Remember to Perfect Claim and Lien Rights As the Economy Improves
As I pointed out in my last post, things are slowly improving for the Florida construction industry, but the operative word, on so many levels, is “slowly.” The obvious implication of the slow-paced recovery is that there still is not enough work for contractors to reach their comfort zone yet. But a less obvious implication is that the money behind the projects is still more tentative than the recent boom years. Although projects are starting, the money behind them remains tight, meaning any little thing can cause a payment dispute that could turn the already small margins into losses at the blink of an eye. Change order disputes, delays and job interferences, quality of work issues and more can turn a tightly run job into litigation and loss. The contractors who will be best positioned to handle this will be those who have perfected their lien and bond claims. The comfort of claiming a secured position, combined with the possible entitlement to recover your attorney’s fees should you be forced to litigate, will put you in a better position to stand your ground when dealing with a payment conflict.
The key will be to fully perfect your claim. Follow all your contract requirements for claim perfection and notice to your client. Some contracts require claims to be submitted within a few weeks for evaluation and determination by an architect or initial decision-maker. Most contracts set deadlines by which your client must be advised in writing of the existence of a claim. Some contracts even contain onerous requirements for the contents and format of your claim. Not only should you familiarize yourself with your contractual claim requirements, but since you’re likely starting new jobs now, this is a great time to review your contract and change the claim requirements to be more favorable for you.
Make sure you’re fully perfecting lien and bond claims by sending notices to owner and contractor, respectively, and timely recording liens and serving notices of non-payment. Familiarize yourself with the other requirements of the Construction Lien Law and bond statutes that may impact you, remembering that strict compliance is often required.
On the other side of the equation, if you’re an owner or general contractor, you need to be aware that your contractor or subcontractors should be perfecting their claims and you should therefore be proactive in assessing them and determining the manner in which they should be handled. You’re better off dealing with them early in the job, even if you decide to merely address them conceptually and save final resolution until the end of the job. The sooner you address them, the easier it is to maintain the proper chain of releases and the cleaner you can keep the payment requests and similar paperwork, so the claim can either be quickly resolved or more neatly packaged for resolution at the project’s end. The longer it takes to review and assess the claim, the messier and more uncertain the paperwork becomes, making it much harder to resolve when the time comes.
No matter which side of the fence you’re on, until job flow improves to the point where the pocketbooks open a little more, money issues on construction projects will continue to be closely scrutinized. Be aware, proactive, and prompt in your handling of these claims and the process of resolution will be cleaner, more efficient and less costly for everyone.