the joys of getting paid - or not 2

[SLTA]

Back in May, I did a project for a builder that came recommended and I had no reason to be leery of his ethics. He said he'd pay as soon as I got the invoice to him, which was the next day. Cut to three months later... after one bounced check, about four promises that the check is coming, and a second job with him where he pulled a lot of unethical crap and tried to get me into it too - I still haven't gotten paid, and I'm getting tired of this.

The check came for the second job just today, but only because I contracted with the owner and not the builder. The builder told the owner in front of me that permits weren't needed, though we (meaning he and I!) legally had to recommend them. Uh, no. I told the owner through email that permits were in fact legally required and that I would not be participating in the job until permits were pulled. Come to find out the builder hasn't renewed his license, either, and is doing projects way over the unlicensed monetary limit. (No, there will not be a third job for this builder.)

With all this, I still need to get paid for the first job. I don't trust this guy AT ALL. I have a call in to my lawyer, but in the meantime, what are some recommended next steps? I'm going to ask for a cashier's check since one has already bounced. I'd also like to ask for a late fee, but given that the terms and conditions on my contract don't say that (but are added in now!), I guess that's out. I'm going to look into placing a lien on the house for the amount as well, but I don't know if that will actually help, since my contract on that job was with the builder and not the owner.

And, as a PE, am I obligated to report the guy for working over his limit, or for recommending illegal stuff?

I know this isn't a lawyering board, but I also know that a lot of you are sole proprietors like me and may have helpful thoughts. Cheers in advance.

 

[IRstuff]

"And, as a PE, am I obligated to report the guy for working over his limit, or for recommending illegal stuff?"

Probably, but are you willing to accept the potential consquences, i.e., retaliation? I would think that he can hurt you more than you can hurt him.

TTFN
faq731-376

 

[DRWeig]

I don't have any sympathy and very little patience for non-paying clients. A bounced check is an illegal document in my state (fraud). I might hesitate to call the police right away, since my insurance will cover it. The insurance company will also go after getting it back. Not my problem either way, I have already paid for the help.

As for reporting the contractor violating his license, which may also be expired, the contractors around here have no problem reporting a competitor who is doing something shady or illegal. I wouldn't either. The playing field is supposed to be level as a result of contractor licensing laws. Fouls need corrective action.

Good on ya,

Goober Dave

Haven't see the forum policies? Do so now: Forum Policies

 

[FSS]

Basically it comes down to how much he owes you and how bad you want it. Big difference between a couple hundred dollars or several thousand. Lawyer is probably waste of time and will cost you even more money you won't get paid for. Lien laws have time limits and you probably passed them too.

 

[Ron]

slta...as a professional providing services on a project, you do not have to have a contract with the owner to file a lien in your state. You have 120 days from your last activity (that can sometimes be variously defined...to include debt collection attempts!) to file the lien and then another 60 days (180 total) to enforce the lien. Do it. Sue the #^*?=@! in small claims court as well. What an ass!

 

[SLTA]

Lawyer called back just a few minutes ago and I could hear him drooling through the phone... cheers, folks. Ron, thanks for the clarification! I tried reading the laws but whew, those suckers are nasty.

 

[IRstuff]

Sure, the owner gets the ultimate benefit from your work, even if it's through an intermediary; he's fair game.

In a similar vein, the Lemuelson Foundation used to sue bar code users for patent infringement, since some of the users were gigantic, ala, McDonnell Douglas, GM, etal, while the actual infringers were relatively tiny.

TTFN
faq731-376

 

[oldrunner]

We're not afraid to take a client to small claims court. My experience is that we'll get our money prior to the first hearing. Had one lawyer say he had never been sued but paid up anyway. You might be sitting in the back of the courtroom and your EX-client will sidle over to you with some sort of a deal. The judge might note this (he can see too!) and will bring it up when your case is announced. Sometimes your client cannot have a lien against him because he's got his next big deal on the line and doesn't want anything screwing up his financing.

And sometimes it's better to walk away.

 

[ajack1]

I have no idea of the legal side of things in what I assume is the USA and like all business owners I know have a strong dislike of late payers. However is it not worth trying to talk to this person and getting to the bottom of why they are not paying on time?

It could be that they have not received payment of some kind or they are victims of a company going into administration. I would think most owners of SME would have had this kind of thing happen to them over the last few years and also know how hard it is to get any help from the banks. So would know the problems of cash flow.

