Reminders for Protecting Your Right to Be Paid
March 4, 2019
Matt is a shareholder in the Construction Litigation Department at the Fabyanske, Westra, Hart & Thomson law firm. He can be reached at 612.359.7610 or firstname.lastname@example.org
Given a recent influx in requests for the recording of mechanic’s liens seen by the firm’s practice, this Briefing Paper provides important reminders for protecting your business interests and maintaining your right to be paid for your work.
- Financial wherewithal of your contracting partners. Although sometimes difficult to obtain, spending time investigating the financial condition of your contracting partners can go a long way in avoiding payment issues in the future. Questions you should be asking include verification that construction financing is secured and in place, whether the other party is stretched too thin to weather a cash crunch, and how speculative is the nature of the project.
- Notice provisions in contracts. Make sure you have reviewed the notice provisions of your contract. Follow the requirements of timely notice for extra costs and additional time. Avoid arguments of prejudice at the end of the project because of the lack of notice.
- Get directives for extra work in writing. Avoid after-the-fact arguments over a lack of a written change order for extra work by sending confirmation emails and letters after verbal directives in the field.
- Preserving project records, including properly cost coding for delays, changes, and other issues. Establish a system for cost coding additional costs by cause. Include the same cost code on notice correspondence to track important communications directly related to claims for additional time and money. It is not unreasonable to require daily T&M expenditure acknowledgements even if entitlement to them is disputed. This will avoid later disputes about the damages at issue.
- Take pictures and video. Better preservation of issues through visualization can be persuasive when negotiating resolution of additional costs.
- Request changes to discussion topics in meeting minutes when appropriate. Express your comments in project meetings and be sure they are captured in the minutes. All meeting participants have the right to request changes and additions to meeting minutes. Send an email with your changes to meeting minutes to document the request.
- Document impact of abnormal weather. Given the example of the winter of 2018-19 and its anticipated impact on the spring thaw, weather will continue to be a major factor on any project. Established routines for recording daily weather and its impact on the progress of the work must be a priority.
- Document the cause of each day of delay. Delays on projects can happened for any number of reasons. Establishing the cause of a delay on a particular day can be important. If a day is lost, make a record in your daily log. Share the information upstream as required by the contract’s notice provisions.
- Document productivity changes where possible. Often costs are increased by inefficiency impacts even if the schedule is not delayed. If a portion of the work goes as planned, document your productivity during that period. If other portions of the work suffer inefficiency impacts, then you will have the data to compare the “measured mile” to the impacted one.
- Update project schedules. Notification of delays should include updates to project schedules. Noting delays in project meeting minutes without providing updated schedules should be avoided.
- Provide pre-lien notice where appropriate. Most every state has pre-lien notification requirements. This website has the requirements for pre-lien notice in Minnesota: https://www.revisor.mn.gov/statutes/cite/514.011. Read the statute in the state of your project and follow the requirements were applicable.
- Do not miss your recording deadline for your mechanic’s lien. Each state has its own deadline for recoding a mechanic’s lien. Whether the project is urban, suburban, or rural, all projects can present unique real property issues that can affect the timely recording of a mechanic’s lien. Do not wait until the last minute to protect your payment rights.
This article is a general discussion only and does not constitute legal advice or representation.
Join Matt Collins (Fabyanske, Westra, Hart & Thomson P.A.), Paul Longsdorf (Redpath and Company, Ltd) and Bob Bowman (CSDZ) on March 8th at the Town & Country Club located at 300 N Mississippi River Blvd, St. Paul, MN 55104 at 7:30 a.m. for a joint presentation on best practices for managing extended warranties and delegated design risks (both known and unknown). This is the first session of a continuing series of advanced discussions on current and persistent topics in the construction industry. Benefit from the legal, accounting, credit and risk management perspectives on a variety of topics!
Congratulations to Hugh Brown on being elected as a Shareholder of Fabyanske, Westra, Hart & Thomson, P.A.
Gary Eidson will be co-chairing a presentation on: Drafting and Reviewing Office and Retail Leases – What matters Most. It will be held at the Minnesota Continuing Legal Education Conference Center in downtown Minneapolis on May 8th. For additional information please visit www.minncle.org. Or feel free to contact Gary at 612.359.7621 or email him at email@example.com
This discussion is generalized in nature and should not be considered a substitute for professional advice. © 2019 FWH&T