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Collecting Fees - Confiscate work
3

Collecting Fees - Confiscate work

Collecting Fees - Confiscate work

(OP)
Has anyone ever taken plans back because you could not get paid?  

My situation:

Residential remodel project (structural)
Homeowner responsible for payment
Work is through builder (good relationship with builder)
Construction has not started
Homeowner keeps telling me the money is coming

I am thinking about getting the plans back from the builder and telling the homeowner that he can have the plans when I get paid.  I have a good relationship with the builder so it would not be a problem to get the plans.  I know the builder will have multiple copies that he has given to subs that I will not be able to get back.  However, the main point is to try to get some leverage on the homeowner.  I am thinking that if he thinks his remodel will be postponed until he pays me then maybe he will really send the check instead of lying about sending it.  

Does this sound foolish?  Any input is appreciated.
 

RE: Collecting Fees - Confiscate work

You can always sue in small claims court and put a lien on the house.

So when they sell it - like in 20 years - you will get paid...

You could call the local enforcement agency and pull your seal..

 

RE: Collecting Fees - Confiscate work

McQSE,

Don't know where you're based but in the UK there is a practice of selling on debt. The bailiff will buy the debt for a reduced amount - so you at least get some money and then chases the other party to collect the whole amount and make his 'profit'.

The alternative is to invoice with a letter saying that every month the bill is not paid will incur interest charges - that usually focuses the mind a bit!

Depends on whether you think the homeowner is ever going to pay and whether you think they will give you referral business in the future.

Hope it works out for you, HM

No more things should be presumed to exist than are absolutely necessary - William of Occam

RE: Collecting Fees - Confiscate work

Depends on the time.  Most of my clients pay in about 45 days.  My "verbal contract" is always with the builder (he's responsible to pay me directly) or directly with a client who has no builder (in which case I expect payment upon delivery of the product).

You don't want a bad reputation and you probably want to work with the builder again.

Gently call the homeowner and ask them for a specifc date (no more than 5 days) for receipt of payment. Let them know you will be filing a small claims court action if you don't get paid.  Let the builder know what you are doing.  If they don't give you a date or fail to pay immediately, file a small claims court action.  You can do it yourself.  Take any drawings, calculations, etc to court.  Check out the maximum you can claim and if your bill is over the maximum, file for $10.00 below the maximum allowed in the court.  

Failure to construct is no reason not to pay you per the local courts as I've done this several times.  Most folks who don't pay, pay upon my discussing court and a lien.  Though I have had to put a lien on a few homes (they paid as they can't sell the house until the lien clears).

Good luck.

RE: Collecting Fees - Confiscate work

I've not been down this road yet, but in these times, who knows.  Can an engineer pull their seal from a set of plans?
 

RE: Collecting Fees - Confiscate work

In accordance with what MiketheEngineer and HamishMcTavish said concerning small claims court...

In the US, I know somebody that took a landlord to court over failure to return their security deposit when the moved out. The court (eventually) ruled that the landlord had to pay the security deposit back, plus attorney's fees. There would be interest if the amount was paid by a certain date, with a lien on the property. Not sure if that is a local thing, or if it applies to engineering work, but might pay to ask an attorney.

Also, my business law teacher in college always said that the first step is to tell the other party, "I have consulted an attorney, but haven't made any formal agreements with him/her." Typically, if you get an attorney involved, there are fees that somebody will end up paying. Also, the other party often gets very defensive and unwilling to do ANYTHING after they think the legal process has started. By telling them you've consulted an attorney, you let them know you are serious and the ramifications. They can still pay without worrying about attorney's fees, but that could change soon...

-- MechEng2005

RE: Collecting Fees - Confiscate work

If you put a lien on the land it could disrupt the permit process.

RE: Collecting Fees - Confiscate work

Rye1:

Yes, you can effectively pull your seal by writing a letter to the local jurisdiction requesting to be removed as the Engineer of Record for the project.  Check with the local jurisdiction to see what their process is, and how effective it would be in your case.

Personally, in this economy, I would wait, especially if you trust the contractor to keep you informed.  Chances are, even if you get a judgement three months down the road in small claims court, he will not have to money to pay you anyway.  I have had the best luck with this situation by just waiting.  If you do a favor for someone, chances are they will remember it, and it will return to you in the future with more work.

Better watch the lien process too.  If my memory serves me right, some contractor leans have to be set up to file with special p[aperwork, allowing the lien to be filed in the future if necessary.  I have a hazy recollection of this in a conversation long ago with a lawyer, and, consequently, never gave liens much consideration.

