Why contractors need to prepare for legal disputes due to COVID-19
Thursday, April 16, 2020
The coronavirus (COVID-19) pandemic has changed the construction game. Contractors are trying to hold onto their cash as long as possible while still having to pay their subcontractors and suppliers. Cash is tight right now, and it’s leaving contractors with a major cash threat.
Contractors already are faced with the longest waits for payment of businesses in any industry, which makes matters worse when the country is in the middle of a recession. As social distancing and stay-at-home orders remain in place, coronavirus will continue to impact the construction industry.
Here are four ways that COVID-19 will impact your construction business:
- The construction supply chain will get delayed
- Essential business orders keep construction workers off job sites
- Economic troubles will affect the housing market and construction spending
- Legal disputes will lead to payment delays
How contractors can survive the COVID-19 pandemic
Contractors can withstand the economic impact by taking immediate and thoughtful action. Here are four tips to help contractors survive the coronavirus pandemic:
- Inventory and address immediate legal issues
- Protect your lien rights at all costs
- Keep a close eye on your GC’s payment behavior
- Increase your cash cushion
Contractor help with coronavirus concerns
Coronavirus-fueled project delays will likely trigger contract disputes and lawsuits. While your business may be sidelined from accessing job sites, you still could have active contract obligations. During these uncertain times, it’s helpful to have an experienced construction attorney in your corner to consult on:
According to some of the country’s top construction lawyers, the best thing contractors can do right now is protect their lien rights.
Jason Lambert, a leading construction attorney in Florida, has specific advice for contractors facing unexpected job delays:
“First, it’s more important now than ever to make sure you’re properly noticing and liening jobs,” instructs Lambert. “This is the exact type of scenario where you might not get paid or a project may be significantly delayed through no fault of yours. When things ramp up again, those who secured their lien rights will be the first ones taken care of; those who do not, will get what’s left.”
Getting paid is already a tall task in the construction industry, and it’s only going to get harder. That’s why it’s crucial for contractors to file a mechanics lien on any project where payment is overdue. When contractors file a lien, it can put them first in line to get paid.
Ask a legal expert for construction answers
Coronavirus is throwing a wrench in almost every construction business’s future, which can leave contractors faced with current or future legal challenges. If your construction business has legal concerns following the coronavirus outbreak, Levelset’s Expert Center features a network of construction attorneys that can provide you with free advice on a variety of legal topics. Ask lawyers and other payment experts for help. Some construction lawyers are even offering free consultations during COVID-19.
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