How to deal with project arrears and arrears of project funds?

There are several solutions to default on project payment:

First, claim rights or keep evidence for the owner's overdue payment in time.

Project funds are generally divided into advance payment, progress payment, settlement payment and quality deposit.

First of all, when signing the construction contract, although the construction party is at a disadvantage compared with Party A, it is still necessary to strive for a reasonable proportion of advance payment and progress payment that is beneficial to the construction party in the contract.

Because, in the process of project progress, the construction unit enjoys the initiative, and if the owner's construction unit delays payment, it can postpone the construction period to restrict the owner, so we must strive to pay a large amount of project funds to the maximum before the project is completed.

Furthermore, in the process of the project, once the owner's construction unit fails to pay the advance payment or progress payment, it should make a written statement or claim in time out of respect. On the one hand, it can take the initiative in the engineering claim procedure, and on the other hand, it can provide the most sufficient evidence for possible litigation in the future.

Furthermore, the payment of the project funds should be checked in time, and if necessary, the evidence should be fixed regularly by means of financial reconciliation with the owner's construction unit. The settlement document shall be sealed by both parties.

Because financial reconciliation is an act between business departments, it will not cause the employer's prevention, and financial statements can be used as evidence of default litigation, so that even if disputes occur, construction enterprises can be in a favorable position.

Second, make full use of the validity of the construction contract to ensure the recovery of project funds.

The background of this strategy is the contradiction between China's strict construction qualification management system and the current construction market borrowing qualifications and subcontracting projects. Because China's laws recognize these subcontracts and links as invalid contracts.

Therefore, if there is malicious default on the project payment after signing this kind of contract, the construction enterprise may request the court to declare the contract invalid according to the specific circumstances.

Because once the contract is invalid, there is the problem of returning the project funds. The construction enterprise can not only ask the contractor to return the project funds after the contract is invalid, but also ask the court to judge the owner's construction unit to directly return the project funds (after the owner pays, it can be deducted from the funds payable to the contractor).

In this way, the owner's construction unit with relatively strong financial strength is involved in the legal relationship, which provides a favorable guarantee for the subcontracting construction enterprise to obtain arrears.

Third, reasonably and legally postpone the construction period to promote the timely payment of the project funds.

There is a common problem: when a contractor files a lawsuit for arrears in project payment, the employer often counterclaims on the grounds that the construction period is overdue, and proposes compensation for overdue breach of contract to offset the contractor's claim.

Therefore, if there is a problem of overdue payment, the construction enterprise should make full use of the rights given to the contractor by law and postpone the construction period. At this point, the contractor shall promptly urge the employer in writing to fulfill the payment obligation within a reasonable period of time (or entrust a lawyer to send a lawyer's letter to save the evidence of sending a written letter).

If the employer fails to fulfill the payment obligation within a reasonable period, the construction enterprise may send a letter again asking the employer to compensate for the losses caused by the shutdown and slowdown, and notify it to postpone the construction period accordingly.

If the construction enterprise fulfills the legal procedures, it can avoid the construction loss of advance payment and the dilemma of the owner's claim for compensation due to the fear of wage arrears.

Four, the controversial quantities and pricing in a timely manner to save evidence or put forward judicial expertise.

Although the construction contract has been signed, due to the uncertainty of the project itself, the change of engineering quantity will inevitably occur during the construction process. Generally speaking, for engineering changes, the examination and approval procedures for engineering changes should be fulfilled in time according to the requirements of the owner's construction unit.

In the lawyer's judicial practice, there are often cases in which disputes over quantities and pricing in project settlement are caused by oral agreement changes.

In this case, construction enterprises can take three ways to safeguard their own interests:

According to the contract, if the supplementary agreement of the contract stipulates this part of the project quantity, it can be used as a basis.

If there is no contract agreement, the quantity of works can be calculated according to the confirmation evidence of the quantity of works of the third party such as the construction party, the supervision unit and the material supplier at that time.

Refer to the pricing methods and standards issued by the construction administrative department when signing the contract to settle the project payment (generally refer to the construction quota standard).

If negotiation fails, both parties may apply to the court for judicial expertise (judicial expertise is also based on building quota standards).

Five, don't ignore the claim for interest on the project arrears.

The phenomenon of default in project payment is very common in the construction field. Therefore, for the arrears, the construction enterprise should promptly collect them, and the second is to stipulate the default treatment method of the arrears in advance in the contract.

However, in the view of some construction enterprises, it is good to get back the principal, so the interest right can often be ignored. In fact, China's laws have made special protective provisions on the interest owed by this project.

Construction enterprises may first demand payment of interest or liquidated damages agreed in the contract. If there is no agreement in the contract, unlike other debts (generally, debts with no agreed interest are regarded as having no interest), even if there is no agreed interest in the project payment, the construction enterprise can still demand to pay interest according to the bank's similar loan interest rate for the same period, and the law also supports it.

Interest is calculated from the day after the agreed payment. If there is no agreed payment time or it is difficult to determine the payment time according to the agreement, the interest shall be calculated from the date of settlement of the project payment agreed in the contract. If the settlement time of the project payment is difficult to determine, it shall be calculated from the day after the project delivery.

Construction enterprises claim that interest compensation has the following advantages: first, they can win the court's judgment on interest compensation to make up for the loss of capital occupation; Second, you can give up interest as a bargaining chip, pay for the car and protect the car, and strive for the timely return of the principal through court mediation.

