# GS as persistent non-payer - what to do?



## ChasPainter (Mar 1, 2017)

Hey guys!

We ran into a client (a big General Contractor) who has not paid for the project for almost six months already. We tried to communicate with him, and with the final beneficiary as well, but they do everything they can to avoid talking. Once they offered to pay for the project (they sent us a final waiver), but they indicated (in the paperwork) the amount without one big element which we painted on their request (it's rather costly). They did not answer to our question Why.

In general, they do not answer us anything since then, and do not responce our calls. It's obviouls that we'll never work with them again. But what could you advise? What should we do to get our money for the project?


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## Stretch67 (Oct 7, 2013)

If it's enough money, and you've done your job, file a lien. Lawyer will pry do it for you for few hundred bucks. 

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## ChasPainter (Mar 1, 2017)

Stretch67 said:


> If it's enough money, and you've done your job, file a lien. Lawyer will pry do it for you for few hundred bucks.
> 
> Sent from my SM-G930T using Tapatalk


That's very interesting, thanks!
But we do not have such experience. Would you mind giving a bit more details on how a lien works in such cases?


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## Stretch67 (Oct 7, 2013)

ChasPainter said:


> That's very interesting, thanks!
> But we do not have such experience. Would you mind giving a bit more details on how a lien works in such cases?


That's what lawyers are for. Depends on what kind of property it is and how it's financed.

Typical house or commercial project, they can't close the loan if there are outstanding liens. Which means you'll get paid. Or else it allows you to foreclose on the property. I've seen it done first hand. That's the general principle, of course there's a lot of detail etc etc involved but I'm not a lawyer (even though my dad is and specializes in contract law).

How much they owe ya?


A LOT of the time, the lawyer will get their full attention just by sending them a nice letter.

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## ChasPainter (Mar 1, 2017)

Very interesting! You could be a paralegal at least (your advices are very clear and impressive).

All right, we'll try act via a lawyer. Actually we were thinking about hiring collectors (even found one company) but they take so much for their services...
I thought lawyer will be even more expensive but you're saying that he can do it for few hundred bucks. To get the price it should be a certain request to the lawyer I believe, i.e. not just "_help us, they do not pay_" but somethings like "_we need you to do this and this_".

Could you give the wording of what should we ask the lawyer for?
And what type of lawyer do we need (to know what to google  )?



> How much they owe ya?


$ 10k*+*


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## Stretch67 (Oct 7, 2013)

ChasPainter said:


> Very interesting! You could be a paralegal at least (your advices are very clear and impressive).
> 
> All right, we'll try act via a lawyer. Actually we were thinking about hiring collectors (even found one company) but they take so much for their services...
> I thought lawyer will be even more expensive but you're saying that he can do it for few hundred bucks. To get the price it should be a certain request to the lawyer I believe, i.e. not just "_help us, they do not pay_" but somethings like "_we need you to do this and this_".
> ...


Do some study on Google... mechanics liens. Depends on how much you can afford to lose. We've had to write off losses more than what's at stake here. 

Usually (not always) the initial consultation is free, and they'll give some recommendations or possible scenarios. It's up to you to decide ultimately.

Talk to friends/relatives maybe for a referral. Or else other contractors maybe would know someone in your area. Have u asked the other subs if they are getting paid? There is a lot to take into consideration I guess.


I don't know if your in Antartica or NYC, so fees could vary wildly.... but around the Midwest I'm pretty sure I could get an attorney to "write a nice letter" for under $500. Most I have met are pretty reasonable people that will look out for your interests. 

Look for a firm that advertises "construction law".

This is NOT legal advice btw and you should thoroughly examine all angles for yourself before taking any action.


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## CApainter (Jun 29, 2007)

This is where that signed agreement with the general contractor becomes more of a value than when it was typically taken for granted. Word of mouth agreements can quickly cease to exist.


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## lilpaintchic (Jul 9, 2014)

Are you licenced, bonded and insured as a legal business? And do you have a contract?

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## ChasPainter (Mar 1, 2017)

lilpaintchic said:


> Are you licenced, bonded and insured as a legal business? And do you have a contract?


We're licenced and insured, we're legal business. Bond was not required for the project. We do have a contract but it's too general..


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## Paradigmzz (May 5, 2010)

Is it new construction and has the owner moved in yet? Id get a hold of a lawyer pronto.


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## ChasPainter (Mar 1, 2017)

It's a store in a big mall and yes, the owner moved in already (many months ago). 



