How to Find Out Whether or Not an Owner Has the Funds to Pay You Part 1
Have you ever heard of the notorious con man Victor Lustig? Although he was born into poverty in the late 19th century, he realized early on that by studying the characteristics of France’s aristocracy and emulating their behavior, he could trick others into thinking he was a wealthy businessman.
Over the years, he developed his “Count Lustig” persona into that of a man who only indulged in life’s most extravagant offerings. He would meet clients at the Hotel de Crillon to discuss business beneath vaulted ceilings decorated with neoclassical frescos. Afterwards, he would have a limousine waiting for tours of Paris. No detail was spared in the cultivation of “Count Lustig,” from his elegant wardrobe to perfectly manicured nails, Lustig personified Parisian affluence. Ultimately, his scams and schemes culminated in a landmark sale that no other con man would ever dare attempt.
While posing as a high-ranking French government official, Lustig sold the Eiffel Tower to one of the most successful and well-known scrap dealers in France. Yes, that actually happened. Even more miraculous is the fact that he pulled off the same scam TWICE. The story of “Count Lustig” is a cautionary tale for construction business owners who plan to take on projects with owners they haven’t worked with before. Do you really know who you are dealing with? How can you be certain that they have the funds to back up their claims? And most importantly, how can you prevent yourself from becoming the victim of a scam?
In this two-part series, a Tallahassee construction lawyer from Cotney Attorneys & Consultants will answer these important questions and provide contractors with solutions for avoiding risky projects with unscrupulous owners.
Prompt Payment Is Critical, Don’t Settle For Anything Less
Most contractors aren’t afforded the luxury of playing with house money. You can’t succeed when an owner doesn’t pay. You are responsible for paying employees, lower-tier contractors, material suppliers, and other vendors, which means owner nonpayment is going to rub a lot of people the wrong way, not just you. When the flow of payments is interrupted, you may find yourself paying out of pocket to cover a delinquent owner. Seriously, if an owner neglects to pay you halfway through a project, how good are your chances of collecting once the project has been completed? Probably not very good.
This can be avoided when prompt payments are mandatory. Your contract should address this, and if it doesn’t, you should consult a Tallahassee construction lawyer. Remember, when payments stop flowing in, work will eventually follow suit. Pretty soon, you’ll be behind schedule and over budget without any guarantee that the money issues will be worked out amicably. Late payments aren’t necessarily rare in the construction industry, but all payment-related issues should be communicated openly before a project’s progress is affected.
No Excuse Is a Good Excuse
When it comes to late payments, no excuse is a good excuse. You expect a high level of professionalism from the owners you work with, so you don’t want to hear excuses about staff members messing up pay applications or being too busy to get a check out to you. They should have processes in place for managing payments on-time. Procedural excuses could be hiding a more sinister truth — there’s no money to pay you. Regardless of the reason, you need to hold owners accountable. This can be accomplished by having your contracts reviewed prior to signing. Our Tallahassee construction lawyers provide contract review, drafting, and negotiation services designed to boost project security.
To learn more about how to find out whether or not an owner has the funds to pay you, read part two.
Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.