Ensuring Payment: Key Steps to Protect Your Rights in Contracts

When entering into contracts, it is crucial to take steps to protect your rights, especially when it comes to ensuring payment.

ARIELA WAGNER

by

Ariela Wagner

Last updated:

Jun 22, 2023

Published:

Jun 22, 2023

WORKER SMILING

Attorney Reviewed

2.3 Mins

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When it comes to securing payment for your services or materials, having a fair and well-drafted contract is crucial. In addition to a solid contract, there are several important steps you can take to protect your rights and increase the likelihood of receiving payment.

In this blog post, we will explore these steps and discuss how they can safeguard your interests in contractual agreements.

6 Steps to Safeguard your Rights in Contracts

construction contract

1. Have a Fair Written Contract

One of the most essential aspects of protecting your payment rights is having a written contract that is fair and comprehensive. The contract should clearly address payment terms and explicitly mention the consequences of non-payment. It is essential to understand that certain contracts may require you to continue working or providing materials even if you are not being paid. In such cases, your remedy is not to stop work but to follow the dispute resolution process outlined in the contract. Therefore, carefully review and comprehend all provisions of the contract before signing it.

2. Timely Send a Notice to Owner

Sending a Notice to Owner, even if not required by lien law, can significantly impact how seriously others perceive your intent to be paid. Even when you have a direct contract with the owner, it is highly recommended to send a Notice to Owner. This document serves as a clear indication of your commitment to receiving payment and can act as a check and balance on the payment process. Timely notice of every job, you work on, especially as a supplier to a subcontractor, helps secure your lien rights and increases the likelihood of getting paid.

3. Preliminary Notice

To strengthen your lien rights, it is advisable to send a preliminary notice for every job that meets a certain predetermined threshold, such as $250, $1,000, or $2,500. Establishing a process in your office to consistently send preliminary notices helps protect your payment rights and improve the chances of receiving timely compensation.

preliminary notice

4. Cut Off Further Credit

Although it may be challenging, it is crucial to be prepared to cut off further credit on a job and other projects within the contractual limits. If you find yourself being unpaid for a certain amount, continuing to extend credit can exacerbate the financial loss. It is important to make a decision to protect your interests and cut off the customer if you no longer feel confident about collecting payment.

5. Timely Record Your Lien or Send a Bond Claim

Recording a construction lien or sending a bond claim is a critical step in protecting your payment rights. Ensure that you follow the applicable timeline requirements, typically within 45 days for a Notice to Owner and no later than 90 days for a bond claim or Notice of Nonpayment. By adhering to these timelines, you distinguish yourself from others who have not followed lien laws, significantly increasing your chances of being prioritized for payment.

6. Contact the Debtor Often

Persistence is key when it comes to collecting payment. Maintain regular contact with the debtor through phone calls, emails, and personal visits. By being assertive and proactive, you remind them of their outstanding obligation and increase the likelihood of prompt payment. Actively working through your credit department to collect debts is a best practice that can significantly contribute to successful payment recovery.

Conclusion

Protecting your payment rights requires a combination of a fair written contract, adherence to statutory requirements, and proactive communication with debtors. By having a well-drafted contract that addresses payment and non-payment scenarios, sending timely notices, recording liens or sending bond claims, and maintaining consistent communication, you can safeguard your interests and increase the chances of receiving the payment you rightfully deserve.

What’s a Rich Text element?

The rich text element allows you to create and format headings, paragraphs, blockquotes, images, and video all in one place instead of having to add and format them individually. Just double-click and easily create content.

Static and dynamic content editing

A rich text element can be used with static or dynamic content. For static content, just drop it into any page and begin editing. For dynamic content, add a rich text field to any collection and then connect a rich text element to that field in the settings panel. Voila!

How to customize formatting for each rich text

Headings, paragraphs, blockquotes, figures, images, and figure captions can all be styled after a class is added to the rich text element using the "When inside of" nested selector system.

What’s a Rich Text element?

The rich text element allows you to create and format headings, paragraphs, blockquotes, images, and video all in one place instead of having to add and format them individually. Just double-click and easily create content.

Static and dynamic content editing

A rich text element can be used with static or dynamic content. For static content, just drop it into any page and begin editing. For dynamic content, add a rich text field to any collection and then connect a rich text element to that field in the settings panel. Voila!

How to customize formatting for each rich text

Headings, paragraphs, blockquotes, figures, images, and figure captions can all be styled after a class is added to the rich text element using the "When inside of" nested selector system.

What’s a Rich Text element?

