General Inquiries

Old retainage amounts showine owed

  • 1.  Old retainage amounts showine owed

    Posted 11-20-2019 19:54
    We have a couple of very old jobs still not closed completely because of amounts still owed (mostly retainage) that existed before my time.  The problem is that these subcontractors have gone "missing" …. there is no response to emails, phone calls, or any other correspondence.  Has anyone else had experience with this?  I'm trying to clean things up in anticipation of year-end.  I'm sure there is a statute of limitations, but I don't know yet if that has been reached.  Wondering if I can re-allocate the amounts to a suspension account so I can at least close out my jobs.

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    Loretta Kuust
    Controller
    HP Civil Inc
    Stayton OR
    (541) 720-0527
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  • 2.  RE: Old retainage amounts showine owed

    Posted 11-21-2019 10:27
    Hi Loretta,

    We have had the same type of issue in the past.  Usually the problem is that the sub either doesn't submit a conditional final or they don't submit their final close out docs (warranty, as-builts, etc.).  My policy is to issue the retetnion payment after a full year, since at that point, their warranty would no longer be valid.  If I run into the issue of not being able to locate them, I issue a billed credit and close the job out.  I have an "Accounting" job that I use to book misc. costs or income associated with "closed" jobs.  I hope this helps!

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    Megan Barnhart
    CFO
    Frank Schipper Construction Co.
    Santa Barbara CA
    (805) 963-4359
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  • 3.  RE: Old retainage amounts showine owed

    Posted 11-21-2019 12:03
    My next question is regarding non-compliance with the terms of the contract.  Some is this is still owing because the terms of the contract have not been fully satisfied.  Does this change how it is handled?

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    Loretta Kuust
    Controller
    HP Civil Inc
    Stayton OR
    (541) 720-0527
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  • 4.  RE: Old retainage amounts showine owed

    Posted 12-05-2019 08:35
    Loretta,

    This is a serious issue that should not be treated arbitrarily or capriciously.

    As Megan pointed out, you first are obligated by whatever provisions exist in your contract. If there are financial consequences for not meeting performance obligations, then those should be followed, but only after proper notice has been given to the subcontractor according to the provisions contained in the contract.  Be careful in your interpretation of those provisions as well. If your contract is silent on "Notice," I would suggest sending a certified return receipt mailing via USPS to the subcontractor's last known address and keep the envelope if returned as evidence that you made a good-faith attempt to contact the party in question.

    If the subcontractor completed their performance obligations under the contract but merely forgot to bill for their retainage, then this may fall under the category of "unclaimed property." Most states have adopted statutes that address unclaimed property by an individual or business. In Oregon (if that is where the work was performed), there are guidelines for reporting and filing with the state any unclaimed property including amounts owed to others whether for labor and services or unclaimed contract proceeds. See https://oregon.findyourunclaimedproperty.com/ for more information.

    Be careful! Issuing a "billed credit" as Megan previously mentioned. It may put your firm at risk for penalties and interest depending upon where the work was performed and that state's laws and treatment of unclaimed property.

    Also, you may want to consult your attorney or CPA  regarding proper treatment of these proceeds.

    Best regards,

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    Doug Hutchison
    Chairman & CEO
    Meisner Electric, Inc.
    Delray Beach FL
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  • 5.  RE: Old retainage amounts showine owed

    Posted 12-10-2019 17:48
    Loretta...  In AZ we have preliminary notices and you need to watch how many days since you were last on the job - and regardless if it's retention - if my lien rights are going to expire I will issue a notice of intent to lien and usually that gets their attention and they pay - if not I lien the job.

    The only other thing I could suggest is to write it off to bad debt - you can always recapture it if they do pay.

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    Carrie Stone
    Vice-President of Finance
    Excel Mechanical, Inc.
    Tucson AZ
    (520) 791-7049
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