Does anyone know or how would I find out if Illinois is a pay when paid or pay when due state?
GC I have done some sub work for is holding back small (5%) final payment because they have not received final payment. BTW, it is going through a title company for payment.
I have heard that there are issues that the customer has problems with but are unrelated to my work.
Thanks,
Ken
Framing the floor inside a crawlspace foundation keeps a gable-end addition close to grade.
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After googling "Illinois "pay when paid"" and then giving some of the pages a quick scanning overview it does not appear to me that there is any prohibition against a GC using "pay when paid" in Illinois.
But one of the pages I read (Who Bears the Risk of Owner Non-Payment? Pay when Paid vs. Pay if Paid.) seemed to indicate to me that the GC can't withold the payment when the GC was responsible for the Owner's nonpayment.
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Thanks.
"the performance of a condition precedent is excused if the party for whose benefit the condition is created prevents the condition from occurring." I can't parse the above. Sometimes language has to be subtle & technical, but is there a pain English version?
In my intrepretation that's basically saying " if I wasn't the cause or reason you didn't get paid I should still get paid". That's my 2¢ but boy is that obtuse language or what! Don't ya really hate lawyer language.
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Yup...see belowNOTICE OF DISHONOR - The notice given by the holder of a bill of exchange or promissory note, to a drawer or endorser on the same, that it has been dishonored, either by not being accepted in the case of a bill, or paid in due of an accepted bill or note.It is proper to consider, 1. The form of the notice; 2. By whom it is to be given; 3. To whom. 4. When; 5. Where; 6. Its effects; 7. When a want of notice will be excused; 8. When it will be waived.Although no precise form of words is requisite in giving notice of dishonor, yet such notice must convey, 1. A true description of the bill or note so as to ascertain its identity; but if the notice cannot mislead the party to whom it is sent, and it conveys the real fact without any. doubt, although there may be a small variance, it cannot be material, either to regard his rights or to avoid his responsibility. 2. The notice must contain an assertion that ther bill has been duly presented to the drawee for acceptance, when acceptance has been refused, or to the acceptor of a bill or maker of a note for payment at its maturity, and dishonored. 3. The notice must state that the holder or other person giving the notice looks to the person to whom the notice is given for reimbursement and indemnity. Although in strictness this may be required where the language is otherwise doubtful and uncertain, yet in general, it will be presumed where in other respects the notice is sufficient.In general the notice may be given by the holder or some one authorized by him or by some one who is a party and liable to pay the bill or note. But notice given by a stranger is not sufficient. On the death of the holder, his executor or administrator is required to give notice, and if none be then appointed, the notice must be given within a reasonable time after one may be appointed. When the bill or note i's held by partners, notice by any of them is sufficient; and when jointholders have the paper, and one dies, the notice may be given by the survivor; the assignee of the holder who is a bankrupt must give notice, but if no assignee be appointed when the paper becomes due the notice must be given without delay after his appointment; but it seems the bankrupt holder may himself give the notice. If an infant be the holder the notice may be given by him, or if he has a guardian, by the latter.The holder is required to give notice to all the parties to whom he means to resort for payment, and, unless excused in point of law, as will be stated below, such parties will be exonerated, and absolved from all liability on such bill or note. But a party who purchases a bill, and without endorsing it, transmits it on account of goods ordered by him, is not entitled to notice of its dishonor. In cases of partnership, notice to either of the partners is sufficient. Notice should be given to each of several joint endorsers, who are not partners. Notice to an absent endorser may be given to bis general agent.The notice of dishonor must be given to the parties to whom the holder means to resort within a reasonable time after the dishonor of the bill when it is dishonored for non-acceptance, and he must not delay giving notice until the bill has been protested for non-payment. Though formerly it was doubtful whether the court or jury were to judge as to the reasonableness of the notice in respect to time yet it seems now to be settled that when the facts are ascertained it is a question for the court and not for the jury.In considering as to where the notice should be given, a difference is made between cases where the parties reside in the same town, and where they do not. 1. When both parties reside in the same town or city, the notice should either be personal or at the domicil or place of business of the party notified, so that it may reach him on the very day he is entitled to notice. If the notice be put in the post office, the holder must prove it reached the endorser. But in those towns where they have letter carriers, who carry letters from the post office and deliver them at the houses or places of business of the parties, if the notice be put in the post office in time to be delivered on the same day, it will be sufficient. 