If you’re a contractor or supplier who’s gotten stiffed (that’s not a legal term, but we all know what it means and how it feels) on a job payment, you might be wondering whether there’s an easy way to make sure that doesn’t happen in the future. While not necessarily easy, with a little bit of diligence, you can greatly improve your chances of getting paid for the work you do or the materials you provide for a construction job.
Securing Your Right to Be Paid Can Mean Different Things
Depending on who the owner is and how the project is structured, you can have very different options for securing your future or past-due payments. For example:
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- Many federally-owned projects are governed by the Miller Act, a federal law that requires the general contractor for certain types of federally-owned projects to provide a payment bond that acts as security for subcontractors and suppliers working on the project. In these situations, the remedy of filing a mechanics lien isn’t available, but you can sue based on the payment bond if you haven’t been paid.
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- Many states have their own “Little Miller Act” statutes that similarly require general contractors working on state-owned projects to provide payment bonds for the benefit of subcontractors and suppliers. Here, too, a lawsuit is usually your initial remedy.
- Where the project is privately owned, different states have different requirements for allowing subcontractors and suppliers to file mechanic liens against a property. It’s important to understand the requirements of the state your job is in so that you don’t miss a filing or a deadline to be able to file a mechanics lien in the event the owner or GC doesn’t pay you.
- If you don’t have a direct connection with the project – for example, if you’re a subcontractor to a subcontractor or a supplier to a subcontractor – you may need to take additional steps to secure your right to be paid for the work you do or materials you provide.
Your Compliance Program Helps You Keep Things Straight
All of this can get confusing if you don’t take some steps to organize your information on a project-by-project basis in a way that helps you know what you have to do and when to secure your right to be paid. A typical compliance program will take the following into account for every project you’re involved with:
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- Where the project is located. As noted, laws vary by state.
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- Who the owner is. If the owner is a government entity (federal or state) you’ll typically follow the federal Miller Act or the state’s equivalent. If it’s privately owned, you’ll follow the state’s mechanics lien laws.
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- Whether there is a payment bond. A payment bond can affect how you secure your payment rights.
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- Whether there is an advance notice requirement. Some states require you to notify the owner within a certain period of beginning work on the project, even if there isn’t a payment issue. This puts the owner on notice that you’re involved in the project and is a prerequisite if you aren’t being paid later and need to file a mechanics lien against the property. Failure to meet this advance notice requirement can mean you lose the right to file a mechanics lien down the road.
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- The deadline for filing a mechanics lien. For projects where a mechanics lien is a payment security option, you may have to file it within a certain period after you finish working on the job or lose your right to file one at all.
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- The deadline for filing a lawsuit. Statutes of limitation will also cut off your ability to sue for payment after some time, which will vary depending on the state.
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- What your role is in the project. What you must do to secure your payment may vary depending on how far down the “food chain” you are. If you’re a subcontractor to the GC, you may have to do things differently than if you’re a subcontractor to a company that is a subcontractor to the GC.
An effective compliance program relies on two main components: accurate information about the project and your role and prompt implementation of the notice and filing steps that the compliance program advises you need to be taken. It does you no good to receive an alert that you need to notify the owner that you’re a subcontractor to the project if you don’t send the proper notice before the deadline.
How Emalfarb Law Can Help You Protect Your Right to Get Paid
At Emalbarb Law, we help our clients implement effective compliance programs that can cover every state in the US (as well as DC). We can work on a project-by-project basis to inform you what you need to do to secure future payments. We also regularly develop compliance systems that clients can use to keep track of multiple projects, and we help them make sure they are making the proper filings within the appropriate deadline to protect their right to be paid.
Our experienced mechanics lien and construction law attorneys have helped thousands of clients collect billions of dollars in project payments. We work with qualified attorneys in every state and the District of Columbia whose focus is to help construction industry clients get paid. No matter where in the US your project is located, Emalfarb Law can help you make sure you get what you’re owed.
Find out more about how we can help you develop and implement an effective compliance program by scheduling a meeting with one of our experienced attorneys. You’ll sleep better knowing you’ve done everything possible to make sure you get paid. If you’d like to learn more about how a compliance program works, check out our video presentation “Learn How to Perfect Your Construction Lien and Get Paid on Every Project.”