The conclusion of a construction project presents a familiar impasse. The project owner doesn’t want to release final payment until it is sure no prospective mechanic’s liens exist. The contractor
doesn’t want to waive its lien rights – which secure payment – until it has actually received payment. The solution is a “closing” of sorts. The parties exchange lien waivers for final payment. But sometimes the process breaks down.

The Texas Supreme Court recently grappled with one of these breakdowns. Because of a scope of work dispute, the contractor refused to release its lien rights. And, the project owner refused to release the 10 percent of the contract price it retained. Did the contractor forfeit the right to all the retainage? Or, was the contractor entitled to the contract balance less the cost of the disputed items?

Other cases this week address the applicability of state procurement law to a project funded by federal stimulus money and the definition of a “claim.” A Louisiana court said the project was subject to state law despite federal agency assertions to the contrary. And, the Connecticut Supreme Court ruled that a notice of claim was sufficient even though it did not indicate the contractor’s intent to pursue a remedy through litigation or arbitration.