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What Happens When a Project Owner Loses Funding?

When you're working on a sizable project, one of the most important elements is ensuring funds are available throughout the entirety of the project. Large construction jobs require a constant influx of money, as the bills can pile up very quickly. There are multiple working arms to a construction project, and all of them cost money. Materials must be covered, the price of permits must be satisfied, and a lapse mustn't occur regarding the availability of capital.

However, sometimes the unexpected happens, and the project owner loses access to vital funding. This can happen for any number of reasons, often through no fault on the contractor's part. When these situations happen, it's important not to get into covering any portion of the project beyond what you're responsible for. The worst thing that can happen is an investor bailing out, and you're left holding the bill at the end of the project. Not only will you be out the money you fronted to keep the project going, your chances of being compensated for labor are also out the window. It's crucial that you understand the steps to take when a project owner loses funding.

Approching the Situation

Sometimes the best thing to do is avoid facing these situations from the beginning. Taking steps in the early stages of the project can help avoid these hang-ups. Don't be afraid to make information requests. Understanding the credit status of a project owner can be important, as well as contacting investors to understand the owner's status with them.

Cover Your Bases

You need to make sure all your bases are covered from the beginning of the project. In the contract, there should be some type of language outlining the project owner's responsibility for providing financial resources for the appropriate sections of the job. The project owner should be aware of this language and fully understand their responsibility for keeping the project funded. This also makes sure you're covered in the event you must stop working.

If all of this is outlined in the contract, the owner won't fare well in court if they end up filing against you for stopping work. Signed paperwork outlining all the information mentioned above will strengthen your position in court.


The first thing you need to do is have a meeting with the project owner. Find out why they've lost funding and ask them what their next course of action is. In some cases, it could be a temporary issue that's easily resolved. If it's looking like it might be a permanent issue, explain to the project owner that you're ceasing all work on the project until funding is available. You should also let them know that they are still responsible for any labor charges up to that point.

Facing these issues can be disastrous for any major construction project. However, by taking the right steps as a contractor, you can avoid the pitfalls associated with these occurrences. Nationwide Notice, Inc. is dedicated to assisting construction companies to protect their receivables and get the lien released based on the state's laws. No matter what size your construction company is, Nationwide Notice, Inc. helps secure your lien rights. To find out more about the services we offer, check out this page. You can also learn about what makes us different here - get started with us today.

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