2. When the parties reside in different towns or cities, the notice may be sent by the post, or a special messenger, or a private person, or by any other suitable or ordinary conveyance. When the post is resorted to, the holder has the whole day on which the bill becomes due to prepare his notice, and if it be put in the post office on the next day in time to go by either mails, when there is more than one, it will in general be sufficient.The effect of the notice of dishonor, when properly given, and when it is followed by a protest when a protest is requisite, will render the drawer and endorsers of a bill or the endorsers of a note liable to the holder. But the drawer and endorsers may tender the money at any time before a writ has been issued; though the acceptor must pay the bill on presentment and cannot plead a subsequent tender.The same reasons which will excuse the want of a presentment will in general excuse a want of protest.A want of notice may be waived by the party to be affected after a full knowledge of the facts that the holder has no just cause for the neglect or omission.
--b--
I can't understand that,... No entiendo inglés!
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"the performance of a condition precedent is excused if the party for whose benefit the condition is created prevents the condition from occurring."
Translation: If the GCs' screwup is the reason the GC dint get paid, dat GC can't claim you don't get paid till he does.SamT
There are three kinds of people: Predaters, Prey, and Paladins. For the life of me, I can't see why Prey feels safer from predators by disarming and emasculating Paladins.
Word.
Ken,
Let me add that it is common to see retainage held on certain projects. For instance, I am on a project where 10% of all invoices is held back until the final approval of the job. That really stinks for me as the portions I am doing are among the earliest portions of work to be done.
Is this a retainage that is being witheld or simply a deficiency in payment?
http://www.petedraganic.com/
deficiency of payment.
The final payment is being negotiated between the GC and customer. Settling I guess. It's just taking forever.
Why don't you call the owner and ask them to pay directly? If you are not paid you can place a lien on the property, which might motivate them to settle with you in spite of their dispute with the GC.
Why don't you call the owner and ask them to pay directly?
...that's one way to burn a bridge.
Beer was created so carpenters wouldn't rule the world.
Who wants a bridge with a contractor who will not pay what is due?
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I agree....burn that bridge and the contractor too.
blue"...
keep looking for customers who want to hire YOU.. all the rest are looking for commodities.. are you a commodity ?... if you get sucked into "free estimates" and "soliciting bids"... then you are a commodity... if your operation is set up to compete as a commodity, then have at it..... but be prepared to keep your margins low and your overhead high...."
From the best of TauntonU.
Who wants a bridge with a contractor who will not pay what is due?
There are many well intentioned contractors opperating with limited working capital who have to work around draw schedules before they can get everyone paid.
I wasn't implying that this particular contractor is worth the extra risk for future projects, but the OP has to make that decision. Going directly to the client will certainly make the decision for him, if it was intended or not.
Beer was created so carpenters wouldn't rule the world.
Happened to me twice last year - two separate owners, same GC. 5k each. In both cases, I got paid from the owner. "...never charged nothing for his preaching, and it was worth it, too" - Mark Twain
Where are you at in Illinois?We have folks in springfield, Chicago, and a few other areas. I live about an hour south of Springfield.Would ya fill in your profile sometime?
T-shirt: Of course I'm in Great Shape - I play Rock-Paper-Scissors
I'm curious about this topic. I've always assumed that, unless otherwise specified in a signed agreement, payment is due upon completion of the work. Isn't that the legal standard?
I'm curious about this topic. I've always assumed that, unless otherwise specified in a signed agreement, payment is due upon completion of the work. Isn't that the legal standard?
