Winning a bid for a renovation or a new build here in the Miami area can be exciting. The prospect of building or maintaining the company’s reputation and working hard to make a profit could give owners a new reason to look forward to the workday. That is, until it comes time for a payment that does not come. Some contractors may be tempted to stop work until payment is made, but doing so wrongfully could end up leading to construction litigation.
In order to help ensure that does not happen, Miami contractors may want to include a provision in their construction contracts, addressing non-payment. Other than having the ability to file mechanic’s or construction liens, companies may also want to have the option of stopping work when they do not receive scheduled payments. If such terms are not included in the contract, or even if they are, using this option could prove problematic.
Contractors must proceed with caution when using a work stoppage when payments are not forthcoming. First, if the requirements outlined in the contract are not followed, it could constitute a breach of contract. Second, it may work best to start off by documenting the situation and the efforts made to receive payment, such as phone calls, emails, demand letters and more. These types of efforts may be worthwhile before stopping work in order to make sure there is a paper trail that justifies it.
Any company wanting to add this type of collection option to its construction contracts or contemplating stopping work would definitely benefit from discussing the situation with an experienced attorney first. A contractor may consider this a simple collection method, but in reality, it is part of the steps that could lead to construction litigation. It would obviously be better to be on the right side of a work stoppage, so understanding the pros, cons and risks of such a move beforehand could save on time, money and effort in the end.