{"id":2399,"date":"2023-08-07T00:31:59","date_gmt":"2023-08-07T07:31:59","guid":{"rendered":"https:\/\/contractorslicensingschools.com\/blog\/?p=2399"},"modified":"2023-08-18T14:25:06","modified_gmt":"2023-08-18T21:25:06","slug":"california-construction-contractors-what-to-do-when-a-client-wont-pay","status":"publish","type":"post","link":"https:\/\/contractorslicensingschools.com\/blog\/california-construction-contractors-what-to-do-when-a-client-wont-pay\/","title":{"rendered":"California Construction Contractors: What to Do When a Client Won’t Pay?"},"content":{"rendered":"

\"\"<\/a>You\u2019re a contractor. You\u2019ve just finished a job (with a contract!) and now, when it comes time for the client to hold up their end of the bargain \u2013 nada.<\/span><\/p>\n

\u201cNo worries,\u201d you think. This client seems legit. They\u2019ll pay, they\u2019re just forgetful is all. Yada yada. Days go by, then weeks, and still nothing hits your account number. You check your emails and make sure that everything went through okay.<\/span><\/p>\n

It\u2019s starting to dawn on you: your client might be \u201cone of those.\u201d Any seasoned contractor has dealt with \u201cone of those\u201d \u2013 people who get you to work, and then completely stiffs you when it comes time to get you paid.<\/span><\/p>\n

So what happens when a client won\u2019t pay a contractor? What recourse do you have as a contractor? What steps do you take to get the money you deserve for the work you\u2019ve completed?<\/span><\/p>\n

Let\u2019s find out.<\/span><\/p>\n

The <\/span>First<\/span><\/i> First Step<\/span><\/h2>\n

The first line of defense against non-payment is a well-established contract. Before you even <\/span>think<\/span><\/i> about taking the job \u2013 you need to make sure you have a comprehensive contract that covers all elements of the job: timing, materials, costs, emergency provisions, and so on.\u00a0<\/span><\/p>\n

It should outline the scope of work, payment terms, and procedures for handling disputes or changes. If anything is unclear, seek clarification before work commences.\u00a0 Always, always, <\/span>always<\/span><\/i> hire a lawyer to make sure your contract is iron-clad ahead of time \u2013 because it\u2019s going to save you a ton of time and money on the back-end in case of a dispute.<\/span><\/p>\n

Document. Everything.<\/span><\/h2>\n

In the construction industry, documentation is king. We\u2019re not telling you anything you don\u2019t know, of course.<\/span><\/p>\n

A good contractor always keeps detailed records of all work performed \u2013 including labor hours, materials used, and any changes or additions to the original scope of work.\u00a0<\/span><\/p>\n

Always make sure you get everything \u2013 and anything \u2013 in writing. If they want to change the scope or the concept, get it in writing. If they want to negotiate price changes, get it in writing. If they want your opinion on a Christmas present for their nephew \u2013 get it in writing!<\/span><\/p>\n

Your client, as much as you may like them, is not your friend. When push comes to shove, you need to act professionally and get every little detail in writing to ensure you\u2019re protected in case of dispute. Your client can be your friend, but consistent documentation is your <\/span>best friend<\/span><\/i> \u2013 and it always will be.<\/span><\/p>\n

Step 1: The 20-Day Preliminary Notice<\/span><\/h2>\n

In California, a preliminary notice is a legal requirement \u2013 and your first step towards securing payment in the case of a default. This notice, which must be served to the property owner and general contractor within 20 days of starting work, informs them of your right to file a mechanic’s lien if not paid.<\/span><\/p>\n

This is the first piece of groundwork you have to lay in order to get paid, no matter what your role is in the construction. Anyone, from a roofer to a general contractor, can and should file a <\/span>20-Day Preliminary Notice<\/span><\/a> on every single job they work on.\u00a0<\/span><\/p>\n

We repeat: <\/span>there is literally no reason not to file a 20-Day Preliminary Notice<\/b>. It can <\/span>only<\/b> protect you in the case of nonpayment!<\/span><\/p>\n

Step 2: File A Mechanics Lien<\/span><\/h2>\n

A mechanics lien is a legal claim against a property that has been improved (such as construction or renovation) and for which the work has not been paid. In California, anyone who provides materials or services during construction can file a mechanics lien.<\/span><\/p>\n

In essence, a mechanics lien is a legal protection for unpaid construction workers. It allows you to place a lien \u2013 basically, a legal impediment \u2013 upon the property where the unpaid work was performed. While this does not guarantee payment for your work, it does create significant personal issues for the client \u2013 usually enough that they decide to pay you.<\/span><\/p>\n

To file a mechanic’s lien, you must first serve a <\/span>Notice of Right to Lien<\/span><\/a>. The lien itself must contain specific information, including the owner’s name, a general description of the property and location, the name of the hiring party, a description of the work performed, and the amount of money owed. The lien must be filed in the county recorder’s office in the county where the property is located.<\/span><\/p>\n

Step 3: Enforce the Lien In The Courts<\/span><\/h2>\n

If payment is not received after filing the lien, the next step is enforcement \u2013 and this requires you to file yet another legal action. In this case, it\u2019s legally pursuing the claim to the property after you\u2019ve filed a mechanics lien.<\/span><\/p>\n

In California, the deadline to enforce a mechanics lien is 90 days after recording the claim. This involves initiating a lawsuit to foreclose on the lien \u2013 which can result in the sale of the property to satisfy the debt. Either way, you need to open this lawsuit against the person who has not paid you \u2013 if you do not, you will most likely not get paid!<\/span><\/p>\n

The California Prompt Payment Act<\/span><\/h2>\n

A brand new piece of legislation launched in 2022 strengthened California contractors\u2019 rights when it comes to ensuring payment for services provided.<\/span><\/p>\n

The California Prompt Payment Act<\/span><\/a> regulates the acceptable amount of time in which payments must be made to contractors and subcontractors, ensuring that everyone on a construction project is paid in a timely fashion. Here\u2019s the basics:<\/span><\/p>\n