As a general rule, almost anything can be inserted into a contract. If there is nothing in a contract as to time of payment, a contract would be interpreted to require payment within a reasonable time after completion, which would depend on a number of variable factors, such as custom in the industry, previous deals between the parties, etc.
In many (most?) states, clauses that provide that the GC doesn't have to pay the sub until/unless the GC is paid are enforceable, so long as the reason for non-payment to the GC isn't the fault of the GC. Thus, if the owner runs out of money and doesn't pay the GC, the sub is screwed.
In Massachusetts, where I practice most, such clauses will be enforced, but only when very precisely worded.
If I recall correctly, as a matter of public policy, New York law doesn't permit pay when paid clauses.
I tell my subcontractor clients that they should not accept such a limitation on payment, because it is frequently unclear why an owner isn't paying. A sub is relying on the GC's ability to pay and rarely has an opportunity to assess the ability of an owner. Like everything else, this is a risk allocation process and an electrical sub shouldn't wait for payment because the owner hasn't paid the GC because the plumber screwed up the job.
It may be reasonable, and it certainly reflects the realities of the business, for a contract payment terms to provide enough time for money to trickle down from owner to GC to sub to sub-sub.
Thanks for the explanation. It makes me wonder if we contactors and subs shouldn't get together and hire a decent lawyer to come up with a better standard contract, something that protects our interests and gets us paid within a reasonable time frame.
In either the G.C. or subcontractor role, I'd be in favor of a stipulation about escrow accounts. All my money would have to be placed in escrow before I began work, then paid to me at each stage of completion, after inspection by the recognized authority. That system would sure eliminate a large percentage of the frustration and financial struggle that comes with our jobs.
Are contracts often written that way? How could we make that provision the standard for our industry?
Edited 4/3/2007 10:33 am ET by Hudson Valley Carpenter
The problem with so-called standard contracts is that any contract involves risk allocation and who is willing to bear a risk is dependent on factors that differ on each job. I have a large multinational company for a client. They pay in 60 days, which is slow, but they always pay without any hassle or question. I'm willing to risk putting a lot of time on one of their cases because I will eventually get paid. For other clients, I may not be willing to risk so much exposure because they may not be able to pay me.
A contract prepared for contractors will frequently include provisions that are unacceptable for owners. I have always looked to AIA contracts as representing a reasonable compromise between the needs of owners, GCs and subs.
As far as escrowing the contract funds, it is a great idea, but I doubt you will get many owners to do it, because holding the money gives the holder a lot of leverage. As far as contracts between GCs and subs, few GCs are able or willing to put up the money until they get paid.
I always remind my clients that picking the right people to do business with is far more valuable that having a good contract with a bad guy. The day you need to look at your contract to see what your rights are is usually a bad day.
You mention risk allocation...how you define and manage it with each client. That may work well for you but it doesn't represent good business practice for a small subcontractor. He/she must front the money required for materials, wages, etc. until paid. Even thirty days is too long for most subs to go without a payment. Why should anyone bankroll a job and only have a lien to protect what he invested in someone else's home?
I recall doing some maintenance work one slow winter, about twnty-five years ago, for a condo owner's association in Vernon, New Jersey. There were some new condos going up adjacent to those where I was working. Interested in finding other work, I started talking to the leader of the siding crew. Having landed his first substantial contract, he was a confident, happy young fellow who was doing a fine job with T&G clear heart cedar.
Checking with other subs who'd been there longer than the siding crew, I found a dis-spirited bunch of tradesmen who were working on their forth or fifth buildings while waiting and worrying about getting paid for buildings two and three.
This was, maybe still is, the oft heard story about subbing work in some states and/or areas. G.C.s who hold guys up for various reasons, mainly to control their work schedule but also because they can rip off the ignorant new guys.
Needless to say I didn't follow the idea of working on the new condos. Six months later I ran into the siding contractor. He wa behind the counter at a local lumber yard, trying to work off what he owed for all that nice cedar.
"What happened with that condo job?" I asked as quietly and gently as possible.
"Oh....I got that guy in court for $30,000."
