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Debt collection articles

Read articles on debt collection written by Carlo Pegna

Can we collect it? Yes we can - debt collection for construction companies

Master Collections has built a reputation in the industry as the go to debt collector for construction. Indeed we often get asked to collect for construction sub contractors who have not been paid Payment Applications as a result of the contractor’s failure to issue a Payment Notice.

While legislation is designed to help sub contractors in contracts where the other contracting party is not the home owner or residential occupier it is complicated and sometimes main contractors take advantage of this.

At Master Collections you will be appointed a legal manager who is a legal executive with construction debt collection expertise, and as a result we ensure contractors do not get away with their legal obligations.

The Housing Grants Construction and Regeneration Act 1996 as Amended (the Construction Act)

Payment Applications are governed by the Construction Act as amended by The Local Democracy, Economic Development and Construction Act 2009. In a nutshell the Payment Application can only take effect of a Payment Notice if the contractor fails to give a Payment Notice within five days after the payment due date and if the contract provides that it can, (the JCT 2011 contract provides for this).

Great if you have such a contract with the contractor, however if you do not you cannot proceed with debt collection proceedings until such time that you have served the contractor a Default Notice.

In terms of what a Default Notice should comprise of reference is made to the following section of the Construction Act:-

110A Payment notices: contractual requirements

(3)A notice complies with this subsection if it specifies- (a)the sum that the payee considers to be or to have been due at the payment due date in respect of the payment, and (b)the basis on which that sum is calculated”

Accordingly providing you itemise the supply of the goods and labour supplied on a document headed ‘Default Notice’ this will be sufficient. More often than not it is just a case of resubmitting the Payment Application with a different heading ‘Default Notice’. When sending the Default Notice it is advised that you send it under cover of a letter explaining why you have decided to issue a Default Notice namely because further to the Payment Application(s) the contractor has failed to serve a Payment Notice 5 days after the payment due date.

If the contractor fails to issue a Pay Less Notice within 17 days of service of the Default Notice confirming the sum they wish to withhold and how it is calculated you have the option of referring the matter to adjudication or commencing debt collection proceedings. Indeed providing you have followed the correct procedure a court will not entertain a Pay Less Notice that has been served out of time.

Want to find out more?

If you are a sub contractor owed money call award winning credit professional and legal executive Carlo Pegna on 01920 481467 for a FREE debt recovery assessment. This is subject to a minimum outstanding balance of £3,000.