Mike McCann
MMC Engineering

RE: Collecting Fees - Confiscate work

Great response Mike, thanks for sharing you experience.

RE: Collecting Fees - Confiscate work

Mike is right about the lien issue.

The first step is to file the intent to lien. There are statutory time limitations on this as well as the actual lien.

I would recommend legal counsel on the issues overall. Just to educate yourself.

RE: Collecting Fees - Confiscate work

2
Consider this a learning experience when dealing with individual homeowners.  When ever I do work in the residential market, whether with the owner, designer or through a contractor, I have very strict contract provisions.

1.  $500 deposit at start of work.  This weeds out deadbeats right away.
2.  Payment in full prior to release of plans.
3.  In event plans are released without full payment, a 10 day pay provision applies.
4.  If payment is not recieved within 15 days, a $100 penalty applies increasing at a rate of $100 for each 15 day period thereafter.
5.  If no payment within 30 days, client agrees to pay all collections and legal expenses including your time at your current billing rate.

Although these provisions seem like they would turn clients away, I have only had 3 walkaways in 5 years as a result of the language.  Clients that have tried to delay or avoid payment run into the "big stick" of the contract provisions.  However this allows you to be the good guy, by telling them that you'll be happy to help them avoid these nasty penalties if they pay in full right away.  What could have been a dead beat client can turn into one that moves very quickly to pay once they realize how deep they can get when the collection expenses of a lawyer gets added to the total.

My advice....Don't stop talking with the client.  Try to do it face to face and as often as practical.  Remain polite, but firm.  Gently ramp up pressure using the contract provisions, but don't be too aggressive right away.  Let them know that you really don't want to assess any penalties and want to work with them to establish a payment plan if they are having trouble paying in full right away.

Even clients that I have applied this kind of gentle pressure have come back for repeat work and generally have not repeated the offense.

Hope this is helpful.
 

RE: Collecting Fees - Confiscate work

Ever read The Fountainhead?

RE: Collecting Fees - Confiscate work

Quote (TheTick):

Ever read The Fountainhead?
Yes, in a day (an a long night when I couldn't sleep).  Such an excellent book, even better than Atlas Shrugged (and everyone thought I would like that one better because I'm an engineer).
 

Dan - Owner
http://www.Hi-TecDesigns.com

RE: Collecting Fees - Confiscate work

(OP)
Good ideas LobstaEata.  I am a fairly new company and I do consider this a learning experience.  I have not been very good with contracts so far.  

Does anyone use CASE contracts?    

RE: Collecting Fees - Confiscate work

McQ:

Look at this from the client's standpoint for a minute.  Before you gave the drawings to the builder, the client needed you.  He doesn't really want to know where to put beams or how many holdowns there are.  He just wants to know how much his project is going to cost.  He keeps asking the builder that question.  The builder says, "I need the structural drawings to give you an accurate estimate."  You obliged the builder by giving him structural drawings that the client hadn't paid for.  Now the client and the builder have both gotten what they want, and you haven't.  The time to get paid is when the client wants something from you.  He doesn't need you for anything anymore.  He has gotten, or will soon get what he wants from the builder.  If the builder is someone you have a good relationship with, you can make him understand that you have done him a favor by allowing him to send your drawings out to his subs before you have been paid.  Ask him to do you a favor in return.  Ask him to tell the client that he needs to pay you to "keep the job moving ahead."  I've had a builder help me by telling the client that some "value engineering" by me will reduce construction costs, but the engineering fees need to be paid first.

After going through this many times, I have finally just required half my fee upfront, the remainder before my drawings are released to anyone, especially the builder.

RE: Collecting Fees - Confiscate work

I require 1/3 up front for my regular clients and 1/2 for first-time clients.  All pay for the work when it is received.  Been doing it theis way for 20 years.  I get a few complaints, but I also go to the bank.

Mike McCann
MMC Engineering

RE: Collecting Fees - Confiscate work

The up-front or desposit to begin is a good idea and we apply it as well and get 20%. We deliver plans at 90% payment of full contract with the final 10% at permit or 30 days, whichever comes first.

Consider in some areas there are statutory limits on the amount of this deposit. This would prohibit the 1/2 down that Mike proposes, but if you can get...go for it.

I'm lucky on this issue in most places around here. Most municipalities in my area require the EOR to perform the steel observations for engineered foundations and approve it before they will do the rough frame inspection. I'll do the observation to keep the project moving.

When the deadbeat finds out I won't issue the approval letter and they can't move beyond rough frame, they pay the bill.

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