The rich text element allows you to create and format headings, paragraphs, blockquotes, images, and video all in one place instead of having to add and format them individually. Just double-click and easily create content.

Static and dynamic content editing

A rich text element can be used with static or dynamic content. For static content, just drop it into any page and begin editing. For dynamic content, add a rich text field to any collection and then connect a rich text element to that field in the settings panel. Voila!

How to customize formatting for each rich text

Headings, paragraphs, blockquotes, figures, images, and figure captions can all be styled after a class is added to the rich text element using the "When inside of" nested selector system.

What’s a Rich Text element?

The rich text element allows you to create and format headings, paragraphs, blockquotes, images, and video all in one place instead of having to add and format them individually. Just double-click and easily create content.

Static and dynamic content editing

A rich text element can be used with static or dynamic content. For static content, just drop it into any page and begin editing. For dynamic content, add a rich text field to any collection and then connect a rich text element to that field in the settings panel. Voila!

How to customize formatting for each rich text

Headings, paragraphs, blockquotes, figures, images, and figure captions can all be styled after a class is added to the rich text element using the "When inside of" nested selector system.

What’s a Rich Text element?

The rich text element allows you to create and format headings, paragraphs, blockquotes, images, and video all in one place instead of having to add and format them individually. Just double-click and easily create content.

Static and dynamic content editing

A rich text element can be used with static or dynamic content. For static content, just drop it into any page and begin editing. For dynamic content, add a rich text field to any collection and then connect a rich text element to that field in the settings panel. Voila!

How to customize formatting for each rich text

Headings, paragraphs, blockquotes, figures, images, and figure captions can all be styled after a class is added to the rich text element using the "When inside of" nested selector system.

What’s a Rich Text element?

The rich text element allows you to create and format headings, paragraphs, blockquotes, images, and video all in one place instead of having to add and format them individually. Just double-click and easily create content.

Static and dynamic content editing

A rich text element can be used with static or dynamic content. For static content, just drop it into any page and begin editing. For dynamic content, add a rich text field to any collection and then connect a rich text element to that field in the settings panel. Voila!

How to customize formatting for each rich text

Headings, paragraphs, blockquotes, figures, images, and figure captions can all be styled after a class is added to the rich text element using the "When inside of" nested selector system.

What’s a Rich Text element?

The rich text element allows you to create and format headings, paragraphs, blockquotes, images, and video all in one place instead of having to add and format them individually. Just double-click and easily create content.

Static and dynamic content editing

A rich text element can be used with static or dynamic content. For static content, just drop it into any page and begin editing. For dynamic content, add a rich text field to any collection and then connect a rich text element to that field in the settings panel. Voila!

How to customize formatting for each rich text

Headings, paragraphs, blockquotes, figures, images, and figure captions can all be styled after a class is added to the rich text element using the "When inside of" nested selector system.

What’s a Rich Text element?

The rich text element allows you to create and format headings, paragraphs, blockquotes, images, and video all in one place instead of having to add and format them individually. Just double-click and easily create content.

Static and dynamic content editing

A rich text element can be used with static or dynamic content. For static content, just drop it into any page and begin editing. For dynamic content, add a rich text field to any collection and then connect a rich text element to that field in the settings panel. Voila!

How to customize formatting for each rich text

Headings, paragraphs, blockquotes, figures, images, and figure captions can all be styled after a class is added to the rich text element using the "When inside of" nested selector system.

What’s a Rich Text element?

The rich text element allows you to create and format headings, paragraphs, blockquotes, images, and video all in one place instead of having to add and format them individually. Just double-click and easily create content.

Static and dynamic content editing

A rich text element can be used with static or dynamic content. For static content, just drop it into any page and begin editing. For dynamic content, add a rich text field to any collection and then connect a rich text element to that field in the settings panel. Voila!

How to customize formatting for each rich text

Headings, paragraphs, blockquotes, figures, images, and figure captions can all be styled after a class is added to the rich text element using the "When inside of" nested selector system.

What’s a Rich Text element?

The rich text element allows you to create and format headings, paragraphs, blockquotes, images, and video all in one place instead of having to add and format them individually. Just double-click and easily create content.

Static and dynamic content editing

A rich text element can be used with static or dynamic content. For static content, just drop it into any page and begin editing. For dynamic content, add a rich text field to any collection and then connect a rich text element to that field in the settings panel. Voila!

How to customize formatting for each rich text

Headings, paragraphs, blockquotes, figures, images, and figure captions can all be styled after a class is added to the rich text element using the "When inside of" nested selector system.

What’s a Rich Text element?

The rich text element allows you to create and format headings, paragraphs, blockquotes, images, and video all in one place instead of having to add and format them individually. Just double-click and easily create content.

