Posts Tagged ‘Las Vegas City Center’

Liens Make Your Payment Problem the Entire Project’s Biggest Problem

On June 15, 2010        

When you don’t get paid on a construction project, that is a big problem for you and your company. But, is it a big problem for the entire construction project? Not likely.

So, how do you make your problem an important problem to the other players working on a construction job? With a mechanic’s lien, of course.

The Wall Street Journal recently reported on a mega-project in Las Vegas (the $8.5 billion City Center), and a contractor dispute that is affecting the project’s finances. There was something really interesting about this report for those of us who follow mechanic lien law and news – and that’s this quote from City Center President Bobby Baldwin, referring to over $500 million in liens filed against the project:

Obviously everybody is concerned about the liens. They have to be explained in great detail to our residential buyers.

To resolve the concern about the liens, the property owner is slowly paying off all of the subcontractor and supplier claims while they proceed with their dispute against the prime contractor. Without those liens, those subs and suppliers would have to wait months or years for the main dispute to resolve, and payment to trickle down from the owner to them. Depending on the size of the contract, that’s something that could cripple their business.

The Wall Street Journal article and construction dispute at the City Center was the subject of a blog post on the Construction Law Monitor, which that blog called a “Large-Scale Example of an Everyday Construction Dispute.” And that summary is perfectly true when it comes down to mechanics liens.

Regardless of how large or how small the project, mechanics liens creates a problem for the project. If you’re not paid on a construction project, the best way to make your problem the construction project’s problem, is to file a mechanics lien.

This article was originally posted on Express Lien’s topic-specific Construction Lien Blog.

Posted in:     Mechanics Lien  /  Tags: , , ,   /   2 Comments

The Project in Las Vegas A Large-Scale Example of Typical Construction Dispute

On May 26, 2010        

A mega-project in Las Vegas is having real problems; mega-problems.   But when you look past the large numbers, all that is left is a simple construction dispute that is played out everyday across the nation between contractors, subcontractors and owners.   The dispute – reported recently by the Wall Street Journal – serves as a good, large-scale example of how things can go wrong in a construction project.

Here are three key components of this dispute:

  • The general contractor claims the owner hasn’t paid according to the payment schedule, and the owner claims it is owed money because of construction defects.
  • Failure to pay the prime trickled down to the subs, and they have filed liens.
  • The owner further refuses to pay the prime because (i) they have a contractual duty to keep the project lien-free; and (ii) The liens are causing the owner damages in that it is more difficult to sell the condominium units.

Sound familiar?   Of course it sounds familiar, this is a summary of nearly every owner / prime contractor dispute across the country.

As your construction project approaches completion, keep these issues in mind.   Owners very frequently get tighter on the final payments because they’re afraid the prime contractor will bail before work is 100% complete.   But the budget squeeze results in subcontractor liens, animosity, catch-22s and the spark of a litigation war.

We usually recommend two ways to handle these frequent problems.

First, handle it in the contract.    Think about these issues before you sign anything, and make the contract clear about how the contract will reach final completion.

Second, set up a way to resolve the dispute out of court (mediations, initial decision makers, and the like).

What do you guys think?   Any other recommendations?

Posted in:     Arbitration & ADR, Construction News, Litigation  /  Tags: , , ,   /   4 Comments