Construction Law

Dealing with Non-Paying Owners Part 2

Throughout the history of the construction industry, lost compensation has impacted countless construction businesses. When a client refuses to pay, many contractors aren’t aware of their options. Remember, for any of your construction-related legal needs, including seeking payment from a delinquent owner, a Knoxville construction attorney is here to assist you.

In this four-part article, we first discussed some of the main reasons why owners fail to pay contractors on time. In this section, we will discuss how a team of Knoxville construction attorneys can be of assistance to the contractor by creating a contract that protects the contractor’s best interests before they begin work on a project.

Payment Terms in a Contract

Overwhelmed with multiple projects and a long list of responsibilities, many contractors overlook multiple important elements in the preconstruction phase of a project. Before work begins, you need to establish a structured payment plan for your project along with the method of payment. Whether it’s a lump sum, cost-plus, or time and material contract, the type of contract you require and the way compensation will be distributed needs to be defined well in advance of starting work. A Knoxville construction attorney can create a well-defined contract that ensures that the contractor receives timely payment for their services. Better yet, if the owner fails to pay the total compensation, legal recourse will be featured in the contract in order to collect payment.

Researching Your Client

In many cases, the best way to avoid the unfortunate scenario of an owner that refuses to pay or pays late is to perform your due diligence well before breaking ground on a job site. This begins with researching all of the businesses working within your supply chain. If you are involved in a lucrative project with an owner that you haven’t regularly worked with in the past, it’s important to gain an understanding of their financial health to ensure that they are the right entity to partner with. Naturally, if an owner requests unorthodox payment terms, this should be the first red flag that steers you clear of working with them.

For more information in regard to receiving a late payment from an owner, please read parts three and four.

If you would like to speak with a Knoxville construction attorney, please contact us today.

Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.