Static and dynamic content editing

A rich text element can be used with static or dynamic content. For static content, just drop it into any page and begin editing. For dynamic content, add a rich text field to any collection and then connect a rich text element to that field in the settings panel. Voila!

How to customize formatting for each rich text

Headings, paragraphs, blockquotes, figures, images, and figure captions can all be styled after a class is added to the rich text element using the "When inside of" nested selector system.

What’s a Rich Text element?

The rich text element allows you to create and format headings, paragraphs, blockquotes, images, and video all in one place instead of having to add and format them individually. Just double-click and easily create content.

Static and dynamic content editing

A rich text element can be used with static or dynamic content. For static content, just drop it into any page and begin editing. For dynamic content, add a rich text field to any collection and then connect a rich text element to that field in the settings panel. Voila!

How to customize formatting for each rich text

Headings, paragraphs, blockquotes, figures, images, and figure captions can all be styled after a class is added to the rich text element using the "When inside of" nested selector system.

What’s a Rich Text element?

The rich text element allows you to create and format headings, paragraphs, blockquotes, images, and video all in one place instead of having to add and format them individually. Just double-click and easily create content.

Static and dynamic content editing

A rich text element can be used with static or dynamic content. For static content, just drop it into any page and begin editing. For dynamic content, add a rich text field to any collection and then connect a rich text element to that field in the settings panel. Voila!

How to customize formatting for each rich text

Headings, paragraphs, blockquotes, figures, images, and figure captions can all be styled after a class is added to the rich text element using the "When inside of" nested selector system.

What’s a Rich Text element?

The rich text element allows you to create and format headings, paragraphs, blockquotes, images, and video all in one place instead of having to add and format them individually. Just double-click and easily create content.

Static and dynamic content editing

A rich text element can be used with static or dynamic content. For static content, just drop it into any page and begin editing. For dynamic content, add a rich text field to any collection and then connect a rich text element to that field in the settings panel. Voila!

How to customize formatting for each rich text

Headings, paragraphs, blockquotes, figures, images, and figure captions can all be styled after a class is added to the rich text element using the "When inside of" nested selector system.

What’s a Rich Text element?

The rich text element allows you to create and format headings, paragraphs, blockquotes, images, and video all in one place instead of having to add and format them individually. Just double-click and easily create content.

Static and dynamic content editing

A rich text element can be used with static or dynamic content. For static content, just drop it into any page and begin editing. For dynamic content, add a rich text field to any collection and then connect a rich text element to that field in the settings panel. Voila!

How to customize formatting for each rich text

Headings, paragraphs, blockquotes, figures, images, and figure captions can all be styled after a class is added to the rich text element using the "When inside of" nested selector system.

What’s a Rich Text element?

The rich text element allows you to create and format headings, paragraphs, blockquotes, images, and video all in one place instead of having to add and format them individually. Just double-click and easily create content.

Static and dynamic content editing

A rich text element can be used with static or dynamic content. For static content, just drop it into any page and begin editing. For dynamic content, add a rich text field to any collection and then connect a rich text element to that field in the settings panel. Voila!

How to customize formatting for each rich text

Headings, paragraphs, blockquotes, figures, images, and figure captions can all be styled after a class is added to the rich text element using the "When inside of" nested selector system.

What’s a Rich Text element?

The rich text element allows you to create and format headings, paragraphs, blockquotes, images, and video all in one place instead of having to add and format them individually. Just double-click and easily create content.

Static and dynamic content editing

A rich text element can be used with static or dynamic content. For static content, just drop it into any page and begin editing. For dynamic content, add a rich text field to any collection and then connect a rich text element to that field in the settings panel. Voila!

How to customize formatting for each rich text

Headings, paragraphs, blockquotes, figures, images, and figure captions can all be styled after a class is added to the rich text element using the "When inside of" nested selector system.

What’s a Rich Text element?

The rich text element allows you to create and format headings, paragraphs, blockquotes, images, and video all in one place instead of having to add and format them individually. Just double-click and easily create content.

Static and dynamic content editing

A rich text element can be used with static or dynamic content. For static content, just drop it into any page and begin editing. For dynamic content, add a rich text field to any collection and then connect a rich text element to that field in the settings panel. Voila!

How to customize formatting for each rich text

Headings, paragraphs, blockquotes, figures, images, and figure captions can all be styled after a class is added to the rich text element using the "When inside of" nested selector system.

What’s a Rich Text element?

The rich text element allows you to create and format headings, paragraphs, blockquotes, images, and video all in one place instead of having to add and format them individually. Just double-click and easily create content.

