Unpaid Contracting? , Course of Action

[mjc]

I have contracted with a GC to perform the Electrical installation of a new Commecial Building. 80% of the way through the project the GC walks and I'm STUCK holding a $12,000 bill for installed material plus labor. (more to come) The Owner asks me to continue assuring me that all will be paid for and we do but! a week later he requests that we perfom two weeks work in five days and refuses to pay for additional manpower. When I refused because money to do the work is not there he asks me to leave (paying $0) and will find someone that can finish for the amount available.

My Question is : What course of action do we have short of attaching a Lien to the building and getting a lawyer involved ?

Had a feeling that this kind of **** would happen and lawyers would get rich but was to deep to stop all involvement, Just looking for a variety of actions different contractors have taken.
Thanks mjc

 

[Jomaul]

Put a lien on the building ASAP. It's an easy way to protect your money.If the owner is using a bank make sure you send a copy of the lien to the bank. He won't get anymore money untill you are paid. Plus you can save the legal fee's you won't need them. I learned the hard way.

 

[kkwong]

Lien, lien, lien. I know liens are a pain and it can feel weird placing one on a job, but it is the best way to ensure that you are paid. I've heard of companies in the past placing cancellation policies in their contracts, usually after things such as this have happened. There's always claims court...

 

[satcom]

No problem just enforce your signed contract, and yes job should of had a lien before work began.

Some areas supply houses, will lien the account, to assure payment, all the terms have to be in your contract, I lost plenty when starting out, all I could see was the work, I had the job, of course I did, the GC had no credit. the money lost was in the thousands, Now the GC has to provice a letter of credit, and the property gets lien attached, and we now get qualified jobs that pay.

 

[growler]

When I refused because money to do the work is not there he asks me to leave (paying $0) and will find someone that can finish for the amount available.

My Question is : What course of action do we have short of attaching a Lien to the building and getting a lawyer involved ?

First off I'm not going to sign a contract where I can be dismissed without cause.

Second, I'm not leaving a job without a formal letter stating why I'm being dismissed. Cause ( May need that in court ).

Third, when a GC walks it's time to collect all money that's due. It's time for new contract.

Just who has a permit for this job at the present time? If it's the GC then there shouldn't be any work going on. If this GC is out of there it will normally reqire another GC to complete the work.

I would start by investigating the permit situation. Who is responsible for this job in the present situation? I would try to shut the job down. It's easier to deal with people once they find out what they are up against.

 

[cadpoint]

Cert. Occupance

Cert. Occupance

My understanding is that a lien (now under construction) on a job will stop a Final CO from being issued on the Job, true or not ?

 

[ITO]

Put a lien on the building ASAP....

Do it now, or you will never see your money.

 

[satcom]

Do it now, or you will never see your money.

If he was in New Jersey, it would be to late for a lien., he would of had to file an intent to lien before the job started. Some states don't let you file, unless you filed an intent to lien. Also he may not of had a written contract, signed by all parties.

If he had a signed contract, then a lawyer, or good collection agent may be the answer, also if he pulled the permit, and has a contract, his Construction Department may be able to help him get paid, I wonder how someone else could take over, without updating the existing permit.

A lot will depend what state he is in, and the laws in that state.

 

[celtic]

mjc,
What State are you in?

No problem just enforce your signed contract, and yes job should of had a lien before work began.

Satcom...don't we - in NJ - have 90 days AFTER completeion ti file a lien?

 

[satcom]

mjc,
What State are you in?




Satcom...don't we - in NJ - have 90 days AFTER completeion ti file a lien?

Yes, as long as you have a contract with the intent to lien, before work begins. Under the old law "Mechanics Lien" you had to actually file an intent form, under the new NJ lien law, as long as you have the intent in your contract you can file within 90 days.

Don't forget if it is a residential lien, you have to file the NUB form before the lien can be filed, His is a commercial lien, and the state laws of his state will determine filing requirements.

My question is did he have an intent clause in his contract, if his state required it, so he can proceed with the lien.

 

[celtic]

Yes, as long as you have a contract with the intent to lien, before work begins. Under the old law "Mechanics Lien" you had to actually file an intent form, under the new NJ lien law, as long as you have the intent in your contract you can file within 90 days.

This may not be my strong point here....

