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February 28, 2019You completed the job, but the homeowner refuses to pay. Not only have you invested time and labor into the job, but you may also be on the hook for the cost of materials that were required to complete the job. Where do you go from here? What options to do you have? Is legal action required?
Let’s take a deeper look at this difficult situation that many contractors face. Including what rights you have as a Georgia contractor, what steps can be taken in response to these situations, and what you can do proactively to help avoid these kinds of hardships.
Your Rights as a Georgia Contractor
If you find yourself in the situation described above – where you’ve held up your end of the agreement and completed agreed upon construction work on a homeowner’s property, but the homeowner is refusing to pay you – it’s critical to understand the important deadline that is now ticking closer each day. More specifically, your right to place a lien for the money owed within 90 days of the last time you (or your company) worked on the property. Per OCGA Section 44-14-361.1(a)(2).
Should you miss this important deadline, you’re limiting your options for methods to collect on the outstanding balance. And you may only be left with the option to sue the homeowner – which as you may be familiar, can quickly get very costly.
Additionally, when contractors don’t exercise this option to file a lien within the 90-day window, it doesn’t exert extra pressure on the homeowner to pay. Rather, to increase the likelihood of collecting it’s best to show the homeowner you’re serious about getting the money you’re due by filing a lien. These liens also restrict the homeowner from selling the property without first clearing the lien by paying their outstanding debt for your construction services.
Filing a lien doesn’t guarantee that you’ll get paid the money you feel you’re owed. However, it is a relatively simple step to take that can give you significantly more leverage on the path to collection.
Proactive Measures to Collecting
Knowing your rights around filing liens is only one piece of the equation to ensuring you’re paid for the labor and materials for each and every job you complete. Let’s now review some of the proactive measures you can take to collect for every job, on time, without the legal hassle.
The first place to start is with your contract. Contracts benefit everybody – you (and your ability to get paid) as well as the homeowner who you’re completing the work for. The document needs to clearly and simply define what will (and won’t) be completed for the specific project in question, expectations for each party, the timeline of the project, and what (and when) money is owned.
These are the basic items you need to clearly address in every contract you present. However, depending on your average job size, availability, market demand, and your level of specialization – you can certainly add further clauses into the contract that work in your favor.
For example, when there is a high demand for your work and your schedule is rather full – you can add extra requirements of the homeowner in the contract such as needing to pay 25-50% of the estimated cost of the project upfront. Or at a bare minimum, a modest deposit that covers the cost of materials or other explicit costs you’ll incur to complete the work. This way, you won’t be “underwater” from the start.
Prudent Next Steps
Whether you’re looking for guidance on your options for an unpaid contract, or you’re looking to be proactive to avoid these situations, we can help. We’ve worked with dozens of Georgia contractors that have worked through these same kinds of hardships and opportunities. We find time and time again that a little bit of buttoning up your contract today can save you a lot of time, money, and resources down the road.
We welcome you to give us a call for an exploratory conversation on what next steps may be best for you and your contracting business. We can be reached at (678) 694-1250.