Static and dynamic content editing

A rich text element can be used with static or dynamic content. For static content, just drop it into any page and begin editing. For dynamic content, add a rich text field to any collection and then connect a rich text element to that field in the settings panel. Voila!

How to customize formatting for each rich text

Headings, paragraphs, blockquotes, figures, images, and figure captions can all be styled after a class is added to the rich text element using the "When inside of" nested selector system.

What’s a Rich Text element?

The rich text element allows you to create and format headings, paragraphs, blockquotes, images, and video all in one place instead of having to add and format them individually. Just double-click and easily create content.

Static and dynamic content editing

A rich text element can be used with static or dynamic content. For static content, just drop it into any page and begin editing. For dynamic content, add a rich text field to any collection and then connect a rich text element to that field in the settings panel. Voila!

How to customize formatting for each rich text

Headings, paragraphs, blockquotes, figures, images, and figure captions can all be styled after a class is added to the rich text element using the "When inside of" nested selector system.

About Author

ARIELA WAGNER

Ariela Wagner

Ariela is the president and founder of SunRay Construction Solutions. She has over 17 years of construction industry experience. Read More>

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When it comes to securing payment for your services or materials, having a fair and well-drafted contract is crucial. In addition to a solid contract, there are several important steps you can take to protect your rights and increase the likelihood of receiving payment.

In this blog post, we will explore these steps and discuss how they can safeguard your interests in contractual agreements.

6 Steps to Safeguard your Rights in Contracts

construction contract

1. Have a Fair Written Contract

One of the most essential aspects of protecting your payment rights is having a written contract that is fair and comprehensive. The contract should clearly address payment terms and explicitly mention the consequences of non-payment. It is essential to understand that certain contracts may require you to continue working or providing materials even if you are not being paid. In such cases, your remedy is not to stop work but to follow the dispute resolution process outlined in the contract. Therefore, carefully review and comprehend all provisions of the contract before signing it.

2. Timely Send a Notice to Owner

Sending a Notice to Owner, even if not required by lien law, can significantly impact how seriously others perceive your intent to be paid. Even when you have a direct contract with the owner, it is highly recommended to send a Notice to Owner. This document serves as a clear indication of your commitment to receiving payment and can act as a check and balance on the payment process. Timely notice of every job, you work on, especially as a supplier to a subcontractor, helps secure your lien rights and increases the likelihood of getting paid.

3. Preliminary Notice

To strengthen your lien rights, it is advisable to send a preliminary notice for every job that meets a certain predetermined threshold, such as $250, $1,000, or $2,500. Establishing a process in your office to consistently send preliminary notices helps protect your payment rights and improve the chances of receiving timely compensation.

preliminary notice

4. Cut Off Further Credit

Although it may be challenging, it is crucial to be prepared to cut off further credit on a job and other projects within the contractual limits. If you find yourself being unpaid for a certain amount, continuing to extend credit can exacerbate the financial loss. It is important to make a decision to protect your interests and cut off the customer if you no longer feel confident about collecting payment.

5. Timely Record Your Lien or Send a Bond Claim

Recording a construction lien or sending a bond claim is a critical step in protecting your payment rights. Ensure that you follow the applicable timeline requirements, typically within 45 days for a Notice to Owner and no later than 90 days for a bond claim or Notice of Nonpayment. By adhering to these timelines, you distinguish yourself from others who have not followed lien laws, significantly increasing your chances of being prioritized for payment.

6. Contact the Debtor Often

Persistence is key when it comes to collecting payment. Maintain regular contact with the debtor through phone calls, emails, and personal visits. By being assertive and proactive, you remind them of their outstanding obligation and increase the likelihood of prompt payment. Actively working through your credit department to collect debts is a best practice that can significantly contribute to successful payment recovery.

Conclusion

Protecting your payment rights requires a combination of a fair written contract, adherence to statutory requirements, and proactive communication with debtors. By having a well-drafted contract that addresses payment and non-payment scenarios, sending timely notices, recording liens or sending bond claims, and maintaining consistent communication, you can safeguard your interests and increase the chances of receiving the payment you rightfully deserve.

Disclaimer
THE INFORMATION ON THIS WEBPAGE IS NOT THE SAME AS LEGAL ADVICE. SUNRAY CONSTRUCTION SOLUTIONS, LLC IS NOT AN ATTORNEY OR A LAW FIRM. WE RECOMMEND THAT YOU CONSULT WITH AN ATTORNEY.
Ariela Wagner
Ariela Wagner
Preliminary Notice| SunRay Notice
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