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Ask an Attorney: HANDLING DEADLINES for Payment Claims on Construction Projects

By: Jeffrey C. Bright, Esq., Saxton & Stump Lawyers and Consultants

Most construction companies are aware that they need to pursue a payment claim by a certain deadline. But the reality is more complex, as there are many different deadlines that apply, depending on the circumstances. Each instance requires careful consideration of various different statutes, types of claims, and contract clauses.

Typically, a claim for payment on a construction project will be pursued as a breach of contract claim. In Pennsylvania, the statute of limitations (deadline) for breach of contract is four years. Other states might differ; for example, Maryland provides a three-year deadline.

But the long deadlines for filing a breach of contract claim can give a false sense of complacency, because most claims for payment must be pursued more quickly. Typically, a contractor/subcontractor/supplier will desire filing a mechanics’ lien claim. In Pennsylvania, the statutory deadline to file a mechanics’ lien claim is six months. Further, if the claimant is a subcontractor, a notice must be given 30 days prior to filing the mechanics’ lien claim, which inherently shortens the deadline by a month. Mechanics’ liens are state specific, and most states have similarly short deadlines that might also require advance notice.

The triggering date to measure the deadline for a mechanics’ lien claim is the last date of furnishing labor or materials to the project site. Thus, strong documentation to establish that date will greatly aid the pursuit of payment.

Payment bonds have different, shorter deadlines. Some payment bonds are purely contractual in nature, but others might be statutory. Depending on the specifics of the bond, there might be different deadlines for pursuing payment. Similar to a mechanics’ lien claim, the deadline for pursuing a claim on a payment bond is often triggered from the last date of furnishing labor or materials. But with a payment bond, the deadlines may be much shorter, especially if the claimant is a second-tier subcontractor or supplier. Frequently, a second-tier subcontractor or supplier must notice the claim within 90 days of last furnishing labor or materials; otherwise, the claim is lost. Ultimately, a payment bond claim must then be filed in court, typically within a one or two-year deadline.

Careful, prudent management of the project should begin evaluating claims for payment once the account and project are 45 days “stale.” The level of vigor in pursuing the claim depends on whether the claimant is still in the progress of performing its work. Once the work stops—for whatever reason, whether due to completing work or a suspension in work, planned or unplanned—any remaining invoices should be promptly submitted, and the claimant should begin evaluating options once the invoice is 45 days old; otherwise, the claimant risks losing its rights to file mechanics’ liens or payment bond claims.

Deadlines to file claims for payment can also be shortened by the contract itself. A contract can expressly shorten the time period for a breach of contract cause of action. For any public work that is under the purview of the Pennsylvania Board of Claims, all contracts include language that reflect the statutory deadlines to pursue claims within six months of the claim arising. These types of claims might need to be noticed and pursued even before the last date of work on the project. Further, public contracts (and many private construction contracts) include intermediary deadlines to notice the claim in advance, prior to filing a final claim in court.

Additionally, nearly all contracts require contractors/subcontractors to execute partial progressive lien waivers as the work progresses. If not careful, these lien waivers can waive a claim for payment. Similarly, contracts often include waivers of claims upon receipt and acceptance of final payment, unless the claims are preserved in writing at that time. These are standard clauses, because the claimant should be well aware at that time of any amounts still due or potentially claimable. Care must be taken to diligently notice, identify, and preserve amounts or claims that exist while the project is ongoing. This is to preserve the claim upfront, which is different than the outer deadline to file a lawsuit, which might be further down the road.


JEFFREY C. BRIGHT is a shareholder in Saxton & Stump’s Construction Law Group and is active in ABC Keystone, serving on its board of directors. In his construction practice, Jeff represents contractors, subcontractors, owners, construction managers, and design professionals. In addition to handling construction litigation and project disputes, he regularly advises on the preparation, revision, and negotiation of construction contracts for various project delivery systems. He also advises and litigates on insurance coverage and indemnity litigation that can arise during a project. He can be reached at jcb@saxtonstump.com.


Posted July 13, 2022