Construction Law | Residential | Commercial | Home Improvement | Contractor Sub Payment Act | Mechanic’s Liens

Commercial Projects - sm

The contractor has a right to be paid for his lawful services. How much can the contractor charge upfront? That depends. There is  no limit on commercial jobs. However on residential jobs, the  contractor cannot charge more than 1/3 upfront and any  modification of the original contract for “extras” or otherwise must  be in writing. Otherwise, the contract will face heavy penalties set  forth in the Home Improvement Consumer Protection Act.

Thereafter, if not paid for work performed, the contractor can  obtain penalties, interest, and attorney fees based on the  Contractor Subcontractor Payment Act. He can also obtain a  mechanic’s lien against the property. It is very easy and affordable  to obtain a mechanic’s lien (a few hundred dollars in legal fees,  not thousands), for example, but the contractor has to do so  quickly and accurately. The courts will strike off a lien if not filed  timely or in adherence with all required formalities.

A mechanic’s lien is an important tool for recovery. It burdens the  property and leaves the contractor free to file a separate civil suit  against the property owners and tenants or whomever else was  negligent or entered into the contract for construction.

For residential jobs, the contractor’s agreement with the home  owner is not enforceable (meaning he toss an unpaid invoice in  the garbage) unless he complied with the Home Improvement Act;  however, he can at least recover an amount for hard costs and  materials if he complied with § 517.7(a) (provided a sufficient  writing), but failed to comply with § 517.7 (b)(providing notice of  rescission).

Contractor’s Defenses
The contractor may have several defense to a claim that it  breached an agreement, if:

1. The contractor followed the contract and/or change orders
2. The contractor caused only a minor delay and time was not of  the essence
3. The contractor followed the industry standard of conduct
4. The contractor reasonably relied on the property owner to  perform certain items
5. It was following the contract
6. There were unforeseeable intervening acts, such as the conduct  of third parties or extreme weather changes beyond usual  seasonal variations
7. Non-Payment by the property owner
8. The contractor utilized suitable Material or substantially  conforming goods, even if the contractor did not follow the exact  letter of the contract.

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