Paradigmzz said:


> Id get a hold of a lawyer pronto.


Why? what do you mean/suggest?


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## Stretch67 (Oct 7, 2013)

ChasPainter said:


> It's a store in a big mall and yes, the owner moved in already (many months ago).
> 
> 
> Why? what do you mean/suggest?


You only have a certain amount of time to file a lien. Depends on state law typically. Anywhere from 1-12 months.

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## ChasPainter (Mar 1, 2017)

Stretch67 said:


> You only have a certain amount of time to file a lien. Depends on state law typically. Anywhere from 1-12 months.


Oh, in our state it is only 3 months... So looks like we missed this option.

Could you advise anything else please?


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## Stretch67 (Oct 7, 2013)

ChasPainter said:


> Oh, in our state it is only 3 months... So looks like we missed this option.
> 
> Could you advise anything else please?


Not really, consider it tuition. Don't forget.

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## ChasPainter (Mar 1, 2017)

So do I take it correctly that, if we do not file a lien in time, we have no any legal way to get paid for the work we actually did?

And another question: does lien effect clients (i.e. property owners) making them to pay only thanks to that lien reserve the right for us (i.e. performers) to sue them later? 

And is filling a lien the only way (an obligatory milestone) to sue a client for work (which was done but not paid)?


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## Delta Painting (Apr 27, 2010)

Have a lawyer wright up a letter send it to the property owner and the GC... I'll bet that lights a fire under the GC @zz..


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## Stretch67 (Oct 7, 2013)

ChasPainter said:


> So do I take it correctly that, if we do not file a lien in time, we have no any legal way to get paid for the work we actually did?
> 
> And another question: does lien effect clients (i.e. property owners) making them to pay only thanks to that lien reserve the right for us (i.e. performers) to sue them later?
> 
> And is filling a lien the only way (an obligatory milestone) to sue a client for work (which was done but not paid)?


I/we aren't lawyers. But imho, filing a lien and suing are two separate processes for the most part.

You could probably still sue them, but it's likely it'll cost a lot more and be kind of a lengthy process. Could take a year or more to get your money and far from a guarantee. 

Mechanics liens are a nice tool to make sure you get paid WITHOUT having to go to court. But you have to learn the process and be willing to enforce/execute them. Imho, any contractor worth their salt knows the ins and outs of liens.

I'm not gonna continue the dissertation here (Google it) but don't be afraid to talk to a lawyer. They'll usually give you the first hour free and are very clear upfront what they charge for and how much. They don't like working for free any more than you do.

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## RH (Sep 7, 2010)

ChasPainter said:


> We're licenced and insured, we're legal business. Bond was not required for the project. We do have a contract but it's too general..


I assume that by that you mean you didn't have a "payment due by" clause. Still, if you have a contract at all, that should assist you in collecting what you are owed. Just because a payment schedule isn't in the contract shouldn't make a six months difference. CALL A LAWYER!!!


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## ChasPainter (Mar 1, 2017)

Stretch67 said:


> Mechanics liens are a nice tool to make sure you get paid WITHOUT having to go to court. But you have to learn the process and be willing to enforce/execute them.


I'm googling and studying the nice tool, thank you. But I still can not see why/how it makes clients to pay without a court - what are they afraid of?
And you're saying two things at once: "without having to go to court" and "be willing to enforce/execute them". I thought that enforcing means going to court. Does lien enforcing work in another way?




> I assume that by that you mean you didn't have a "payment due by" clause...Just because a payment schedule isn't in the contract..


We worked with many different GCs already but I've never seen a contract with a "payment due by" clause. They usually write something like "_we'll pay you after we get money from our client/the property owner, but we never know when he pays us, so we are not able to give you even an approximate date when you may get your money, please wait another month"_. lain: So what do you mean?


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## RH (Sep 7, 2010)

ChasPainter said:


> I'm googling and studying the nice tool, thank you. But I still can not see why/how it makes clients to pay without a court - what are they afraid of?
> And you're saying two things at once: "without having to go to court" and "be willing to enforce/execute them". I thought that enforcing means going to court. Does lien enforcing work in another way?
> 
> 
> We worked with many different GCs already but I've never seen a contract with a "payment due by" clause. They usually write something like "_we'll pay you after we get money from our client/the property owner, but we never know when he pays us, so we are not able to give you even an approximate date when you may get your money, please wait another month"_. lain: So what do you mean?


My contracts specify payment within 10 days of completion of the described work.


