Throughout time, circumstances arise where a homeowner feels the need to breach their contract by refusing to pay their contractor or architect for services that were already performed and/or provided. For example, perhaps a homeowner feels that the contractor’s work is not what was agreed upon or is subpar, or maybe even because the project took longer than expected to complete, so in turn, the homeowner may decide to refuse to pay the contractor for work already performed or even dispute the previously charged credit card transaction. This raises the age-old question: Is the customer truly, always right?
Perhaps a contractor has performed work on a home. The homeowner was incredibly happy with the work and detail that the contractor was executing. The client, who paid all invoices on time via credit card, decided that the project was taking longer than expected and felt entitled enough to dispute the past invoice charges that were already processed via credit card. Soon thereafter, the contractor receives a letter from his banking institution letting him know that $8,000 worth of charges has been disputed and taken from his account, leaving him at a negative banking balance. Now the contractor is left with a pile of outstanding invoices, payment for which is rightly owed to him for work performed, and the burning question of what to do now, how to be made whole again?
If you are the contractor in this situation, speaking to a construction attorney is always a great first step in recovering the monies owed to you. Most commonly, a Mechanic’s Lien can be filed against the homeowner for the refusal of payment on work that has already been completed and was done so according to the terms of the parties’ contract.
According to Cornell Law School Dictionary, a Mechanic’s Lien is defined as “a security interest that may be acquired in the property by someone who spends material or labor working on that property. A mechanic’s lien usually stays in effect until the lienholder gets paid for services provided. The failure to pay for services as agreed may allow the lien holder to keep possession of the property involved.”
Filing a Mechanic’s Lien places a significant burden on the property owner which, in turn, makes paying monies duly owed to a contractor much more attractive and likely to occur. The Mechanic’s Lien encumbers a property, resulting in the owner’s inability to sell, refinance, or transfer the property until the lien is lifted (i.e. paid or otherwise removed from the property).
John Caravella Esq., is a construction attorney and formerly practicing project architect at The Law Office of John Caravella, P.C., representing architects, engineers, contractors, subcontractors, and owners in all phases of contract preparation, litigation, and arbitration across New York and Florida. He also serves as an arbitrator to the American Arbitration Association Construction Industry Panel. Mr. Caravella can be reached by email: [email protected] or (631) 608-1346.
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Alex Benarroche is a legal associate at Levelset since 2018, where he works to help construction businesses get paid what they earn. His legal expertise includes construction, contracts, business, and intellectual property. Alex is bilingual in English and Spanish. He earned a J.D. from Loyola University College of Law and an M.S. in Intellectual Property and Internet Law from the University of Alicante in Spain. Originally from South Florida, Alex has called New Orleans home since 2003.