Getting Paid, Fast: Construction Law

by | Jan 31, 2011 | Getting Paid, Liens, Litigation & Arbitration

Not receiving payment for your work is a principal concern on every job. Especially today, with everyone facing tough economic challenges, it has become a real concern to get paid when you are supposed to. Generally, contractual disputes on construction projects are complicated by the fact that not all of the parties have actually contracted with each other. It is not uncommon for several layers of separation to exist between the persons or entities actually performing the labor, services or providing materials and the owner. The general contractor, architect, or engineer may each contract directly with the owner. The general contractor will in turn then contract with any number of subcontractors, who themselves contract with one or more sub-subcontractors and/or material suppliers. The one constant is that the owner remains responsible for making payments when due. Once paid over, however, the money does not always flow down the chain as it should. This problem becomes more acute as the project nears its end.

One of the many reasons parties hesitate to file a court action to recover money owed is the cost of litigation and the length of time it takes to obtain a final judgment. The Florida Legislature recognized this problem and set out a workable solution providing for swift payment. There is a little known provision of Florida’s Construction Lien Law, Fla. Stat. §713.364, which allows any person who provided labor, services or furnished materials constituting a permanent improvement to real property, on a private project[1], to get paid the undisputed amount owed on an expedited basis. This provision also awards the prevailing party its reasonable costs and attorney’s fees at trial and on appeal. This last point usually catches the attention of most, because it is generally understood that you cannot recover your costs and attorney’s fees unless you record a lien or such a recovery is in your contract. For those contractors and materialmen who failed to record a lien and who mistakenly omitted an attorney’s fees provision from their contracts, this prevailing party provision in Fla. Stat. §713.364(7) provides the proverbial “hammer” and the needed leverage to assert a forceful claim.

How does this work?

Generally, the cause of action arises once any person has received a payment for work on a project and then fails to make payment to its contractors, subcontractors, sub-subcontractors, laborers or material suppliers within thirty (30) days after the date the labor, services or materials were furnished and payment was due or within 30 days after the date payment was actually received, whichever is later. Requesting a sworn statement of account is a good first step to confirming the amounts paid. Once the complaint is filed, the Court is obligated to set a hearing upon not less than 15 days notice. The only defenses to this action are that payment was not actually received or that a bona fide dispute exists as to what is owed. This is further qualified by the fact that any alleged defense must be proven by competent substantial evidence before the Court at the expedited hearing. If the defenses cannot be proven at that time, then the moving party is entitled to a money judgment for the undisputed amount as well as its reasonable attorney’s fees and costs.

It may take a “village” to successfully complete a construction project, but it only takes one payment hic-up to derail a job. Being aware of your statutory rights to payment may surely come in handy to keep both you and your project on track.

1 Similar relief for public projects is set forth in Fla. Stat. §255.071

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