Construction Law

Mitigating Construction Payment Disputes featured image

Mitigating Construction Payment Disputes

If you’ve worked in the construction industry for any period of time, you know that performance on any project is dependent upon an uninterrupted, steady cash flow. Yet, more than half of all contractors in the United States do not get paid on time, are forced to chase down payments, have to threaten to file or file a mechanics lien, and suffer from serious cash flow issues as a result of it. Especially in this day and age, you likely don’t have the luxury of covering weekly payrolls and material costs before you receive payment from the owner. 

For those looking to deescalate the situation and avoid taking matters to court, this article will provide a brief overview on what you can do to mitigate construction payment disputes. If you’re looking to secure payment from a delinquent owner and exercise your legal options for securing payment, it’s time to contact a West Palm construction lawyer with Cotney Attorneys & Consultants. 

Related: What to Do When You’re Unable to Collect Payment

Send a Demand Letter

One of the most valuable tools for contractors facing a delinquent owner who refuses to provide compensation for services performed or materials provided is the demand letter. It does much more than act as a sign of good faith should your case make it to the process of litigation; it shows the owner you’re serious about receiving payment, outlines the demand and deadline, and significantly reduces the cost of getting paid. An important thing to remember about demand letters, however, is that you should never write and send your own demand letter, if possible.

In simplest terms, your signature doesn’t have the weight and power of a legal professional’s penned on legal letterhead. You are also likely to come off as panicked or aggressive when your personal feelings bleed through, which may end up hurting your case. For an attorney who will draft a strongly-written demand letter on your behalf outlining when you will receive payment and the legal consequences for the owner if you don’t receive said payment, consult a West Palm construction dispute attorney

Related: Are Demand Letters Really Effective?

Move Forward With Alternative Dispute Resolution

If the demand letter falls short but you’re still looking to achieve minimal disruption to the project chain at all costs, it’s a good idea to move forward with alternative dispute resolution, such as arbitration or mediation. Ideally, your contract should have anticipated possible issues and laid out how disputes like these would be handled through an alternative dispute resolution clause. Generally speaking, this also means that the parties have waived their right to litigate this dispute in court. For those looking to achieve a legally-binding agreement, arbitration is definitely the way to go as a third-party arbitrator will review your case, hear testimony, examine the evidence, and render an award. If you’re looking for a less expensive, non-binding option, mediation may be preferable. For any further assistance determining which option is best for your payment dispute, don’t hesitate to contact a West Palm construction attorney

If you would like to speak with a West Palm construction attorney, please contact us today.

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.