Tell me about this "intent to file lien" that must be in the contract?
I did a brief search, but did not find that term

Eyeball these when you have time:
SECURING YOUR CLAIM: CONSTRUCTION LIENS AND BOND CLAIMS

A contractor?s lien rights when performing work for a tenant (From Craig H. Parker)

NJLIEN.COM

Residential Construction Liens in New Jersey:The Nuts & Bolts
By Thomas Daniel McCloskey, Esq.



N.J.S.A. 2A:44A-1 is the applicable law....under it I see that :

A lien claimant must first file a ?Notice of Unpaid Balance and Right to File
Lien?, or ?NUB?, as an express condition precedent to the filing of any lien arising under a residential construction contract.4 N.J.S.A. 2A:44A-21b(1) (emphasis added). See also Mansion Supply Co., 305 N.J.Super., supra at 318 (noting that ?a NUB must always be filed when a potential lien claim affects residential real estate . . .?).

(From the McCloskey link above)

How can a NUB be filed in advance?
(FWIW, a resi. lien is MORE restrictive than a comm. lien 60 days vs. 90 days)

Help me out here...

 

[satcom]

This may not be my strong point here....

Tell me about this "intent to file lien" that must be in the contract?
I did a brief search, but did not find that term

Eyeball these when you have time:
SECURING YOUR CLAIM: CONSTRUCTION LIENS AND BOND CLAIMS

A contractor’s lien rights when performing work for a tenant (From Craig H. Parker)

NJLIEN.COM

Residential Construction Liens in New Jersey:The Nuts & Bolts
By Thomas Daniel McCloskey, Esq.



N.J.S.A. 2A:44A-1 is the applicable law....under it I see that :
(From the McCloskey link above)

How can a NUB be filed in advance?
(FWIW, a resi. lien is MORE restrictive than a comm. lien 60 days vs. 90 days)

Help me out here...

In your contract, you should have a clause that gives notice that you intend to lien, this establishes your place in line should other lien filings conflict with yours, also other terms may be included in your contract to avoid filing the NUB, yes the law and the timing of the filing is crazy, IMO a lawyer should be consulted before any lien is filed, if you cause any damage to the owner, by filing an improper lien, the results can cost you.

Back in the 80"s when they started requiring the intent notices, it had one good result, it got the contractors to talk to each other, the old "Mechanics Lien Law" now under the new law I think somewhere in 92 they changed, and I remember because we had to have all our contract forms re printed.

IMO If all the states would do what Kansas did, with the lien laws all sub contractors would be in a better position to recover losses. and speed up claims.
http://findarticles.com/p/articles/mi_hb4355/is_200504/ai_n15204899

 

[petersonra]

My understanding is that a lien (now under construction) on a job will stop a Final CO from being issued on the Job, true or not ?

I don't think the CO is dependent on the financing status. The owner probably won't be able to sell it or get a regular mortgage to replace the construction loan though.

 

[growler]

I don't think the CO is dependent on the financing status.

You are right, you can't stop them from getting a CO on financing but you can on permitting. In this area you can. Here you would be required to sign a contractor release form, this states that you are off the job and not comming back ( no claims against owner ), The owner or general contractor also signs and it and states that they absolve you of all responsibility and then the new contractor signs and states that they accept all responsibility.

There are not that many contractors that wish to take on the responsibility for a job that's 80% complete and assume total responsibility for the remaining 20% of the job cost. It's not that easy to change contractors and it will cost you when you do. Anyone comming in will know that they have the owner over a barrel and you know what that means.

 

[mjc]

Guys,sorry for the delay its been hectic, Thanks or the responses- theres a lot of good info. Somebody asked, What STATE? The State of Michigan. I have contacted a Credit bureau that deals with attaching Liens on Buildings. (FWIW..wanted to do it that way so all the i's are dotted and t's are crossed) This lien will be issued to property owner and Building owner (which are different at this point) also the GC , paperwork is due back to me on 8/2/07. I contacted a Lawyer and he cannot go forward until the Lien has been Issued. ... Someone said that they have done this type of thing without a lawyer. I'm pretty sure in Michigan a Contractor must get a lawyer involved and sue within one year or the Lien is Void. At any rate this Lawyer is a relitive and I'll check with him first. Also heard from the GC who is out a ton of money and will Lien the Building. My Electrical Supplier is attaching a Lien also. I will let you know how the saga unfolds but until then lets just rephrase and say the STATE is "Confusion" for now.
Thanks again.