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Review collection terms in development construction contracts

When beginning a new project here in Orange County or elsewhere, it will usually be necessary to enter into an agreement with a company to handle the renovation or build. Construction contracts can be long with a substantial amount of provisions and fine print. Two items to make sure to review -- in conjunction with everything else -- prior to signing and beginning work on the development involve the contractor's rights when it comes to collecting for non-payment.

It probably would not be surprising to see provisions regarding the filing of construction and mechanic's liens against the property owner for non-payment. More than likely, the provision will include more than just the general contractor. It will probably include suppliers, subcontractors and others who may provide goods or services for the construction.

Another provision to look for involves allowing the contractor to stop all work until payments are made. The property owner should also have assurances that work will resume once payment is made if this provision remains in the contract. Of course, it may be possible that work could stop for non-payment even without such a provision in the contract.

When it comes to working out terms of construction contracts, Orange County property owners need to make sure their rights are as protected as possible. It may be necessary to make some compromises, but they should not put the developer in an untenable position. The provisions should be fair and provide some guarantees that the development will move forward in a timely manner as agreed and that any delays will be resolved as quickly and efficiently as possible.

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