A Comprehensive Guide to Contractor Recourse for Non-Payment
As a contractor, you may be faced with a non-paying client at some point. Luckily, if and when you do find yourself in this difficult situation, there are steps that you can take to get the money you deserve.
Not only can the techniques in this guide make it possible to get your money, but they can allow you to receive payment from a non-paying client as fast as possible.
When a Client Refuses to Pay a Contractor: What to Do?
If a client refuses to pay contractor bills, it's important to take action immediately. While some cases of non-payment are simply errors, many are due to the client not being satisfied with the quality of the work.
However, in other cases, you may end up faced with a client who is simply trying to skate out of paying you.
In any case, it's essential to realize that clients are obligated to pay for the services that they agreed to. If they do not hold up their end, you need to take action.
Can a Contractor Sue for Non-Payment?
While a contractor will always be able to file a lawsuit against a non-paying client, a successful case is not guaranteed.
In fact, you'll need to make sure that you thoroughly document everything and have the right representation.
Luckily, if you have evidence to prove that you held up your end of the contract, your chances of success in the courtroom are very high.
Tom Reber from rise explains goes into more detail about this in his video on Contractor Business Tips: What to Do When Your Customer Won't Pay You.
We've time-stamped the video to help you get straight to the juicy bit!
Can a Contractor Sue for Non-Payment Without a Contract?
Can a contractor sue a homeowner without a contract? While it's possible to file a lawsuit against a non-paying client even if you do not have a written contract, it's far more difficult.
Though, there are other ways that you can create a contract, such as a recorded verbal agreement.
However, simply creating a written contract is typically much simpler and more effective.
What to Do If a Client Refuses to Pay You
As soon as you realize that a client is late on payment, it's important to take action right away. Here's what you need to do when a customer won't pay for building work or any other services you agreed to perform.
Always make sure that you reach out to the client who hasn't paid to tell them about the money they owe you. While it may come as a surprise to some, in some cases, it may turn out that the client simply forgot.
In these cases, you're very likely to get your funds quickly just by getting in touch with them. Furthermore, many clients will pay as soon as they realize that you intend to take legal action if they don't.
Try to find a peaceful solution
It's always best to work something out directly with the client if you can. That's because the cost of taking a client to court can be significant.
Furthermore, the issue of non-payment can often be effectively solved by simply reminding the client that they failed to pay. Of course, it doesn't always work out that way.
It's best to allow a client who won't pay to do so in installments rather than as a lump sum. However, there may come a time when this doesn't work, which leaves you faced with a situation where it's necessary to take legal action.
If the client was not satisfied with the work that you did, it will usually be best to offer to redo the task if possible.
You Did the Home Construction Work, but the Homeowner Won't Pay Up: Now What?
In some cases, simply talking with the client or setting up a payment plan won't work, and it's crucial to take legal action right away in these situations. A contractor suing a homeowner for non-payment is warranted in these cases.
Arranging Progress Payments for Home Improvement Work Is Wise
If the task that you agreed to perform will be completed in stages, you might want to consider setting up a progress payment system. This means that the client will agree to pay you for each step in the process individually. If the homeowner refuses to pay the contractor, the contractor can then take legal action.
Therefore, they have the option of backing out before the work is completed, which can prevent non-payment in many cases. Though, it's important to note that this is not an effective solution if a client is withholding payment for poor workmanship.
If a client is withholding payment for poor work, you may need to redo the job.
File a Mechanics' Lien on the Property
If a contractor performs work on a property, and the customer refuses to pay the contractor, the contractor may be able to file a mechanics' lien on the client.
Unfortunately, many independent contractors are unaware of this potentially effective strategy when they're faced with a non-paying client.
Sue the Homeowner for Breach of Contract
If you perform the agreed upon services and are not paid, this is considered a breach of contract. As a result, you will be able to take the client to court for failing to hold up their end of the agreement.
What do to if a customer refuses to pay you: Takeaways
An additional issue that can arise when a client won't pay a contractor is the contractor's inability to pay the subcontractor. Due to the numerous contract violations, the issue is made more challenging.
Learn about your legal rights to remedies if your customer failed to pay you for the rendered services. What your choices are for handling the matter and pursuing damages are explained in this article.