6 Essential "Dos" for Small Contractors

1. Do Serve a Preliminary Notice Timely

Protecting your payment rights starts on day one. To enforce a mechanics lien, stop payment notice, or a payment bond claim, a preliminary notice must be served within the strict statutory deadline.

For a deeper dive into why this step is non-negotiable, refer to our article: “Missing the Preliminary Notice Could Cost You—Here’s Why.”

2. Do Contact a Construction Attorney

When dealing with complex legal matters, professional guidance is your best defense against costly complications. Without an attorney, you may inadvertently take actions, or miss deadlines, that negatively affect your ability to get paid or defend your work.

3. Do Pay Attention to Filing Liens and Notices Timely

In construction law, time is of the essence; missing a filing window by even twenty-four hours can result in the total loss of your lien rights. Always track your "date of last work" and “project completion date” to ensure every notice is served and every lien is recorded within the legally specified timeframe.

4. Do Confirm Verbal Agreements in Writing

Verbal agreements on a job site are common but notoriously difficult to prove in court. Always establish a paper trail by confirming verbal instructions via email to ensure both parties have a clear, signed record of the work proceedings and expectations.

5. Do Revise the Contract by Change Order

Whenever the project deviates from the original plan, ensure the agreement is updated via a formal change order. Documenting changes in scope, price, and time protects you from "scope creep" and ensures you are legally entitled to compensation for extra work performed.

6. Do Have a Defined Scope of Work

A vague contract is a recipe for a dispute. Clearly define exactly what work is and is not included in your bid to prevent misunderstandings and ensure that both the contractor and the owner are aligned to the project's final deliverables.

6 Essential "Don'ts" for Small Contractors

1. Don't Work Unlicensed or Outside Your Classification

Operating without a valid license or performing work outside of your specific classification is a significant legal risk. Doing so can jeopardize your right to payment and lead to severe penalties or the permanent loss of your license.

2. Don't Employ Staff Without Workers' Compensation Insurance

In many jurisdictions, failing to carry workers' compensation insurance automatically renders your license suspended or inactive. Maintaining this coverage is vital to protect your business from liability and ensure employees are supported if an on-the-job injury occurs.

3. Don't Ignore Contract Terms Regarding Change Orders and Notices

Always follow the procedures set forth in the original contract when change orders arise. Although a change order modifies specific aspects of a project, the underlying contract remains in force. Failure to comply, particularly with notice requirements for extra work, can result in a breach of contract and the loss of your right to additional compensation.

4. Don't Fail to Track and Control Time-and-Materials Work

Tracking "Time and Material" work is critical for maintaining budgets and avoiding end-of-job disputes. Ensure these subcontracts are documented and monitored closely so that costs do not spiral, leading to financial losses for the general contractor.

5. Don't Forget That Subcontracts and Prime Contracts Are Linked

Most subcontracts contain “flow-down” provisions, meaning the terms of the prime contract between the owner and general contractor also apply to the subcontractor. Subcontractors should obtain and review the prime contract before executing their subcontract to fully understand their obligations and risks.

6. Don't Ignore Project Close-Out Requirements
Project close-out obligations are often a condition to final payment. Incomplete or missing close-out documentation, such as-built drawings, warranties, operation and maintenance manuals, lien waivers, test reports, or final inspections, can delay or even bar final payment. Failure to timely satisfy close-out requirements may also extend punch-list disputes or expose the contractor to liquidated damages.