Construction takes a lot of time, money, and labor. As a contractor, the last thing you want to worry about is a property owner’s refusal to pay for your hard work. Construction disputes are relatively common but can threaten a contractor’s livelihood. Fortunately, an unpaid contractor has remedies under New York Law. These include filing a mechanic’s lien or suing the property owner in court.
On the other hand, property owners may wonder, can you refuse to pay a contractor for poor work? While a property owner can refuse to pay due to poor work, poor materials, or defects in the work, they may face an uphill battle in court unless they have a solid legal argument and evidence to support their position.
Rights of a Contractor if a Property Owner Doesn’t Pay
Contractors and subcontractors have rights and remedies if a property owner refuses to pay them for their work. Generally, a contractor or subcontractor has the right to obtain a mechanic’s lien on the property and the right to file a lawsuit for the unpaid work.
Get a Mechanic’s Lien
One of the most powerful rights a contractor has when a property owner refuses to pay is the right to obtain a mechanic’s lien. A mechanic’s lien is a debt that attaches to the property for unpaid improvements or work done on the property. It’s much like a mortgage or a property loan in that the debt attaches to the property and title. This means that if the property is bought or sold, this lien will follow the land until it is paid off. Since most buyers do not want a property with a lien, the owner has a huge incentive to pay the lien.
A contractor does not need to go to court to obtain a mechanic’s lien. They just need to file a notarized Notice of Lien with the county clerk’s office in the county where the property sits and serve it on the property owner. The Notice of Lien must include information such as:
- The address of the property,
- The name of the owner,
- The work performed, and
- The total amount outstanding.
The lien is immediately effective upon filing and is effective for a year. A homeowner, however, has the right to challenge the lien in court.
If the homeowner does not pay the lien, the contractor can enforce the lien by filing a foreclosure action in court. In a foreclosure proceeding, the court can force the sale of the property to satisfy any outstanding debts, including the mechanic’s lien. This is a complicated process. You should seek counsel if you are considering a foreclosure proceeding for a mechanic’s lien.
File a Lawsuit
Under New York law, a contractor could file a lawsuit for unpaid construction work. Some potential reasons for filing a lawsuit are listed below.
Keep in mind that construction lawsuits are complicated suits which must adhere to certain procedures, and the laws can be confusing. If you are considering filing a construction lawsuit, you should speak with an experienced attorney.
Breach of Contract
Under New York law, home improvement contracts exceeding $500 must be in writing. These contracts should describe the work to be done and set forth a progress payment schedule for when the owner will pay the contractor. If the owner doesn’t pay the contractor as stipulated in the contract, the contractor can sue for a breach of contract.
Unjust Enrichment
An unjust enrichment lawsuit is an equitable remedy if a contractor has performed work for the benefit of a property owner but has not been paid. Under this legal theory, the property owner who has been unjustly enriched by the contractor’s work must pay reasonable costs for the benefit they incurred. A court may order that the property owner pay the reasonable cost of the work and materials that benefitted the property.
How Long Does a Contractor Have to Collect Payment for Work Done?
If you are facing a construction dispute, you may wonder, how long does a contractor have to collect payment? How long a contractor has to collect payment varies based on their legal arguments, the contract, and the remedies they wish to pursue.
If the contractor wants to pursue their legal remedies, there are certain deadlines that they must meet. For a mechanic’s lien on a single-family dwelling, the contractor must file it within four months of completing the work or last providing materials. If the property is larger, the contractor has eight months to file the lien.
Lawsuits have different filing deadlines. A foreclosure of a mechanic’s lien must be filed while the mechanic’s lien is still valid, meaning you have to file the foreclosure action within a year of filing the mechanic’s lien. You must file a breach of contract or unjust enrichment lawsuit within six years. Although six years may seem like a long time, do not delay. Witnesses can move, property can change hands, and documents can go missing. Speak with an attorney immediately to be sure you can maintain your legal action within a timely manner.
Can You Refuse to Pay a Contractor for Poor Work?
Just as the contractor has rights, so does a homeowner during construction. A homeowner has a right to a written contract for construction work, specifying payment dates, the work to be performed, and the reasons they may refuse payment to the contractor. Written construction contracts are required under New York law.
Can you refuse to pay a contractor for poor work? Depending on the terms of the contract, a property owner may be able to refuse or disapprove of a contractor’s invoice for several reasons, including:
- Unsatisfactory performance of work
- The work or products used were defective
- The materials used were not as specified or are in dispute
- The contractor failed to pay their workers or subcontractors
Several of these reasons fall within a potential definition of “poor work.”
However, it’s important to note that you could face a mechanic’s lien or lawsuit if you refuse to pay a contractor, even with a legally valid defense. You’ll be allowed to raise your defenses or fight the lien. You can also assert your rights by filing your own lawsuit or a counterclaim for a breach of contract. You also have a right to file a complaint against the contractor with the New York State Attorney General’s Office.
Contact TonaLaw for Help with Construction Disputes
Although contractors have rights, learning how to enforce them can be overwhelming. You need trusted and experienced business litigation attorneys to help you get paid through these legal processes. TonaLaw is here to help. Our client-centered attorneys understand how stressful it can be when someone refuses to pay for work you’ve done. Our fierce litigators will fight for your rights. Contact us today.