It’s Summertime and the Living’s Busy for Contractors
In the construction industry, the summer months mean more than sun and fun. They mean productivity. This is when building professionals look for good weather to get good projects they’ve been planning for out of the ground or moving ahead. It’s a time to be looking forward. The last thing anyone wants to worry about is payment problems.
As you dig in to new work, take a moment to remember that for those projects you’ve completed, you only have a limited amount of time to preserve and protect key payment rights. Don’t wait until the summer rush is over to review your open A/R from older winter and early spring jobs.
1. If you’re a sub or supplier who doesn’t have a contract with the privately-owned property’s owner where open balances are getting old, remember to give that owner notice of your intention to file a mechanics’ lien claim no later than 5 months after your last work on a job. This is a necessary step before any sub or supplier can file a lien claim.
2. Whether you have a contract directly with the owner of a private project or not, the lien claim itself must be filed before your 6-month anniversary of last work.
3. If your work was on a public project and you hold a contract with a subcontractor of the prime or general contractor, Pennsylvania and federal bond law assume that the general contractor does not know whether you have or have not been paid (or whether its payment bond is at risk). Therefore, PA and federal law make it mandatory for you to serve a written notice of your intention to file a bond claim on the prime or general contractor before your 90-day anniversary from last labor or materials supplied to the project.
4. If you hold a written or oral contract with the prime contractor or general contractor on a public works project, there is no requirement that you preserve your potential bond claim by giving any advance notice prior to filing your claim. All you are required to do is bring your claim in court sometime after 90 days have passed since your last labor or materials were furnished to the project, but in no event more than 1 year + 90 days after that last work.
5. If you are on a private project where the owner has required the general contractor to post a payment bond in place of your right to file a mechanics’ lien claim, get a copy of that bond early and review it closely for notice and timing requirements. On private jobs where a bond is in place, you must closely follow the steps in the bond itself.
Threatening to file a mechanics’ lien or bond claim isn’t a step which should be taken lightly, especially when good business relationships are at stake. Nevertheless, if you identify a problem on the horizon, the sooner you let the owner know who you are and that your bills haven’t been paid, the easier it may be for the owner to be sure you’re taken care of. Just be careful not to let the warm, sunny glow of a busy summer ahead lull you into a false sense that your older balances for completed work are properly secured.
If you, or someone you know, may be affected by the information in this legal alert, please contact Bob Watson at Eastburn and Gray. To learn more about Eastburn and Gray and our Construction Law practice group, please visit the firm’s website, www.eastburngray.com.