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Including payment collection options in a construction contract

What is the most important part of any building project? Many would say it is the construction contract. In those pages lies everything the parties agree to and hold each other responsible for as the project progresses.

One aspect that California construction contractors will want to negotiate into their contracts is provisions regarding collection of payment before, during and after the job. Liens do not necessarily need to be negotiated into a contract, but it would help clarify the stakes for everyone involved. Mechanic’s liens are a powerful tool for contractors, subcontractors, suppliers and others who work on a particular project. Laying out for all parties that this is a viable collection option if payment is not timely received in accordance with the contract may help keep everyone willing to comply with its terms.

California construction contractors could also include clauses regarding work stoppages as a consequence of nonpayment. Most investors and property owners want a project completed on time with as few delays as possible. If the paying party understands that a work stoppage is a viable option for protesting nonpayment, it could help make sure that payments arrive on time and in full.

Property owners and investors may not readily agree to such provisions, but that does not necessarily mean that a contractor should give up. He or she should expect to receive some accommodations if giving some to the other side. The final construction contract should protect a contractor’s rights as much as is it does the other side, and the right to take steps to collect payment should not be given away.