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Do-It-Yourself
Collections
Contractors and subs
have options that do not involve hiring an attorney
If you are a materials
supplier, subcontractor or general contractor, there are simple and inexpensive
steps you can take yourself to collect your accounts receivable.
Small Claims.
Where the amount owed is relatively small and all you want the court to do is
award to you a money judgment, the Small Claims Division of the Arizona Justice
Courts may be a viable alterative. You can file a Small Claims complaint at the
Justice Court to collect up to $2,500. File the claim in the precinct where your
defendant resides (if an individual) or does business (if a company).
Summons and complaint forms are available from the Justice Court.
The filing fee for Small
Claims is just $16. You will also need to hire a process server to deliver the
complaint and summons to the defendant. Although the procedures are not
complicated in Small Claims court, the court clerks are not authorized to give
advice and will not help you complete the forms. If a question arises that the
clerk cannot resolve for you, talk to your attorney.
Justice Court. If
your claim is between $2,500 and $5,000, you can file a claim in Justice Court.
As with Small Claims, the Justice Court provides forms for these claims, and you
will have to hire a process server to serve the defendant with the summons and
complaint. The filing fee is a little steeper: $45.
A Justice Court claim is
somewhat more complicated than in the Small Claims Division. It requires more
paperwork and additional court appearances, and attorneys can be involved.
Nonpayment by a licensed
contractor is also grounds for disciplinary action by the Registrar of
Contractors. Contact the Registrar at (602) 542-1525 or (888) 271-9286 or at
www.rc.state.az.us to
obtain a claim form.
Keeping records.
Whether you file a claim in the Small Claims Division or elsewhere, the burden
is on you to prove your case.
Winning your Small Claim
or Justice Court claim is going to depend first on the quality of the proof you
can show to the court. That means beginning every project with written
contracts, keeping your records complete and organized, and documenting the
issues that arise in the field.
The attention you give to
your project file before problems arise will pay off greatly if you have to file
a claim of any kind to collect payment. Having your contract, proposals, bids,
proof of costs, purchase orders, and documented changes in good order will be
your most valuable asset when you walk through the courtroom door.
Stop notices. If
you are not paid in full and on time, even if the amount is small, you can take
action immediately by serving a stop notice on the owner or construction lender.
Arizona's stop notice law gives contractors, subcontractors and suppliers the
ability to demand that the owner or construction lender immediately withhold
amounts of the undisbursed construction funds to satisfy your claim.
A lawsuit to enforce the
stop notice may be filed as early as 10 days after the notice is served and
requires no title search on the real property. You can pursue a stop notice
during construction without impeding the project, and you retain your lien
rights if enforcement of the stop notice does not satisfy your claim.
In order to file a stop
notice, though, you must be eligible to file a lien, and the rights to serve a
stop notice and file a lawsuit to enforce the stop notice expire with your lien
rights. (More
information about stop notices and lien rights.)
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