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## Stretch67 (Oct 7, 2013)

ChasPainter said:


> I'm googling and studying the nice tool, thank you. But I still can not see why/how it makes clients to pay without a court - what are they afraid of?
> And you're saying two things at once: "without having to go to court" and "be willing to enforce/execute them". I thought that enforcing means going to court. Does lien enforcing work in another way?
> 
> 
> We worked with many different GCs already but I've never seen a contract with a "payment due by" clause. They usually write something like "_we'll pay you after we get money from our client/the property owner, but we never know when he pays us, so we are not able to give you even an approximate date when you may get your money, please wait another month"_. lain: So what do you mean?


Execute/enforce. What I mean is you usually have to do paperwork periodically to keep the lien current. I don't know the details but you can't let them "expire". It is possible to go to court but most times that doesn't happen. I think you would end up going through court if you were to foreclose the property (which is rare). Most times, the owner or bank financing the project would rather cough up the money than lose the property completely.

Similar to if you finance a car, the bank has first "claim" on the title. By providing goods/services on a construction project, you're effectively financing the project until you get paid. If you don't get paid, then you're technically a financier of the project same as the bank. You make it official by filing a lien which basically gives you a "claim" on the title, just like the car I mentioned.

Eventually, the owner of the property will go to the bank to switch their construction loan to a fixed loan. As part of that process, the bank will hire someone to do "title work". Part of title work is researching to make sure there are no liens filed. Inevitably, the person doing the title work will find out from the county government (court system) that You filed a lien.

They will call the bank and tell them that there are liens filed. The bank will call the property owner and tell them they can't do the fixed loan unless the liens are paid. Because if they did, the bank would have second claim on the title (behind you). This is a problem for the bank.

It means that in the event of a default and subsequent foreclosure, you get paid before the bank does. They don't like/want that. Because they're financing majority of the project, they demand first claim on the title. In order for that to happen, they make all liens get settled/paid before they will do the fixed loan.

So continuing on, the owner will (typically) be forced to pay you otherwise they won't get the fixed loan from the bank and will be stuck paying high interest on a construction loan.


If their is NOt a bank involved with the project, you can still file a lien. The process just works a little differently. Whenever they go to sell the property, you will get paid before they can close the sale because the title person will discover your lien (that's there job!) and require that you get paid from the sale money. That could be many years though in some situations (and many years of keeping your lien active via paperwork). It also doesn't work as well on some things like churches because they may never be sold, or maybe not in your lifetime.

If you have done your lien correctly, you can foreclose the property in some situations. That means you get to seize the property, sheriff will auction it off, and pay you with the money. That takes a lot more time/resources though. Personally, that is a "last resort" and would have to be a lot more than 10k for me to go through the trouble. I'm not sure, but you probably can't do that in the shopping mall scenario. 

I'm sure I've missed some details but that is the general idea of how liens work. You really need to talk with an attorney to learn about this stuff and make sure it doesn't happen in the future. The attorney will also teach you how to have good contracts and make sure your a$$ is covered in the future.

A lot of painters think they did everything right until they end up in court. Then all the loose paperwork shows up and bites you in the butt. And depending how much money's involved, they might hire a scientist to prove where you skipped a coat etc etc. You really need to be sure you did your job correctly including all office related work. That's what lawyers are for. It helps to have a fresh set of eyes look at your situation.

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## ChasPainter (Mar 1, 2017)

RH said:


> My contracts specify payment within 10 days of completion of the described work.


Cool! But how do you make GCs sign your contracts?
They always send us their contracts..


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## Stretch67 (Oct 7, 2013)

ChasPainter said:


> They usually write something like "_we'll pay you after we get money from our client/the property owner, but we never know when he pays us, so we are not able to give you even an approximate date when you may get your money, please wait another month"_. lain: So what do you mean?


Contracts are negotiable. Delete/cross out that paragraph out and write when you need to be paid. If they don't agree to it, don't take the job.

We probably delete 50% of the crap in the "Standard Subcontract Agreement". The way they are written is totally unfair.

This is stuff that lawyers will teach you. Or if your company's big enough, be like my dad and get your own law degree.


....the more you cross out, the more likely it is that they will just hire a different painter. And that is the inherent problem in the industry and why working for General Contractors basically sucks. There are too many painters who like taking the abuse. If half the painters would just quit, WE could be the ones writing the contracts. But that won't happen cause painting is so easy anybody can do it.