"Unnnhh, sorry to hear that." I replied, thinking to myself, "no, he's got you in court for $30K".
This isn't just a sad story about an ignorant new contractor. It's the kind of complete screwing that ruins marriages, families and futures for an entire lifetime. And it happens every day to enthusiastic, well intentioned guys who are overlooked by our system of laws because we don't have any political clout.
<<As far as escrowing the contract funds, it is a great idea, but I doubt you will get many owners to do it, because holding the money gives the holder a lot of leverage. As far as contracts between GCs and subs, few GCs are able or willing to put up the money until they get paid.>>
Who is the holder and why does that person have any clout? If it's an escrow agent, they are governed by the contract. And if the contract states that the money will be paid when a third, disinterested party finishes a specific inspection and signs a release, then how can that be unfair to either party?
Using my theoretical contract, the G.C. wouldn't be required to put up any money. The party who owns the property and is seeking/will own the building would be required to put up those funds.
Again, why should the guy with the least be bankrolling the guys with the most and have the least protection under law?
Since were talking about getting paid, and not getting paid, I might as well tell this little story that Frank relayed to me the other day.
We did some work for a builder last winter and still are waiting for a final payment. The guy got himself in a lot of trouble and hasn't managed to get everyone paid. We're keeping him in our loop by promising to finish a remodel on a foreclosure that he is still working on. It's a long shot, but our only shot.
Anyways, Frank ran into a plumber and the plumber asked if Frank had been payed yet. They got to talking and Frank jokingly told the plumber "You might as well run your truck through the garage doors on his models, because you aint gonna get paid anyways. You'll still be broke, but you'll feel better for awhile."
Frank had to do some service in that sub the next day for a different house/builder and when he drove into the sub he cracked up.....both garage doors were rammed in LOL!
I guess you gotta be careful about what you jokingly suggest to someone that is owed money eh?!
Next story....same guy.
Someone broke into that same model a couple of months ago and stold all the appliances....uninstalled them and hauled them away. The builder calls Frank and asks if he might know who did it. Frank says he doesn't have a clue. Anyways, the builder was very disgusted about that and then commented "The really bad thing is that the bank is foreclosing on that model and I WAS GONNA STEAL THEM MYSELF".
We cracked up.....the builder stiffs someone, they steal his appliances and hes peeved because he wants to steal them from himself!!!!
blue"...
keep looking for customers who want to hire YOU.. all the rest are looking for commodities.. are you a commodity ?... if you get sucked into "free estimates" and "soliciting bids"... then you are a commodity... if your operation is set up to compete as a commodity, then have at it..... but be prepared to keep your margins low and your overhead high...."
From the best of TauntonU.
"The party who owns the property and is seeking/will own the building would be required to put up those funds. "couple thoughtsif I'm having a home built using a GC, I have no contractual relationship with any subs.escrow would have me having a large loan outstanding whose monies are sitting in an escrow account. Who would give such a loan?It is my understanding that banks will issue draws according to some schedule.
bobl Volo, non valeo
Baloney detecter WFR
"But when you're a kibbutzer and have no responsibility to decide the facts and apply the law, you can reach any conclusion you want because it doesn't matter." SHG
Let's start with the premise that there's something missing in the payment equation, something which can be remedied by a change in our laws.
The subcontractor is too far removed from...has no direct access to...the money which is meant to be his/hers. The bank has no ties with anyone but the borrower. And everyone, from the bank...to the borrower...to the G.C...profits from holding onto the money as long as they can. That's one simple reason that the sub eats it so often.
What I'm suggesting is a law which would recognize the financial interdependence of all those involved and require a more responsible, formal approach to funding timely payments to subs: 1. The property owner places the necessary funds in an escrow account. 2. That money is paid to the G.C. at many predetermined points of completion and inspection. 3. The G.C. would then be required to pay the sub before taking his profit from each payment. 4. Timely payment would be very rapid and carefully defined so that no one would have any leverage over payments.
