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Why is this acceptable in construction
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I spent 15 years as a contractor, and you are dammed if you do, and dammed if you don't. If you ever wonder why an Electrician charges you $60 an hour, its partly to make up for the 3 people last week that didn't pay them in full, if the payed them at all.
Contracts. Contracts are good for one thing...starting a fire to keep you warm. I still have tens of thousands of dollars in mechanic's liens on property, but unless they decide to sell, I will never see a dime. And I have to keep updating them to keep them valid. I just stopped bothering with liens as well, because they are worse than a contract...you don't even get a piece of paper to burn.
Builders are smart enough to know this too. I handed a builder a bill for $16,000 once, and he wrote me a check for $10,000, looked me right in the eyes, and said "take it, or leave it". He knew I had bills to pay, and that I would take it....and he was right. You have no recourse. You can't take the material and labor back. Once it is attached to "their" structure, its theirs. If you take it back, that's a criminal offence. If they don't pay you for it, that's a civil issue.
Magician - I think you just haven't got the right lawyer. My family and I have rarely had issues with non-payment... though that could be because our family's business is in corporate debt collection and insolvency.
If you're having ongoing issues with it and it's not something long past, let me know and I might be able to help out.
One thing I've noticed in the construction industry internationally is the differences in part / progress payments for items. In Australia, I wouldn't ever consider making progress payments on an apartment block under construction/development - progress funding is always going to be provided by a bank. However, in Malaysia where we've just put down a deposit, such payments are actually mandated by law. Horses for courses, I suppose.
The problem isn't not "winning" a judgement, its in the collecting.
It's fairly easy to obtain a judgement against someone, its nearly impossible to collect on one if that person is not "intimidated" by it.
One of the biggest issues, is that builders can still obtain massive amounts of credit, even if they have dozens of judgments against them, because suppliers want their business. They know if they pay the suppliers, and short the contractors, they will be able to continue in business. As an individual, if I have a judgement against me, my credit rating will tank, and I would be unable to borrow money. But as a builder, as long as I paid my suppliers, I could get all the credit I needed from them. Builders around here rarely need to borrow actual "money" for a project. They just need access to supplies, and supply houses are only interested in trade references, often not even looking at a credit file before extending credit.
The second issue is how a mechanic's lien works. It only is enforced if title of the property changes hands. So builders know this, and they structure payment in a way to have no fear of liens. Builders will set payments in 3 installments. Usually something like 20% down to start, 40% at majority of completion, and the final 40%
completion. The first 2 payments are always made, then they screw you on the last one. In my case, as a mechanical contractor, I am usually not "complete" until sometimes just days before the house is finished, and the builder "closes" his contract with the homeowner. So at that time, the deed to the home has already been transferred, so the builder has no fear of a lien...he has his money.
At that point, the homeowner becomes liable for the outstanding bill, and they rarely have the funds to cover the bills, and even when they do, they often will not pay because they have already paid the builder. By the time I obtain a judgement on the builder, and a lien on the property, the homeowner has done enough research, or has an attorney, and they know that they really do not "have" to pay me, at least not until they sell their house.
And since liens expire every 3 years, unless I make it a full time job to keep up on liens I have (including keeping meticulous records for years and years), unless the home sells in the first 3 years after I get screwed, I never see a penny.
The worst part is, the builders just keep building. There are 40 other contractors in line that will do their work, regardless of their reputation. Everyone just thinks they will be better than the last guy, or that the last guy didn't get paid because he did shoddy work. And even those that do finally get "blacklisted" will just build in another town. Just drive 50-60 miles in any direction, and you have a whole new set of contractors to screw over. By the time it catches up with them, they have made their money...or new victims (contractors) have moved it, and they start the cycle all over.
I finally broke out of contracting about 4-5 years ago. I just recently opened 2 retail stores. Now, you pay the price on the product, or you don't get leave the store with it. I still get a little of the same, because I have a service department at 1 store, but at least in my current case, I have their device in my possession, and if they are unable, or unwilling to pay the bill, I have their property in my hand as collateral. I have a posted policy that all devices that have unpaid bills against them go on eBay after 30 days, and I will even provide the previous owner with the auction listing, if they want to bid on their stuff.
Correct me if I'm wrong, but once you have a judgment on someone, that then opens up avenues for you to collect it via various means. Liens aside, a debt is a debt. I'm going to speak from my experience in Australia, but there should be similar avenues for yourself as well. Once a judgment is obtained, if they still don't pay within a period of time, you can start bankruptcy proceedings, you can get a sheriff to head over and start repossessing items, you can even issue a garnishee notice to their bank and get them to take the cash straight out of their account.
The bigger issue is if they have a whole truckload of debts that they'd be happy dropping and dumping in a single bankruptcy process. But presumably, if they've still got assets that they can make money out of, and if they have money, they'd rather pay you off than risk getting made insolvent / bankrupt. Essentially, what they've been doing is figuring that you would rather get paid part of what you deserve and not wind them up, and they've been winning thus far. Debtors do this all the time, until they get served with a bankruptcy notice, at which point they've got no choice but to pay up or call your bluff.
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