Jennifer Mahe: What remedies do contractors have if they don’t get paid?

It’s not uncommon to hire a contractor to complete work upon your home. Maybe your pipes have frozen and you need to hire a plumber or you need to hire a general contractor to complete an improvement to your property. In either case, when you hire the contractor you have entered into a contract at the price quoted for their services. For a variety of reasons, both valid and invalid, individuals sometimes decide not to pay their contractor. The homeowners’ concern thereafter becomes what remedies the contractor may utilize to collect the funds owed to them.

Like anyone who enters into a contract with another person and then finds the contract is breached, contractors have the right to pursue a breach of contract action. Depending upon the amount outstanding, a contractor may decide to pursue the action in either small claims court, justice court or district court. In determining how long they have to pursue such an action the contractor is subject to the general statute of limitations for a breach of contract action which ranges between four and six years contingent upon whether the contract was oral or in writing. Finally, depending upon the factual circumstances of each case, a contractor may have other actions which they may pursue and are subject to different statutes of limitations.

In addition to claims associated with breach of contract, contractors have a statutory remedy referred to as a mechanics lien. Since mechanics liens are created by statute and allow a contractor the broad authority to foreclose upon someone’s real property, a contractor must comply with a variety of requirements in order to validate their mechanics lien.

Moreover, it’s important to note some of these requirements begin at the time work is begun, often long before a contractor knows whether a customer will fail to pay in the future. Specifically, if tcontractors aren’t working directly with the homeowner than they’re required to provide the homeowner a notice of right to lien. Often receiving a notice of right to lien is worrisome to the homeowner since the document includes the term “lien.” However, it’s important to note this document alone doesn’t create a lien but only preserves the contractors’ right to pursue a lien in the event they don’t get paid.

If a contractor isn’t paid, then they provide a homeowner with a notice of intent to lien and only if payment isn’t received thereafter may a contractor actually place a mechanics lien upon the real property.

If a contractor validly records a mechanics lien upon the real property then they must initiate litigation to foreclose the mechanics lien with the district court within six months of recording the mechanics lien. Due to the timelines associated with the mechanics lien statutes, a mechanics lien must be pursued relatively quickly, generally within nine months of the last time work or materials were furnished by the contractor or the improvement was completed.

Finally, given the ability for contractors to pursue such a powerful remedy, it’s important to ensure you receive waivers and releases as you make payments to the contractor.

Jennifer Mahe has practiced law in the Northern Nevada area since 2005 focusing on general civil matters such as real estate, business, litigation and estate planning. She can be reached via the Mahe Law, Ltd. website, www.mahelaw.com, or at 775-461-0992. If you have a legal topic related to general civil law which you would like to see addressed in this column in the future, please send that topic to the Nevada Appeal.