Darin D. Honn
503.243.1629
 

How To Get Your Construction Billings Paid

December 2001

Darin D. Honn
503.243.1629

As the economy tightens, one of the major questions in the construction industry, by both general contractors and subcontractors, is how and when will I get paid?  Our philosophy at Sussman Shank LLP is "to get paid, you must BE IMPORTANT."  As I am sure you know, developers and contractors come and go, some of them never to be heard from again, with others arriving back on the jobsite in the form of a new entity.  If a contractor or subcontractor relies only upon the financial position of an owner, developer or contractor, the creditor probably will have failed to attach the only assets of any value that are available for payment: (a) the land and improvements thereon or (b) a bond.  In addition, the creditor probably will have lost the leverage created by holding a security interest in the real property or the project (via a lien or bond).

One means of asserting leverage is to file a claim against the general contractor's payment bond, if the contractor has filed such a bond.

A second means by which you can be "important" enough to get paid is file your lien claim against the land and improvements, where appropriate.  Construction liens are created by statute, both in Oregon and Washington.  Because the lien rights are a statutory creation, adherence to statutory guidelines in creation, perfection and prosecution is required.  Failure to follow the statutory procedures can, at a minimum, prevent obtaining super-priority status (in Oregon) and/or attorney fees, but can also make the entire lien invalid and the claimant (i.e., contractor who was not paid) will be responsible for the other parties' attorney fees.

Bond claims, especially on public jobs, also must be timely and correctly prosecuted to allow the claimant to collect on the bond.  Claimants against certain public entities in Oregon are required to comply with the Oregon Tort Claims Act requisites.  The specifics of how to timely file, perfect, and prosecute bond and lien claims were among the topics discussed by the Sussman Shank LLP Construction Law Department at a construction seminar held on January 23, 2002.  For more information on a specific construction law issue, please call Darin Honn or Jason W. Alexander at (503) 227-1111.


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