There are many reasons why a construction dispute can arise in Tennessee. Often, it is connected to disagreements about the outcome of the project, allegations of construction defects, discord over how long it takes to complete and other issues. However, the most fundamental part of any agreement is payment for services. It is important to know what steps can be taken under the law if a contractor has not been paid.
Prime contractors and remote contractors have options to seek payment
There are several ways in which payment can become a problem. One is if the property owner refuses to pay the prime contractor. Another is if the prime contractor hires remote contractors—as is the case in a significant number of projects—and does not pay them.
The funds can be in a trust that was created based on the written contract between the parties. If the contractor or remote contractor has not been paid, they can state their intention to try and recover the funds they say they are owed. This must be sent by either registered or certified mail with a return receipt or by a commercial delivery service that will verify that the addressee received it.
The person being asked to pay must reply within 10 days of receiving this notification. They can make the payment or give legal justification for not making the payment. Not making the payment may be construed as a legal violation. When there has been no response within the 10-day time-frame, the prime contractor can stop all work until they are paid or they receive a response. For payments from a prime contractor to a remote contractor, the same rules apply with stopping work.
If they do stop work because of nonpayment, they can then have a contract extended to equal the duration of the work stoppage. The party that loses a legal case can ask for reasonable attorney’s fees to be paid if bad faith was involved.
General contractors and subcontractors should have help with legal issues
If general contractors or subcontractors are not getting paid based on the specifics of the contract, it is important to be aware of what can be done to rectify the situation. In some instances, it is just a clerical problem or a misunderstanding that can be settled relatively quickly. In others, it is more complex. For help with these situations, it is useful to contact professionals who are experienced in construction litigation.