What to do when a client won't pay: the contractor's legal checklist

Your contract controls what happens next

Payment terms. The first thing you need to do is read your contract. Confirm what the contract says about late payment, dispute resolution, and your right to stop work. Those provisions are the legal basis for what you do next.

Right to suspend work. Many construction contracts give you the right to suspend work after a payment default, but only if you follow the notice requirements exactly. Send a written notice of suspension before you stop work. If you walk off the job without proper notice, you hand the client a breach-of-contract argument that undercuts your claim.

Dispute resolution clauses. Check whether your contract requires mediation or arbitration before you can sue. If you file in court when the contract mandates arbitration, you waste time and money. If the contract is silent, you have more options, including small claims court for smaller amounts.

Mechanics liens: your most powerful collection tool

Lien deadlines are strict and unforgiving. A mechanics lien attaches your unpaid balance to the property itself, which means the client will struggle to sell or refinance until the lien is resolved. In most states the client can post a bond to release the lien from the property—your claim then attaches to the bond until the dispute is resolved. Every state sets its own deadline for filing, often 60 to 90 days from your last day of work or the date of substantial completion. Miss that window and your lien rights are gone permanently.

Preliminary notice requirements. Many states require you to send a preliminary notice to the property owner at the start of a project as a condition of your lien rights. If you didn't send one, you may have already lost your right to lien regardless of what the client owes. Check your state's requirements now, before you're in a dispute, not after.

Subcontractors and suppliers can lien too. If you're a general contractor and a sub or supplier goes unpaid, they may be able to lien the property directly, in many states even after the owner has paid you in full. That puts the owner at risk of paying twice, and it puts you in the middle. Some states limit a sub's lien to what the owner still owes, but do not count on that protection without checking. Understanding the lien exposure up and down the chain is part of managing payment risk on any job.

The demand letter: what it needs to say

Written demands create a record and prompt responses. A properly worded demand letter does three things: it states the exact amount owed with a reference to the contract, it gives a clear deadline to pay (typically 10 to 14 days), and it states the consequences of non-payment, including your intent to file a lien and pursue legal action. Vague or emotional letters are easy to ignore. Specific, documented demands are not.

Send it the right way. Email is convenient, but certified mail with a return receipt creates a paper trail that holds up in court. Send both. Keep copies of everything, including delivery confirmation.

Some states require notice before you can act. Several states require a formal notice of intent to lien, sent days or weeks before you can file the lien itself. Missing that notice kills your lien rights the same way missing the filing deadline does. A smaller number require a demand before certain lawsuits, and in some states a written demand preserves your right to recover attorney's fees. Skipping this step, even in a state where it's technically optional, weakens your negotiating position and your case.

Change order disputes: the documentation problem

Verbal approvals are not approvals. The most common reason clients refuse to pay is a disputed change order. If your contract requires written change orders and you proceeded on a verbal go-ahead, you may have difficulty enforcing payment for that extra work, even if the client asked for it and you did it. The fix is documentation before you start, not a text thread afterward.

Constructive change orders. If an owner or their representative directed additional work without a formal change order, you may have a constructive change order claim under the contract. This argument is stronger when you document the direction in real time, such as in an email or job log entry, and weaker when it surfaces only after a payment dispute starts.

The contractor's non-payment checklist

Run through these in order before escalating:

• Pull the contract. Read the payment terms, dispute resolution clause, and suspension rights.

• Gather your documentation: signed contract, all invoices, change orders (signed and unsigned), job logs, photos, and correspondence.

• Check your lien deadline. Calculate it from your last day of work and calendar it now.

• Verify whether you sent a preliminary notice at project start (required in many states for lien rights).

• Send a written demand letter: amount owed, deadline to pay, consequences of non-payment.

• Send via certified mail and email. Keep proof of delivery.

• If unpaid after the deadline, file the mechanics lien before the window closes.

• Evaluate your options: mediation, arbitration, small claims court, or civil suit based on amount and contract terms.

How to use Inhouse

Start by describing your situation: the project type, the amount owed, whether you have a signed contract, and when you last performed work on the job. From there, Inhouse can produce a first-draft demand letter with the key terms filled in, a lien deadline calculation based on your state and last-work date, and a change order documentation checklist tailored to your contract.

What gets routed to a lawyer: anything involving a mechanics lien filing, a formal arbitration demand, or a civil complaint. Inhouse drafts the documents; a licensed attorney in your state reviews and files them.

What to ask Inhouse first:

"I'm a general contractor in [state]. My client owes me $[amount] on a [project type] job. We have a signed contract. My last day on site was [date]. They haven't responded to my last two invoices. I need a demand letter and want to understand my lien rights."

Bottom line

Non-payment is a legal problem with a legal solution, and the contractors who collect are the ones who move fast and document everything. Your lien rights are time-limited and your demand letter is more powerful when it lands before the client lawyers up. Start with Inhouse to get your demand letter drafted and your lien deadline on the calendar, then loop in a licensed attorney in your state to file.

Legal notes

This article is general legal information, not legal advice. It does not create an attorney-client relationship. Construction payment law, including mechanics lien statutes, preliminary notice requirements, and pre-suit demand obligations, varies significantly by state. Deadlines referenced in this article are illustrative; your actual lien deadline depends on your state's statute, the project type, and your role in the project. Do not calculate or rely on lien deadlines without verifying the applicable statute or consulting a licensed attorney in your state. Consult a construction attorney before filing a mechanics lien or initiating legal proceedings.