When a contractor is not paid for completed work in New York, legal options may include filing a mechanic’s lien, pursuing a breach-of-contract claim, or resolving the dispute through mediation, arbitration, or litigation. The right approach depends on the contract terms, the amount owed, and how far the dispute has escalated. Acting early helps contractors protect payment rights and avoid unnecessary delays or losses.
Start by Reviewing the Construction Contract
The first step in any payment dispute is reviewing the contract governing the project. Construction contracts often control how disputes must be handled and may limit or require certain remedies.
Key provisions to review include:
- Payment schedules and deadlines
- Scope of work and change order terms
- Notice requirements for disputes
- Mandatory mediation or arbitration clauses
If the contract requires a specific dispute resolution process, contractors must generally follow those procedures before pursuing litigation.
Using a Mechanic’s Lien to Secure Payment
A mechanic’s lien is one of the most powerful tools available to contractors in New York. A properly filed lien creates a legal claim against the property where the work was performed, putting pressure on owners to resolve payment disputes.
Mechanic’s liens are subject to strict filing deadlines and notice requirements. Missing a deadline or filing incorrectly can invalidate the lien entirely. When used correctly, a lien can lead to payment without the need for prolonged litigation, especially when property owners need to refinance or sell.
Breach of Contract Claims for Nonpayment
When payment disputes cannot be resolved informally, contractors may pursue a breach of contract claim. These claims typically allege that the owner or developer failed to pay under the agreed terms.
Breach of contract litigation may seek:
- Unpaid contract balances
- Payment for approved change orders
- Interest and contractual penalties
- Legal costs, where permitted
Courts evaluate the written agreement, project documentation, and performance history to determine liability.
Litigation vs. Mediation or Arbitration
Mediation
Mediation involves a neutral third party who helps both sides reach a voluntary resolution. It is often faster and less expensive than court and may preserve ongoing business relationships. Mediation does not result in a binding decision unless both parties agree to a settlement.
Arbitration
Arbitration resembles a private trial, where an arbitrator hears evidence and issues a binding decision. Many construction contracts require arbitration. While typically faster than court, arbitration offers limited appeal rights.
Litigation
When alternative resolution fails—or is not required—contractors may pursue claims in court. Litigation allows full discovery, motion practice, and enforcement remedies. Complex disputes involving large sums, multiple parties, or contested workmanship issues often require court intervention. Choosing the right forum is a strategic decision that can significantly affect outcomes.
Small Claims vs. Civil Court
For lower-dollar disputes, contractors may consider small claims court. Outside New York City, claims up to $5,000 may qualify; within NYC, the limit is $10,000. Small claims court does not require an attorney but offers limited remedies. Larger or more complex disputes are typically handled in civil court, where procedural rules, deadlines, and evidentiary standards make legal representation especially important.
What If You Win but Still Don’t Get Paid?
Winning a judgment does not automatically result in payment. If the defendant fails to comply, contractors may pursue enforcement actions such as asset restraints, bank levies, or wage garnishment where permitted. Enforcement strategies vary by county and circumstance, making legal guidance essential at this stage.
When Legal Action Becomes Necessary
Not every payment dispute requires litigation. Some arise from temporary cash flow issues or miscommunication and can be resolved through negotiation. However, repeated delays, refusal to pay, or disputes involving large balances often demand formal legal action to protect the contractor’s rights.
How Kohan Law Group Can Help Contractors
Kohan Law Group represents contractors, subcontractors, and construction professionals in payment disputes across New York, including Nassau County and the New York City area. Our attorneys handle mechanic’s lien enforcement, breach-of-contract litigation, and complex construction disputes involving owners, developers, and other project stakeholders.
We assess the strongest path forward—whether through negotiation, mediation, arbitration, or aggressive litigation—and pursue payment strategies designed to protect both cash flow and long-term business interests. If you are facing nonpayment, contact usto discuss your options and take decisive action to enforce your rights.