Six, we should pay special attention to the limitation of action for arrears of project funds.

According to our lawyers' experience in handling cases of arrears in project payment, there is also a problem of limitation of action that needs special attention from construction enterprises. Limitation of action refers to the system that the obligee whose civil rights have been infringed fails to exercise his rights during the statutory limitation of action, and the people's court no longer protects his rights when the limitation of action expires.

China's General Principles of the Civil Law stipulates that the limitation of action for requesting protection of civil rights from the people's court is three years. Unless otherwise stipulated by law, this shows that the limitation of action for creditor's rights and debts is three years, that is to say, the construction enterprise should, in principle, request the court to settle the project payment within three years from the date of payment.

Of course, there is a question of legal litigation skills for arrears that have exceeded the limitation of action. In fact, it is also possible to file a lawsuit or apply for a payment order, and the court will accept it. If the other party does not raise the defense that the limitation of action has expired, the court may support the plaintiff, which requires construction enterprises and lawyers to study specific solutions.

Seven, the actual construction should make full use of special legal protection measures to safeguard their legitimate rights and interests.

In principle, actual construction parties such as labor subcontractors cannot directly sue owners or general contractors who have no contractual relationship with contractors, because they directly sign subcontracts with contractors.

However, because the actual construction parties are often workers in the construction field, such as labor teams and contractors, their arrears often involve the wages of migrant workers. Therefore, the law has made special provisions on this.

If the construction party is in arrears with the actual construction party of the labor subcontractor, the labor subcontractor can choose two ways to defend his rights. One is to sue the construction party that has a direct labor subcontracting relationship with him, and the other is to sue the owner, the construction unit and the construction party, and the owner will be responsible for the labor subcontractor within the unpaid project price.

Therefore, if the owner's construction unit defaults on the contractor's project payment, which leads to the contractor's default on the labor fee, the labor subcontractor can defend his rights by suing the owner and the contractor, and the owner will directly pay it to the labor subcontractor. Moreover, listing the owner's construction unit with abundant funds as the defendant is also conducive to finding out the facts, putting pressure on the owner and urging the owner to assist the construction party in paying the labor costs in time.

Eight, the housing construction project guarantor shall exercise the lien on the project in a timely manner and give priority to compensation.

Because the real estate development and construction project itself has high economic value, if the owner defaults on the payment, the construction enterprise will first exercise the project lien.

In other words, the construction unit can keep the project under construction or completed, and realize its rights and interests through court sale.

The second is to exercise the priority of compensation for the construction project price, especially for the commercial housing projects developed by developers, the project payment takes precedence over the mortgage of the bank, and the employer cannot pay the project payment according to the contract. After being urged, the construction enterprise may apply to the people's court for auction of projects under construction or completed projects, and the proceeds from the auction shall be paid to the construction enterprise in priority.

Nine, in the form of creditor's rights transfer in disguised form to obtain project arrears.

The arrears of project payment is a long-standing problem, and its solution will inevitably consume a lot of energy. Taking legal action rashly will also destroy the cooperative relationship between the two sides. Therefore, various means such as litigation and non-litigation should be taken comprehensively to promote the timely payment of arrears.

Extended data:

The Beijing Municipal Commission of Housing and Urban-Rural Development (hereinafter referred to as "Beijing Municipal Commission of Housing and Urban-Rural Development") was informed that the CPC Central Committee and the State Council attached great importance to ensuring the wage payment of migrant workers.

The the State Council Inter-Ministerial Joint Conference on Solving the Problem of Enterprise Wage Arrears has put forward clear requirements for all provinces and cities to ensure the payment of migrant workers' wages and control their wages.

In order to implement the work arrangements of the inter-ministerial joint meeting and the Beijing Municipal Party Committee and Municipal Government, effectively standardize the settlement and payment behavior of construction units, and ensure the wage payment of migrant workers from the source, the Beijing Municipal Commission of Housing and Urban-Rural Development has formulated the Notice on Implementing the Relevant Requirements for Settlement and Payment of Project Funds by Housing Construction and Municipal Infrastructure Construction Units (hereinafter referred to as the Notice).

According to the relevant person in charge of the Beijing Municipal Commission of Housing and Urban-Rural Development, since 2004, when the State Council began to clean up the arrears of project funds in the field of engineering construction, the General Office of the State Council and relevant departments have issued documents for many times, prohibiting the arrears of project funds.

The Ministry of Housing and Urban-Rural Development also listed the construction units that are in arrears with the project payment in the "blacklist" of the main body of the construction market. The "Notice" clearly stipulates that the construction unit that is found by the people's court to be in arrears with the project payment shall be included in the "blacklist" of the construction market and shall not approve its new project construction. Belonging to government investment projects, the construction unit shall not be required to carry out construction by means of contract with capital.

The person in charge stressed that at present, some construction units lack the spirit of contract, unreasonably delay settlement and payment of project funds, leading to contract disputes and arrears of wages for migrant workers.

Therefore, the "Notice" clarifies the content of process settlement, and stipulates that the construction unit shall make settlement and pay the project payment according to the measurement period or project progress agreed in the contract.

Beijing News-Prohibit arrears in project payment and ensure the payment of wages for migrant workers.