You can mitigate against the risk of late payment or non-payment through a little due diligence before any project begins. When working with homeowners, you should ask what their planned budget is for the job, and if they have a plan to pay for the work that is being done. You might even ask for a credit report on the homeowner before beginning the project.
As a contractor or subcontractor, be sure to do all your work with a written contract in place. It’s highly unlikely the homeowner is going to have your level of knowledge and experience in the construction industry and relevant contracts, so you want to make sure there is no gray area or misunderstanding before the contract gets signed. Try to make any documents regarding payment as clear and concise as possible. If you’re unsure about the language, an experienced attorney like Brian D. Zinn at ZinnLaw in Fort Myers can help with these documents.
Once a construction project has begun, be sure to keep records of any and all documentation, including any changes to the project. These changes should be noted with the date, the time, and signatures of all parties involved. You can also take pictures of the job in various stages, which, if the matter does unfortunately need to go to court, will serve as evidence supporting your side in the dispute. Florida law stipulates that a construction lien has to be filed within 90 days of the last date that labor and/or materials were provided for a project. Once the lien is filed, the entity filing the claim has 15 days to provide a written copy to the property owner.
Retainage Rights
Sometimes a client insists that retainage rights be included in your contract. This means the payor has the right to withhold retention funds for specific reasons having to do with the quality of work. Those retention funds must be paid out within 14 days of one of these events remedying these issues:
- The issuance of a certificate of substantial completion after a contractor substantially completes a punch-list.
- The issuance of a certificate of occupancy by a building inspector after a contractor substantially completes a punch-list.
- A contractor substantially completes the punch-list and the owner or tenant takes possession of the property.
