What to Do When a Client Refuses to Pay (A Colorado Contractor’s Guide)

Close up of currency

One problem I didn’t seriously consider when I opened Lindworks, LLC in 2009 was non-paying clients. I was excited to establish myself, and I initially turned to people I knew who could use my services, or at least refer me to others. As honesty is one of my core values, I assumed others would feel the same way. 

I was wrong.

One client, a woman who’d been a personal friend, refused to pay for the work I’d completed. She didn’t like it, and she therefore believed she didn’t have to pay for it. She also wanted it rushed, which didn't give me enough time to plan for it and complete the work. Had I made some mistakes? Yes, and I offered to fix them without charging her more, but she refused to allow me to fix my mistakes and to pay me. 

That hurt. Financially, professionally, and personally, I was hurt.

I price myself lower than other companies because I want people to be able to afford me and afford to have the work done. Based on my years of experience, I could charge $125 an hour, but that would price out many of my clients. It’s important to me to help people, 

However, I’ve recently discovered an attitude among some clients that if they don’t like the work, they won’t pay for it. 

Frankly, I’m astounded by that thinking. 

My clients know that I communicate with them, asking them to check my work, and I’m willing to fix any mistakes. But this is my livelihood, and I can’t imagine refusing to pay anyone who does work in my home. 

Right now, I’m struggling to get a company to pay me for work completed. This isn’t the first time I’ve done work commercially where, once finished, the company refuses to pay me. 

When companies and clients first started refusing to make a payment, I was frustrated, but I let it go. It didn’t seem worth the fight, especially after one client bullied me and insulted me. 

Home repair and remodelers don’t work for free. So what should you do if a client refuses to pay?

When your client fails to pay for the work you’ve completed,  contractors should follow a structured, escalating process that begins with direct communication and moves toward legal remedies like mechanics' liens. 

Colorado law offers strict, time-sensitive protections for contractors, requiring specific procedures to secure payment. 

1. Immediate Follow-Up and Documentation:

a. Send Reminders: Immediately send a polite email or letter reminding the client of the overdue payment, attaching the invoice and the original contract.

b. Stop Work: Stop work on the project until payment issues are resolved, especially if the client is unresponsive.

c. Document Everything: Gather all communication, photos of completed work, and signed contracts. This documentation is crucial if legal action is necessary. 

2. Send a Formal Demand Letter 

• If payments are overdue (e.g., 60-90 days), send a formal demand letter or debt collection letter via certified mail with return receipt requested.

• Contents: State the original payment due date, total amount owed, and a strict final deadline for payment (e.g., 10-14 days).

• Consequences: Explicitly state that failure to pay will result in the filing of a mechanic's lien on their property. 

3. File a Colorado Mechanic’s Lien

• A mechanic's lien acts as a security interest in the property, preventing the owner from selling or refinancing until the debt is settled. 

• Serve Notice of Intent to Lien: You must serve the property owner with a "Notice of Intent to File a Mechanic's Lien" at least 10 days before recording the lien.

• Record the Lien Statement: After the 10-day notice period, record the Lien Statement with the county clerk and recorder where the property is located.

• Deadlines:

Contractors (supplying labor & materials): Within 4 months of the last work day.

Laborers (labor only): Within 2 months of the last work day.

Warning: Filing for an amount larger than what is owed can invalidate the entire lien. 

4. Small Claims Court or Litigation 

• Small Claims Court: If the debt is $7,500 or less, you can file a lawsuit in Colorado small claims court. This is a faster, lower-cost option.

• County/District Court: If the debt exceeds $7,500, a suit must be filed in a higher court.

• Foreclosure: If the lien does not prompt payment, you may have to file a foreclosure lawsuit within 6 months of the last date of work to enforce the lien. 

5. Alternative Remedies

• Collection Agency: Hire a collection agency for debts over 90 days, though this usually involves paying a percentage of the recovered amount.

• Colorado Construction Trust Fund Statute: If the homeowner paid a general contractor but that contractor did not pay you (as a subcontractor), you may have a claim under this statute for misappropriation of funds. 

Key Tips for Colorado Contractors

• Oral Contracts: Although oral contracts are valid and enforceable in Colorado, they require more evidence to prove there is a pay dispute. You are much better off asking your clients to sign a written contract. 

• Get it in Writing: Future projects should include a clear contract, scope of work, and a 50% deposit before work begins to prevent nonpayment.

• Invalid Liens: A lien can be rendered invalid if technical errors are made, such as failing to meet the 10-day notice requirement or the 4-month filing deadline. Be sure you have covered your bases when putting a lien on a property. 

• Consider finding a lawyer who specializes in construction law. Yes, it will cost you, but a lawyer knows the law and can advise and represent you. 

I know it seems like a lot of work to get the money you’re owed, but it’s necessary. You held up your end of the agreement. Your clients should do the same.

If a client doesn’t like your work, fix it—or offer to fix it. But if they refuse to pay, you have every right to take the next step.

Even when it’s uncomfortable.

Even when it’s personal.