What Can a Contractor Do When a Client Won't Pay?
By Wyatt Cooper · Published · 7 min read
Key takeaways
- Start with your own paperwork: a signed contract, signed change orders and an invoice that matches the payment schedule are what any later step stands on.
- Find out why the client isn't paying and put the answer in writing; a dispute over the work or a change calls for a different next step than a client who can't pay.
- Send a written demand with a deadline, and put your lien deadline on the calendar the same day, because it runs whatever the client says.
- If the demand fails, choose between a mechanic's lien, small claims court for smaller amounts, the contract's dispute process, or a lawyer and a lawsuit.
When a client won't pay, first check that your contract, change orders and invoice support the amount. Then ask why, in writing, and fix any real complaint. Next send a written demand with a deadline, and diary your mechanic's lien deadline at once, because it runs regardless. If the client still doesn't pay, record a lien before the deadline, use small claims court for smaller amounts, follow the contract's dispute clause, or hire a lawyer.
Step 1: check your own paperwork
Before you push, make sure the amount is owed on paper. Pull the signed contract, every signed change order, the payment schedule and the invoice. A charge for extra work without a signed change order, or an invoice ahead of the schedule, is the first thing the client's side will point to.
Some states make this a legal question. In California, a home improvement contractor may not "request nor accept payment that exceeds the value of the work performed or material delivered," other than the down payment (Bus. & Prof. Code § 7159.5), and a contractor must allege "that they were a duly licensed contractor at all times" during the work to sue for payment (§ 7031). If your paperwork has a gap, fix what you can now: a written confirmation of a verbal change, an invoice reissued to match the schedule.
Step 2: ask why, and answer it
Call, then write down what was said in an email the same day. If the client disputes the quality of a piece of work, offer to walk it and fix what is genuinely wrong, and agree in writing what will be paid once it is fixed. If they dispute an extra, show the signed change order. If they simply can't pay, agree a short written payment plan. Paying the undisputed part now and settling the rest later is often the fastest money.
Should you stop work? Only if the contract allows it and you have given the notice it requires; walking off without a right to can turn the client's breach into yours. Read the clause before you decide.
Step 3: a written demand, and the lien clock
Send a short demand letter by a method that proves delivery: the amount, what it is for (contract and change-order numbers), the invoice date, a reasonable deadline to pay, such as 14 days, and what you will do if it isn't paid. Attach the invoice and the signed change orders. Keep the tone factual.
The same day, put your lien deadline on the calendar. A mechanic's lien is a claim against the property, and every state sets its own steps and deadlines; mechanic's lien deadlines explains how they are counted. In California, a direct contractor (one with a contract with the owner) must record its lien after completing its contract and before the earlier of 90 days after completion of the work of improvement or 60 days after the owner records a notice of completion or cessation (Civ. Code § 8412), then sue to enforce it within 90 days after recording, or it "expires and is unenforceable" (§ 8460). A demand letter doesn't stop that clock.
Step 4: lien, small claims, the contract's process, or a lawsuit
| Option | When it fits | What to know |
|---|---|---|
| Mechanic's lien | You are inside the lien deadline | Secures the claim against the property; must be enforced by a lawsuit within the deadline, or it lapses (CA: 90 days after recording) |
| Small claims court | The amount is within the court's limit | CA: up to $12,500 for a natural person, $6,250 for others such as a corporation or LLC; no more than two claims over $2,500 a year |
| The contract's dispute clause | The contract requires mediation or arbitration | Follow its notice steps first; a court may send you there anyway |
| Lawyer and lawsuit | Larger amounts, or a lien to enforce | Costs money and time; a lawyer's letter alone sometimes settles it |
The small claims limits are in California's Code of Civil Procedure: $6,250 for a demand under § 116.220, and $12,500 "in an action brought by a natural person" under § 116.221; no one may file more than two small claims actions over $2,500 in the state in a calendar year (§ 116.231). A sole proprietor suing in their own name may be a natural person; a company is not. Excess over the limit may be waived to stay in small claims, but you then give it up.
Worked example: a final invoice that isn't paid
- 1ContractorSeptember 1: work complete; final invoice of $6,400 sent with the signed final change order
- 2ClientSeptember 15: hasn't paid; on the phone says a grout line is cracked
- 3ContractorSeptember 18: regrouts the line, emails a photo and asks for payment within 10 days
- 4ContractorOctober 1: unpaid; sends a demand letter by certified mail with a deadline of October 15
- 5ContractorOctober 16: still unpaid; decides to record a lien well before November 30, 2026 (90 days after completion)
- 6ContractorThen: if the lien is recorded on, say, November 3, sues to enforce it by Monday, February 1, 2027 (90 days after recording); or, for the money alone, files in small claims as a sole proprietor, since $6,400 is over the $6,250 limit for a company
The count: from September 1, 90 days is November 30 (29 days to September 30, then 31 and 30). If the owner records a notice of completion, the deadline becomes the earlier date 60 days after recording. Don't wait for the last day.
The bottom line
When a client won't pay, work in order: check your paperwork, ask why and fix what's real, send a written demand, and calendar the lien deadline the same day. Then lien, small claims, the contract's process or a lawyer, before the deadlines pass.
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Sources
- California Civil Code § 8412 — California Legislative Information. Read October 22, 2026.
- California Civil Code § 8460 — California Legislative Information. Read October 22, 2026.
- California Code of Civil Procedure § 116.220 — California Legislative Information. Read October 22, 2026.
- California Code of Civil Procedure § 116.221 — California Legislative Information. Read October 22, 2026.
- California Code of Civil Procedure § 116.231 — California Legislative Information. Read October 22, 2026.
- California Business and Professions Code § 7031 — California Legislative Information. Read October 22, 2026.
- California Business and Professions Code § 7159.5 — California Legislative Information. Read October 22, 2026.
Questions
What can I do if a homeowner refuses to pay?
Check your contract, change orders and invoice; ask why and fix any real complaint; send a written demand with a deadline; and calendar your lien deadline. If that fails, record a mechanic's lien before the deadline, use small claims court for smaller amounts, follow the contract's dispute clause, or hire a lawyer.
Can I put a lien on a house for nonpayment?
Usually, if you follow your state's lien statute: the right notices, a recorded claim before the deadline, and a lawsuit to enforce it in time. In California a direct contractor records within 90 days after completion, or 60 days after a recorded notice of completion, and sues within 90 days after recording.
Should I stop work if the client stops paying?
Only if your contract gives you that right and you follow its notice steps. Stopping without the right can make you the party in breach. Read the clause, and talk to a lawyer if the amount is large.
Can I take a client to small claims court?
If the amount is within your state's limit. In California the limit is $12,500 for a natural person and $6,250 for others such as a company, and no one may file more than two claims over $2,500 a year. Check your own state's limit.
What should a payment demand letter say?
The amount owed, what it is for, the invoice date, a deadline to pay, and what you will do if it isn't paid, with the invoice and signed change orders attached. Send it by a method that proves delivery and keep a copy.
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