments during a construction project, your company can partner with a construction law firm. There are law firms that specialize in construction law and helping construction companies resolve disputes. You can partner with one to help you deal with issues that are slowing down or stopping payments.

Don’t Hesitate to Take Legal Action

If you have tried many of the other remedies with no success, then it’s time for legal action. One of the first actions that any construction business should take when they get a claim in writing from a customer is to determine if the customer has indeed fallen behind on the bill. When to take legal action for delinquent construction clients should be decided by careful examination of all the bills and invoices. 

If a construction business receives a bill in writing that is less than thirty days old and that balance still hasn’t been paid, then a client can certainly take legal action. To make sure that they are doing the right thing, a legal company will need to ask themselves some questions. If the balance hasn’t been paid in six months, a client should ask the company whether or not they can extend the payment plan. It is also important to consider if there was a mistake made on the bill. If so, the invoice should be corrected, and a fresh bill sent out to the client.

Another question that must be answered when to take legal action for delinquent construction clients is what would happen if the contractor’s insurance company denies payment. In this case, a client may have to send the bill to the insurance company’s headquarters in California. The invoice should include all the pertinent information related to the payment dispute, including the denial’s reasons for rejecting the payment extension. Once this has happened, it is up to the insurance company to make their decision. In the end, it pays to be patient when it comes to dealing with construction companies that are having a hard time paying their bills.

Document Everything

It is advisable to take every step necessary in order to document everything to ensure prompt payment. Whether one is purchasing or selling property, ensuring that a mortgage or a construction contract is signed on time will help to prevent any problems in the future. This is especially so if something should go wrong or there are any disputes about payments that arise.

Dealing with the financial part of contracts and construction work can be difficult. Fortunately, help from a qualified lawyer can make a big difference in how your disputes are handled. If you have questions about handling payments or liens, contact a Nashville mechanics lien law attorney from Cotney Construction Law.

If you would like to speak with a Nashville construction dispute attorney, please contact us today.

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.