Might it not be a better idea to try and come up with some kind of payment terms, even if they are spread over a period of time rather than just take legal action and possibly see another company go into administration and see more people out of work and more companies left with bad debt?

 

[cranky108]

Risk is part of any business. You took a risk. Now he is taking a risk you can't hurt him.

There are several avenues, including legal action. But if nothing else works, the social media can bring a business to it's knees. A bad reporting to the BBB is also possible. In some countries you can hire a preson with a sign that states "pay your bills", to follow the person around.

Have you reported him to the credit reporting agency?

 

[SteelPE]

Being new and forced into this consulting gig I am always interested in these problems. I spoke to another engineering firm recently who stated that the first project they do with new clients is always cash and carry. That is, they meet the client, get paid in cash and then give them the plans that they are looking for. If the client is unwilling to do this they tell them to hit the road.

For larger projects they set up payment milestones. Say, submission of plans for permit, they get paid a % of the contract. In these instances again, it's cash and carry. This way they know in advance that they will have an issue and can really ruin the guys day when they call the building department and have their names removed from being the EOR.

My last employer (who went under) subcontracted some work to an engineer based upon an hourly rate. The project he was hired to do got caught up in the permitting process. 3 years later with my employer in financial distress and the project coming back to life the engineer called the building department and had is name removed from the project because he had a fear that he wasn't going to get paid (he was paid to date just not for the CA portion of the project). Don't know if that was ethical or legal but he got away with it and it caused/is causing a world of pain for everyone involved.

I guess this is just part of doing business in the flied of construction.

 

[JRESE]

slta - My approach is to go at them with a lien notice. Maybe first, try to find out who their construction lender is, and quietly let them know you haven't been paid. The lender absolutely doesn't want to see a lien. Let the project owner know that you haven't been paid, and that you have lien rights. If you settle for a lesser dollar amount, demand that the deal is only good if payment is made TODAY.

I always kept a file of the small unpaid bills. Believe it or not, a lot of these guys would call me years later asking me to do some work for them. I would go right to the file, pull the bad invoice, then tell them, "You should save yourself some embarrassment by keeping track of people you've stiffed." Of course they have stiffed many people, so they wouldn't remember. But with the invoice there, I would remind them. It never resulted in me getting paid, but the moment was always worth the couple hundred bucks. It also resulted in me being more cautious about getting paid on the small jobs. Down the road, they aren't worth the effort to try to get paid. The client should understand that, and agree to pay on completion.

 

[SLTA]

We're trying a scary lawyer letter first and a lien after that if it doesn't work. I know times are hard and I don't want to ruin the guy, but knowing he's let his license lapse and having him try to rope me into his unethical practices made me much less sympathetic.

I'll let y'all know how it goes.

 

[JedClampett]

Hire my ex-wife's lawyer.

 

[IRstuff]

Ducking pulling permits is often a big warning flag. We once had a contractor offer us a discount, provided we pulled permits; turned out he didn't have a business license in our city.

TTFN
faq731-376

 

[lacajun]

Some people have won judgments against others and never collected a red-hot penny. Seems just because "the law" says you "have" to pay doesn't mean you "really" have to pay.

Pamela K. Quillin, P.E.
Quillin Engineering, LLC

 

[SLTA]

Lawyer emailed the letter yesterday. Just got an email from the builder saying "what do you know, I just sent you a money order this morning, before I saw your message!" and then proceeding to guilt trip ME for getting my lawyer involved. So yeah, no more business with this guy...

 

[lacajun]

Smart decision!

Pamela K. Quillin, P.E.
Quillin Engineering, LLC

 

[IRstuff]

Don't relax until the check clears...

TTFN
faq731-376

 

[moltenmetal]

Check the postage date on the money order, so you know when he actually mailed it, then you'll know for sure whether or not the lawyer's letter was what shook this guy's wallet open again.

Unless the client has assets you can claim against, do your work on a retainer basis. If the work is large, progress payments are appropriate and reasonable even for good clients with good credit. Don't put yourself in the position of financing the work.

The key to getting paid is to be more annoying than the other people he owes money to. A collection agency can help, although they do take a hefty slice. A lawyer can help too, but they too take a hefty slice. A lawyer's letter though is sometimes effective and shouldn't be expensive.