Eventually every contractor will run into the client that ends up being a pain in wallet and refuses to pay even though you did everything right. What do you do?
I have heard many contractors say that you just need to lien the property. Then I hear others ask what good is a lien against the property. With a lien you may have to wait years before you can get your money. You have to wait until the owner sells the house or tries to refinance.
If you use this tactic you need to remember that you are a professional and act accordingly. Keep your composure whenever you are in contact with the client. Never threaten always promise!
Back up and think about the situation. Review the sequence of events that got you to this point.
Hopefully, you acted in a professional manner and did the right things and have copies that include the following:
- A signed contract that has the property address.
- The contract is dated and signed by all responsible parties.
- The contract has a descriptive scope of work and there are a good set of blue prints and specifications.
- You did the work according to the plans and specifications.
- There is a 3rd party inspector and you have copies of all the inspection reports.
- You have lots of documentation showing that the work was done according to plans and specifications.
- You have lots of pictures showing the work as it proceeded.
- No extra work was done without a documented change order signed and approved.
- If there are any disagreements you need to have all documentation detailing the events.
- Sometimes if possible record the disagreements. Again, never raise your voice in the discussions!
You will notice that most of the items that I have detailed all lead directly to documentation. Make sure you make a mental note and have the notation tattooed to your forehead! Document, document, document! If you do nothing else make sure you document everything that occurs on every project.
One day you will find that documentation will probably save your assets along with a bundle of money.
When the nonpayment begins you need to bill frequently. Push to get a reason for nonpayment in writing. Naturally, if possible try to get the money in an amicable manner.
You will have to pay court costs to begin the process but this can be recovered if you win the suit. Often, the homeowner will change their minds and try to be more agreeable once they get served by a process server.
Your goal is to get a judgment against your nonpaying customer! A judgment will give you more tools to get your money.
A lot of contractors back away from litigation but it is like anything else; once you get your feet wet you will find the process is not difficult at all. Do not allow yourself to be intimidated.
Take a little time and study your state’s process and approach it one step at a time. Being a professional means that you will eventually spend some time in court so don’t shirk the experience; you should embrace the experience. It will make you tougher and more flexible in your journey in the business arena.