I was hired by a GC as the LV sub on a resi project in which the owners are a group of investors intending to sell the home. The project has wrapped up (the home is currently on the market) and I’ve been waiting to receive final payment of approx $45K.

Yesterday, the GC called me to say the owners stiffed him on final payment and asked if we could find some arrangement to settle my final bill. I said very little, and told him I would get back to him.

The GC and I have no history prior to this project and the GC conceded that I delivered 100% on this one. Naturally, my first reaction is that the GC owns this problem and that he is both legally and ethically obligated to pay me the full $45K.
As such, I feel I should have my lawyer send letters to both ownership and the GC stating full payment is expected and holding a lien over them.

On the other hand, it’s worth something to me for this whole thing to go away, which is to say that perhaps I should consider accepting less than full payment.

I know I left out a ton of detail, but I am hoping to get some thoughts and questions flowing to help me think this through. My lawyer is currently looking over the contract.

I'd insist on full payment.

If you don't have any experience with someone, when things don't go right you don't know if things have gone wrong for them or if, instead, this is a negoatiating tactic intended to delay and lower the payment.

The last time I had to look carefully at my attitudes and expectations of people, the company I was working for was being mistreated by a certain ethnic group in Beverly Hills (you won't be able to guess them, so stop being upset at my generalization) where three families negotiated for our lowest lowest prices, we did the work without getting much payment in advance, and when everything was done they started negotiating the price as though we hadn't already lowered the price.

We then changed to initial payment, progress payments, and a final payment of less than 10%. 10% is high enough that the client can feel that they're holding payment over our heads in case something went wrong, but low enough that we could survive walking away if we had to.

Lien the property immediately before it sells. If it sells before you do your chances of getting paid go down a lot.

^^^ This all the way.

Did you pull any permits?

KOT

Be at the recorders office when they open on Monday morning and file a lien. They can't sell the house or refinance until the lien is settled.

Act quickly.

How many of you are sending out a Notice of Intent on any larger project at the start of the job? I'm not and probably should just in the event we ever run into an issue like this.

Likely, there will be costs associated with cleaning this mess up. If you think that your cleanup costs will be $5K, settling for $40K is an option to end this quickly.

If there was a signed contract, why would you even consider settling on a smaller amount. That's crazy.
If he really got screwed (and I have my doubts he did), then that is HIS problem not yours. Why would you accept being penalized for what might be a negligent error he made with the customers.

Here is exactly what I would say "A smaller amount? Sure! I will accept whatever amount your bankruptcy hearing negotiates with me. Sounds fair right!"

There are FAR to many of these A-holes out there, trying to take advantage of people however they can. DO NOT BE A SUCKER!

Call the owner and threaten a lien. There is a chance the gc has already spent your money. Here in NJ, if the gc doesn’t want to pay you for any reason, he doesn’t have to. After all , he has your money he can use toward a lawyer if needed. And is the reason , I never let them get ahead on payments ever.

I always try to structure my larger contracts into 50/40/10 payment terms to minimize the fall out if I were to encounter non payment at the end of the job. Like everyone else said, file a lien...

it came to a point where i woud place a lein on the house before we started work. and have a contract that had specific payouts, x amount deposit, x amount at % completion and 10% due at completion. then and only then did we release the lein in full. you would be suprised to find out how well people pay when there is a lein on the house and a structured payout system. change orders are payable 100% in advance of work being done.

Consult an attorney. Construction liens aren’t the wonderful solution they sound like. For one, you only get paid if they sell the house. If the house is foreclosed on, you can be out of luck. Also, they expire. You have to renew them or they just drop off. For $45k you might need to go to court where a judge can force seizure of property and an auction to get your money.

Also, an attorney can tell you what it will cost, and let you know if you’d be better off to take $25k cash and walk away now than to wait years to settle or run up a bunch of legal fees.

Doesn't really cost anything to place a lien on a property. And as far as loosing it all if the property goes to foreclosure.. well it sounds like he isn't getting anything right now either.

As for the OP, let it be known that you have a signed contract and that you expect full payment. Do not give any notice that you could be up for negotiation, once you do that you lose your rightful position of receiving full payment. These Speculation Builders do this shit all the time, they will tell you there is no money left, try to get you to accept a lesser payment and then two weeks later the place will sell and the investors will walk away with a million $$. Happens all the time here in Colorado. I don't do these kinds of jobs for this reason.

Find out what your state says about this kind of situation- some are more in favor of the aggrieved contractor than others.

I have a call with my lawyer scheduled for tomorrow. Meanwhile, I'm thinking things through, taking in your comments, and coming up with an agenda for the call.

My currently thoughts:

1. The owners/investors currently have the property up for sale. They really need to sell the property, so it seems a lien would definitely get their attention.

2. Now, either the GC was legitimately stiffed by the owners or the GC is just messing with me (or the reality is something in between.)

2a. If the GC is messing with me and the owners find out I put a lease on the property because the GC didn't pay me from the funds that the owners paid the GC, it seems the owners would put a ton of legal pressure on the GC to get me paid.

2b. If, alternatively, the owners did stiff the GC, the owners now have more incentive to make the GC whole so that the GC can pay me and get the lien lifted.

2c. It seems either way, filing the lien moves things forward in my favor.

3. OTOH, it's possible that once I file the lien and "make trouble" for the GC, the GC will then see me as an enemy and refuse to pay me anything (as where now they are at least prepared to pay me something.)