Construction

No Contract; No Problem?

On smaller jobs, a contractor or subcontractor may agree to perform work without a formal written contract.  While it is best to have a written contract in place, in the real world, people don’t always take the time to prepare and sign such an agreement. (more…)

How to “Bond Off” a Mechanic’s Lien

A mechanic’s lien can be a powerful tool in the hands of a contractor, subcontractor, or supplier that is owed money on a project.  Once recorded and perfected, a mechanic’s lien allows those that have performed work or supplied materials on a project to claim a legal right to the underlying property.  The property subject to the lien essentially serves as security for the payment of all unpaid amounts owed to the party asserting the lien. (more…)

“No Lien” Clauses: Are They Enforceable?

A “no lien clause” in a construction contract forces a contractor (or subcontractor or supplier) to give up its lien rights in advance of performing the construction work and/or supplying materials on a project.   In other words, the contractor promises that it won’t lien the project in the event of non-payment. (more…)

Contractor Payment Obligations: “Pay-When-Paid” vs. “Pay-If-Paid”

Contractors often include “pay-when-paid” clauses in their subcontracts. These clauses provide that the contractor will pay its subcontractor after the contractor has received payment from the owner. A typical pay-when-paid clause might read: “Contractor shall pay Subcontractor within seven (7) days of Contractor’s receipt of payment from the Owner.” Thus, under this type of clause, the receipt of payment from the owner will trigger the contractor’s obligation to pay its subcontractor. But what happens if the owner never pays? Does the contractor have any payment obligations to its subcontractor? (more…)

How to Preserve and Enforce a Mechanic’s Lien

A mechanic’s lien can be an effective tool for contractors, subcontractors, and material suppliers seeking to enforce their right to get paid on a job. Under Maine law, anyone that furnishes labor or materials on a project with the owner’s consent will automatically have a lien (which secures payment for the labor or materials) on the real property where the project is located. (more…)

Maine’s Prompt Payment Act: Hidden Traps for the Unwary

Maine’s Prompt Payment Act strictly enforces owners’, contractors’ and subcontractors’ payment obligations.

For owners, the Act’s requirements are fairly straightforward. An owner must pay its contractor in accordance with the terms of its contract. If the contract does not include payment deadlines, the owner must pay the contractor’s invoices 20 days after the end of each billing period, or 20 days after delivery of each invoice, whichever is later. If payments to the contractor are subject to retainage, the owner must release those funds within 30 days after final acceptance of the work. (more…)