Your rights as a construction supplier when a client doesn’t pay

Your rights as a construction supplier when a client doesn’t pay

On Behalf of | Jan 5, 2021 | Construction Law |

Erecting a new building or remodeling an existing one is often a complex process. The flow of funding from one party to another often depends on contracts and the completion of various stages of the work.

As someone who runs a business that supplies construction materials, whether you offer lumber or prestige flooring brands, you may sometimes need to deliver your products before you receive full payment.

The client may have only paid a deposit on materials and will then pay the balance at a future time. If the homeowner has moved in to the completed property or the construction company that you contracted with has completed the work, you should receive payment in full. What can you do when you don’t get paid?

Your contract for the transaction may offer help

You probably negotiated terms in your contract for the purchase of the materials that would protect you in this exact scenario. You may need to follow certain steps, such as sending a specific notice, to pursue more aggressive collection tactics.

Advising the other party of the deficit and of how you intend to remedy it might get them to take action. If they still don’t pay you in full, you may need to pursue a lien against the property.

Seeking a lien can get someone to pay quickly

Under Arizona law, you have to provide the other party with at least 20 days’ notice before you attempt to secure a mechanic’s lien due to non-payment.

In a situation where a homeowner hasn’t paid their bills, a notice of an impending lien will potentially prompt them to pay. If it was a construction company that didn’t pay you, pressure for the property owner might help you finally receive the payment owed to you. Getting legal help with drafting contracts, filing for a lien and litigating your right to compensation can increase your chances of success.