Mechanic's Liens, Stop Payment Notices, Bond Claims, Prompt Pay Statutes
In these challenging economic times, where payment is often an issue on construction projects, there are several legal tools that contractors, subcontractors, and equipment and/or material suppliers may use to secure payment.
On private projects, the most powerful tool to secure payment is the recording of a
mechanic’s lien. Other legal devices may include preparing and serving a stop payment notice, submitting a claim on a payment bond (assuming that a payment bond has been secured on the project) or possibly making a license bond claim. There are also statutory penalties available in certain instances where no good faith dispute for payment exists but yet payment is still withheld. There are many procedures and critical timing requirements that must be followed in order utilize any one of these approaches for securing payment.
On public projects, the legal tools for securing payment are similar but not identical to those of private works. One of the major differences is that one cannot generally record a mechanic’s lien on a public works project. On the positive side for subcontractors and equipment/material suppliers, on public projects exceeding $25,000, a payment bond must be secured by the general contractor. Thus, on public projects, both stop payment notices and payment bond claims can be effective tools for securing payment, along with the threat of interest and penalties for violating the prompt pay statutes.
Our skilled attorneys have counseled our clients through the many procedural issues to address whether payment has been properly secured. Where necessary, our attorneys have filed or defended against actions to foreclose on liens, enforce stop payment notices, and collect on bond claims.