Most G.C.s recognize the importance of paying their subs promptly. That's how they keep the wheels of cooperative commerce in motion. But their are so many opportunities for power plays; between the bank, the property owner, the G.C. and the subs, that the little guy often ends up holding the bag, with little or no direct recourse to getting paid.
The proper way to handle this is to ask for payment NOW.
If you don't get paid, file a lien against the property and file a suit against the general contractor.
You will be paid promptly.
Yes, file a lien.
I had a similar situation where I subbed some cedar siding work from a guy that was subbing larger portions from a builder... that's how it was expalined to me.
One guy ran off with money, blah blah blah...
End of story, I can't get paid.
until I filed the lien
was paid rather promptly.
In Ohio, a lien on residential propeties (condos in this case) is rather easy, however to file a lien on commercial property requires that a certain amount of paperwork be in place prior to project commencement and any invoicing.
http://www.petedraganic.com/
This thread has been reminding me of two old jobsOn one, I had been doing roofs as subcontractor for a developer. Special kind of place up on the mountain. Seventeen homes for first phase.I was subbing labour only on the first one or two, then the project manager asked if I wanted to provide materials also. This would have bumped the cost by 5-7K on each with some extra profit for me.It sounded interesting, but over the first few homes, they had been getting slightly slower in paying me each time I submitted a bill.
I also happended to hear that some other subs were getting stiffed.
So One day I showed up at their office for three reasons. First I needed to collect a check for the latest that was about three weeks late. Got that in hand. Second, I was presenting a bill for the dry-in on the next home. Third, I had a cedit application for the guy to get filled out, sine I would be extending them credit if I supplied materials with their payment scedule.The guy laughed in my faced telling me I would never get their financial information.Fine - I laughed back and walked before I got in too deep with them.A yeaar later they were in bankruptcy with only seven of thsoe seventeen units built and five sold and a lot of subs hurting. I think I got a chek for the dry-in three months later. Don't know who put the roof on, but I heard that it leaked.on another job, we were subbing from what was supposedly the biggesst or secondbiggest national home builder in the country at the time on a custom home. Big place. Not a spec, but for real owners.I had weekly onversations with the office after we had finished to get various versions of "the check is in the mail" for many weeks.Knowing my right to file a lien would run out in another week, I showed up at the job with clip-board in hand and got all the pertinenet info off the permit curbside. Then I said howdy to the lead carp on site 'ause we had gotten along well. Asked him if he had been getting paid on schedule or had heard of any other subs not getting paid. All fine from his POV. I mentioned why I was there and that I WOULD BE FILING A LIEN THE NEXT DAY. since the office kept lying to me and failing to pay.This job was an hour from home. By the time I made the drive, whenn I walked in the door, the phone was ringing. first time in about ten weeks that they had called me. Said the check would be there by fedex the next day and please, please do not file a lien.sure 'nuf, it arrived
Welcome to the Taunton University of Knowledge FHB Campus at Breaktime. where ... Excellence is its own reward!
Hi Piffin :
After reading this post, I realized I have more in common with you than I initially would have thought.
You've been thru the "wars".
Please accept my sincere apologies for being such an A-hole to you.
Happy Easter to you and yours.
Edited 4/7/2007 9:36 am ET by ericicf
Happy Easter to you too.I ccould tell you were more intelligent than you were acting in that exchange and have seen in other threads just how well versed you are. "wars" - naw - just a few skirmishes is all. I've learnt to pick most of my battles though
Welcome to the Taunton University of Knowledge FHB Campus at Breaktime. where ... Excellence is its own reward!
Just got a mailing from the Oregon Construction Contractors Board that I thought I would share here. There is a proposed legislation here that is being backed by the OCCB that changes the lien process for homeowners/clients/etc. and it's final protection for consumers. Up till now a homeowner was still liable for bills even if they had already paid off the GC or anyone else in line who then pocketed the moeny and did not pay supplliers and subs. The change would mean that once the homeowners pay then they are free of any further liability. The lien placers have recourse only to the one who has pocketed the monies paid.