In Delaware, property owners of residential projects may withhold final payment from a general contractor until the latter serves a document known as a certification of payment.
A contractor certification of payment in Delaware is a document that allows a general contractor to prove that they have made the necessary payments to all subcontractors and lower-tier parties. In effect, it protects property owners from having to deal with mechanics liens after having already paid the GC.
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- When is a Contractor Certification of Payment served in Delaware?
- What happens if a contractor does not serve a certification of payment in Delaware?
- Can a contractor still file a mechanics lien after serving a certification of payment?
- How do you file a Delaware Contractor Certification of Payment?
- Best practices when filing a Delaware Contractor Certification of Payment
When is a Contractor Certification of Payment served in Delaware?
It is served prior to or on the day the property owner of a residential project releases the final payment to a general contractor. This is to ensure that all potential lien claimants other than the general contractor have been paid; therefore, the property owner will not be at risk of facing mechanics liens after paying off the GC.
What happens if a contractor does not serve a certification of payment in Delaware?
A contractor certification is typically required by residential property owners prior to releasing the final payment. If you do not serve a contractor certification of payment, the property owner may withhold your last payment for the project.
Note that failure to provide a certification of payment or a lien release waiver may also be grounds for a contractor to lose their business license.
Can a contractor still file a mechanics lien after serving a certification of payment?
If a property owner does not release your final payment after you have served them a certification that all subcontractors and suppliers have been paid, you may still record a mechanics lien to recover your payment.
How do you file a Delaware Contractor Certification of Payment?
Prepare a contractor certification of payment form
Per Delaware laws, the contractor certification of payment must be “a notarized, verified written certification that the contractor has paid in full for all labor performed and materials furnished to the date of such full or final payment in or for such construction, erection, building, improvement, alteration or repair.”
This certification should illustrate the following details:
- A list of the lower-tier parties who were paid
- A description of the property location
- The dates when the payments were made
- A statement confirming that payments were made
Note that instead of certification of payment, you may also serve a written release of mechanics liens signed by all parties who are entitled to file a mechanics lien against the property in question.
Serve the contractor certification of payment on the property owner
You may serve the Delaware contractor certification via personal delivery or via certified or registered mail. There is no specific deadline for doing so, but it is usually done before or on the day you receive your final payment.
Note that if payment is not made even after you serve contractor certification, you may still record a mechanics lien. The deadline for filing a mechanics lien in Delaware will not be extended regardless if you serve contractor certification or not. Keep this is in mind so you do not risk missing the mechanics lien deadline and losing your lien rights.
Best practices when filing a Delaware Contractor Certification of Payment
Remember to have the contractor certification notarized
The contractor certification in Delaware must be a notarized document. It must also include a statement certifying that all parties who work for you have already been paid. You must swear to this statement, which means that you should sign your contractor certification only when you’re in the presence of an authorized notary officer.
Include a list of all paid parties in your contractor certification
There is no statutory form for the Delaware certification of payment, although ideally, it must contain a list of all the parties that you paid, including your subcontractors and material suppliers. You must make sure that all parties who have lien rights against a property have indeed been paid prior to signing a contractor certification.
File a mechanics lien if needed
Serving a contractor certification is not equivalent to signing a lien release or waiver. You will still have your lien rights intact, provided you have followed all other rules and requirements in Delaware. If you do not receive your final payment after serving a contractor certification, filing a mechanics lien will be your best recourse to recover your payment.