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Bloomfield Office
Three Regency Drive
Bloomfield, CT 06002
Phone: (860) 242-2221
Fax: (860) 286-0185New Haven Office
1164 Townsend Avenue
2nd Floor
New Haven, CT 06512
Phone: (203) 468-4770
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CASHING IN ON COMMERCIAL CONSTRUCTION CLAIMS 06-01-2005 The Connecticut Legislature has recently provided commercial construction Contractors with an enhanced weapon which can be used to collect a debt due the Contractor upon default by the Owner. Likewise, a Subcontractor who has a claim against a Contractor is afforded the same protection. The following is a step-by-step summation of how a Contractor (Subcontractor) can make a claim against the Owner (Contractor) even if the Creditor’s Mechanic's Lien rights have expired. “Construction Contracts”, as defined by State law, must contain the following provisions (as applicable): a Contractor in a direct relationship with an Owner must be paid within 30 days after the Contractor’s request for payment; and the Contractor must pay its Subcontractors and Suppliers within 30 days after receiving payment. 1. a. If the Owner does not pay as required, the Contractor can make a claim against the Owner. b. If the Contractor does not pay as required, the Subcontractor or Supplier can make a claim against the Contractor. 2. a. In addition, the Contractor or Subcontractor, as the case may be, may make demand upon the Debtor to place the funds due in an interest-bearing escrow account in a bank (with certain exceptions). b. If the Debtor fails to create this escrow account, the Debtor is liable to the Creditor for the funds, plus reasonable attorneys' fees, plus interest at 1% per month. 3. Each Owner who enters into a Construction Contract and fails to make payment as required shall, upon demand of a Contractor, Subcontractor or Supplier be directly liable to the Contractor, Subcontractor or Supplier. The Subcontractor or Supplier must also send a copy of the written demand to the Contractor. If the Owner fails to pay, the Creditor may sue the Owner. The net result is, by complying with the above requirements, a party with, or without, a direct contract with the Owner can sue the Owner, provided the Owner entered into a Construction Contract. There are additional provisions in the statute (P.A. No. 04-202) which are beyond the scope of this summary. If you care to learn more about your rights and obligations under this act please contact the author.For more information, please contact Attorney Martin A. Clayman.
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