How can construction contractors make sure they are paid?

In Tennessee, when there is an agreement between a contractor and a property owner, both sides will have the same goal: to complete the project as specified. Obviously, the contractor will want to be paid for the work and receive what was specified in the contract. This is true for the prime contractor and remote contractors (subcontractors). A common worry for contractors is that financing is lacking and they will not be paid. There are certain rights that should be in the contract to ensure they are properly compensated for their work. Knowing these legal rights is critical from the outset.

Understanding details about payments for a construction project

Before even starting the work, the owner must show the contractor that the money to pay for the project is available. That could be through a mortgage or other loan. If the owner does not make the payments, the contractor can provide a notice requesting evidence that there is money available to make the payments and it will be paid based on the contract. These assurances must be provided within 10 days of receiving the contractor’s request. The owner can also provide legal justifications as to why the payments are not being made.

The law stipulates that when the owner responds to the contractor’s demand for assurance that the payments will be made, he or she cannot adjust the financial arrangements. The demand for non-payment and the request for reasonable assurances for payment can be sent separately. This law cannot be waived as part of the contract. It is not applicable for state or department projects such as improvements and repairs to a school.

Construction contracts should be understood and adhered to

Contractors should understand the most fundamental part of a construction work agreement: being paid based on the agreement. While other problems such as construction defects, unexpected damage during the project and a failure to adhere to the blueprint could arise, an owner simply failing to follow the law for contractor agreements is also a concern. Knowing these details beforehand can avoid costly litigation, but a legal filing is always an option. Having professional assistance from the start can be useful to avoid and address problems as they come up.

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