Construction, Building Materials, Architects, Engineers, Contractors
Law suits to recover payment for building and construction follow one of two paths. Either the debtor company is out of business and defaults or the company is still in business and hires a lawyer to waste as much time as possible. Any legal action to recover for work, labor, or materials can be ground to a crawl unless the complaint follows to the letter a specific law designed to eliminate defenses. With my confirmation to you that suit has been started you will get the verification affidavit that is needed to take advantage of this law, designed to streamline all collection suits. We have repeatedly gotten summary judgment based upon this law, meaning that the debtor company which failed to pay your invoices hired an attorney to try to delay the court proceedings, but we won immediately. Moreover, we won without the client having to ever appear in court. The necessary affidavit is prepared with the information in your invoices.
It is crucial for collection that you know your lien rights and time limits. Public jobs, especially, have extra tight time limits. The State Finance Law imposes strict time limits in order to recover upon payment bonds. In part, the law says:
Every person who has furnished labor or material, to the contractor or to a subcontractor of the contractor, in the prosecution of the work provided for in the contract and who has not been paid in full therefor before the expiration of a period of ninety days after the day on which the last of the labor was performed or material was furnished by him for which the claim is made, shall have the right to sue on such payment bond in his own name for the amount, or the balance thereof, unpaid at the time of commencement of the action; provided, however, that a person having a direct contractual relationship with a subcontractor of the contractor furnishing the payment bond but no contractual relationship express or implied with such contractor shall not have a right of action upon the bond unless he shall have given written notice to such contractor within one hundred twenty days from the date on which the last of the labor was performed or the last of the material was furnished, for which his claim is made, stating with substantial accuracy the amount claimed and the name of the party to whom the material was furnished or for whom the labor was performed.
No action on a payment bond furnished pursuant to this section shall be commenced after the expiration of one year from the date on which final payment under the claimant’s subcontract became due.
In 2009, New York enacted General Business Law, Article 35-E, “Construction Contracts,” to clarify the payment rights and obligations between owners, contractors and subcontractors and to prevent delay tactics.