You know the situation–the job is not progressing as you would like, payments are slow, and now you are being challenged on your pay applications and change orders. You decide to finish the project, but you are still owed money. What do you do?
Review your contract and file a claim!
Pay Applications are Not Claims
Although you may have submitted pay applications, pay applications are not claims under most construction contracts. Most contracts require a notice of claim to be submitted to the upstream party setting forth the basis for the claim. While the claim may contain much of the information contained in the pay application, you must still submit a claim.
Submit your Claim on Time
In addition to requiring you to submit a claim, most contracts require claims to be submitted within a certain amount of time. Often times, the time limit is ten to fifteen days after the work is performed, the pay application is denied, or whatever event created the claim.
This is an important step because courts will enforce reasonable time constraints on submitting claims. If you do not submit your claim in a timely fashion, you may be deemed to have waived your claim.
I recommend creating a summary sheet of the time limits in the contract. List how long you have to submit change orders, when claims must be submitted, and what must be included in the claim. This will save you some time if a claim arises and serve as a reminder of any time constraints.
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