Masonry Magazine June 1987 Page. 41
CONSTRUCTION CLAIMS
Arbitration (if specified in the contract) or litigation is the only way to obtain compensation. Arbitration may be faster than litigation, but both will be far more expensive and time consuming than negotiation. In arbitration you may receive an award for compensation in a period of 6 months to 3 years, whereas litigation may take from 1 to 5 years. Once you receive a judgement, then you face another hurdle, which is collecting the amount awarded. Frequently, collection is time consuming and may prove impossible.
Q: Can the mason contractor be denied additional money if the general contractor does not request it from the owner on his behalf?
A: Yes, that is the reason you must carefully scrutinize the agreement the owner has with the general contractor. You may find that you are limited to an amount of recovery the general contractor receives from the owner. The contract documents will dictate how and how much you may recover.
In certain instances you may feel that you are entitled to additional compensation, but the owner will not grant any to the general contractor. Perhaps the delay is the fault of the general contractor. Also, if the general contractor has other subcontractors working for him, and one goes bankrupt, for example, there is a good chance that the project will be delayed. The general contractor may require you to accelerate your work without additional compensation. The owner will not pay for the delays caused by the general contractor for which he (the owner) is not responsible. If the owner will not pay the general contractor for a delay, you will receive no additional payment.
Q: Are bonds and liens related to claims relief?
A: The contractor bonds himself to assure the owner or general contractor that he will perform as specified by the contract. If there is litigation regarding the fulfillment of the contract, or, if the contractor defaults or goes bankrupt, the bond is insurance that the project will be completed in accordance with the contract. Bonds cannot be used to avoid claims or subsequent litigation initiated by other prime contractors suffering losses as a result of default, bankruptcy or other actions which affect the fulfillment of their contracted work.
A lien can be placed on a property by a contractor when he has not been compensated as agreed upon. Occasionally an owner is not aware that a mason contractor has not been compensated by the general contractor. The mason contractor can then file a lien to facilitate negotiations with the general contractor.
When a lien exists on a property, a bond in the amount of the lien may be used to cover that lien so that the bond becomes the security instead of the property itself. Nevertheless, liens cannot prevent the need to file claims.
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MASONRY-MAY/JUNE, 1987 41