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## ChasPainter (Mar 1, 2017)

*Stretch67*, thank you so much!



Stretch67 said:


> Contracts are negotiable. Delete/cross out that paragraph out and write when you need to be paid. If they don't agree to it, don't take the job.


Could you show me please a paragraph you often use in your contracts regarding pay time terms?


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## Stretch67 (Oct 7, 2013)

ChasPainter said:


> *Stretch67*, thank you so much!
> 
> Could you show me please a paragraph you often use in your contracts regarding pay time terms?




Are you prepared to lose 75% of your GC work?


I would strongly recommend spending $500-$1000 bucks to sit down with a lawyer and learn this stuff. Also, take some night classes at a local community college or something. It will pay for itself 1000 times over throughout your career. Our office manager has a Masters in Business. It's an invaluable tool.

The real players in this game know that contracts are the name of the game.

That's where the money is made or lost.

80% of the workers in this world are just average, period end of story. They all work an average pace with average quality. Your not gonna make a mint by magically only having the best workers. You can however have the best contracts in town. And that's what'll make your money. 



That's why they're called General Contractors instead of General Workers or General Freelancers or General Busybodies. They know how to write contracts. And they win, most of the time.




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## ChasPainter (Mar 1, 2017)

Stretch67 said:


> Are you prepared to lose 75% of your GC work?


You know, I'm so tired of working with GCs... Speaking with you here is like a breath of fresh air. I've never saw another option of the pay time terms so it maybe a mind-breaking thing for me to see.


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## Stretch67 (Oct 7, 2013)

ChasPainter said:


> You know, I'm so tired of working with GCs... Speaking with you here is like a breath of fresh air. I've never saw another option of the pay time terms so it maybe a mind-breaking thing for me to see.


Lol. I'm on a roll here.

Also cross out the spec section that says your responsible for the quality of taping/mudding. And have the GC sign to acknowledge it. That way when the supt says you can start you just walk in with the sprayer hot. Who cares what it looks like. 

If they gotta fix the drywall later then they pay you for repainting it. Had a multiunit building few years ago. 6 stories nicer 3 bedroom condos. The touch up was more than the original contract cause the tapers sucked! We're talking 6 figures. They tried to fight it until we sat down with them and showed them their signature right under our "touch up clause".

We generally "give" them 100 hours of touch up on 100k job. Of course it's figured in our price. When we start touch up (trade damage) we track our time and have supt sign the sheet daily/weekly. Once the 100 hours are used up, send the change order buddy!




You'll know you did a good job on the contract when the tile guy starts thinking about where to put his saw. And the carpenter's move a little more deliberately with casing/cabinets/countertops etc.

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## Tiny Tim (May 26, 2017)

ChasPainter said:


> So do I take it correctly that, if we do not file a lien in time, we have no any legal way to get paid for the work we actually did?
> 
> And another question: does lien effect clients (i.e. property owners) making them to pay only thanks to that lien reserve the right for us (i.e. performers) to sue them later?
> 
> And is filling a lien the only way (an obligatory milestone) to sue a client for work (which was done but not paid)?



You could file a complaint with the licensing board. GC might lose his license.

It's 90 days from when you last worked on the job. You said they wanted you to do more work? Go do it.:wink:


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## ChasPainter (Mar 1, 2017)

> You could file a complaint with the licensing board.


That's interesting, could you tell me more how it works please?


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## Tiny Tim (May 26, 2017)

ChasPainter said:


> That's interesting, could you tell me more how it works please?



What is your state?


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## ChasPainter (Mar 1, 2017)

Tiny Tim said:


> What is your state?


SC. Most of our clients are from SC as well.

But sometimes we have no payment issues with constructors located in other states (like FL).


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## michaeljmann2000 (Jun 5, 2017)

You can really look back on this as a learning experience. I too learned the hard way but only once on a 8000 sq. ft. Custom in Folsom, California.

In your next project with a GC write your agreement up and structure it with milestones.
After "X" amount of work is performed in first 2 weeks first payment is due. Same for each phase of your work. If you kept painting and you did not get a draw for services performed you have no one to blame but yourself. Some builders when they get a pigeon like you (sorry but the world is a mean place) treat people like this on a regular basis, thus the name scum bag was created to describe these type of people. When you sit down to sign your agreement you should bring a portable notary and record video of all of the conditions with the GC acknowledging every one of your stipulations. If you run across a GC that will not agree with what I have described, it is best to walk away instead of getting burned. I have been there and it really sucks to get burned.


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