CONTRACTORS: Don’t Just Notice the Notice of Non-Payment

Author: Faren Bogach |

Don’t Just Notice the Notice of Non-Payment.jpg

If you receive a Notice of Non-Payment (form 1.1)1 from the owner, you are being notified that the owner will not pay you for some or all of your proper invoice. You then have a short window of time to take action.

First, you should check whether the owner gave the notice on time. The owner has 14 calendar days from when you gave your proper invoice to give its Notice of Non-Payment (form 1.1) 2. If the owner misses the deadline, its notice may be invalid.

Second, you should review the notice to determine if the owner is paying you for all or some of your proper invoice and the reasons for non-payment.

Third you need to determine whether you will dispute the owner’s Notice of Non-Payment (form 1.1) 3.

If you do not have subcontractors or suppliers, you can choose whether to commence an adjudication, preserve a lien or accept the notice of non-payment (at least for the short-term).

If you have subcontractor(s) whose work you carried in your proper invoice to the owner, you have a few options:

  1. pay anyway even though you are not getting paid. If you choose this option, you need to make the payment within 35 days of when you gave your proper invoice to the owner.
  2. give a Notice of Non-Payment (form 1.2)4 within 7 calendar days from when the owner gave its notice. The form 1.2 includes an undertaking to commence an adjudication as against the owner within 21 calendar days.
  3. give a Notice of Non-Payment (form 1.3)5 within 7 calendar days from the owner giving its notice. You will need to provide reasons for paying the subcontractor for reasons, other than the non-payment of the owner. With this option there is no undertaking to commence an adjudication.

There are different reasons to choose an option. If you do not give a notice within the statutory timelines, you might be forced to pay your subcontractors and suppliers. If you are deciding which option to choose, we can help. You can reach out to the team at Construct Legal.

This is legal information and not legal advice.