Need to get paid retainage? A “Sample Letter To Collect Retainage Or Legal Procedure Will Follow” is your tool. It’s used when payment is overdue. It clearly states you’ll take legal action if needed.
Writing this letter can be tough. Don’t worry, we’ve got you covered. We’re sharing templates and examples.
These samples make writing easy. Use them to craft your perfect letter. Get your retainage paid!
Sample Letter To Collect Retainage Or Legal Procedure Will Follow
[Your Name/Company Name]
[Your Address]
[City, State, Zip Code]
[Date]
[Recipient Name/Company Name]
[Recipient Address]
[City, State, Zip Code]
Subject: Overdue Retainage Payment – [Project Name]
Dear [Recipient Name],
This letter concerns the outstanding retainage balance for the [Project Name] project, completed on [Date of Completion]. As per our contract, the retainage amount of [Dollar Amount] is now due.
Despite previous invoices and communications, we have yet to receive this payment. We understand that delays can occur, but the payment is now significantly overdue.
We request that you remit the full retainage amount of [Dollar Amount] within [Number] days of this letter. You can send payment via [Preferred Payment Method, e.g., check, wire transfer].
If we do not receive payment within the specified timeframe, we will be forced to consider all available legal options to recover the outstanding balance. We prefer to resolve this matter amicably and avoid further action.
Please contact us at [Your Phone Number] or [Your Email Address] to discuss this matter further or to confirm payment arrangements.
Sincerely,
[Your Name/Company Name]
How to Write Letter To Collect Retainage Or Legal Procedure Will Follow
Crafting a Persuasive Subject Line
The subject line is your opener. It must be direct, unambiguous, and hint at the severity of the situation. A nebulous subject line is anathema to getting your invoice paid promptly. Instead, opt for something like:
- Subject: Unpaid Retainage – Project [Project Name] – Invoice [Invoice Number] – Notice of Potential Legal Action
- Subject: Overdue Retainage Payment Demand – [Project Name] – Final Notice
Composing a Professional Salutation
Start with a formal salutation to maintain a professional demeanor. Avoid being overly familiar; this is a business communication, not a convivial chat. Examples:
- “Dear [Contact Person],”
- “To Whom It May Concern,” (Use this only if you don’t know the contact person)
Articulating the Retainage Details
The body of the letter is where you meticulously outline the specifics. Be precise. Include the original contract date, the project name, invoice numbers, and the exact amount of retainage due. Don’t leave room for equivocation.
- State the original contract amount and date.
- Specify the total amount of work completed.
- Clearly state the amount of retainage withheld.
- Reference the specific invoice number(s) for the retainage.
Establishing a Payment Deadline
Set a firm but reasonable deadline for payment. This conveys the seriousness of your intent. Avoid being indefinite; vagueness only invites procrastination on their part. Give them a concrete date—typically 10-15 business days.
- State, “Payment is expected no later than [Date].”
- Emphasize that this is a final opportunity to remit payment.
Notifying Intent for Legal Recourse
This is the crux of the letter. Clearly articulate that if payment is not received by the specified deadline, you will pursue legal avenues to recover the debt. Avoid threats; instead, state it as a matter of procedure.
- State, “Please be advised that if payment is not received by [Date], we will be compelled to initiate legal proceedings to recover the outstanding balance.”
- Mention that legal action may include filing a lawsuit, placing a lien on the property (if applicable), and pursuing all available legal remedies.
Offering a Final Opportunity for Resolution
While asserting your intent to pursue legal action, also extend a final olive branch. Show that you are open to amicable resolution before resorting to litigation. This can potentially avoid costly legal battles.
- State, “We are amenable to discussing a mutually agreeable payment arrangement to resolve this matter amicably. Please contact us at [Phone Number] or [Email Address] to discuss this further.”
Concluding with Professionalism
End the letter with a professional closing and your contact information. Reinforce your seriousness and clarity.
- Use a formal closing such as “Sincerely,” or “Respectfully,”
- Include your full name, title, company name, phone number, and email address.
- Consider adding a brief statement like, “We trust this matter will be resolved expeditiously.”
Frequently Asked Questions: Retainage Collection
This section addresses common inquiries regarding the collection of retainage, specifically when a formal demand letter indicating potential legal action is required.
Understanding your rights and the appropriate procedures is crucial for successful retainage recovery.
What is retainage and why is it withheld?
Retainage is a percentage of the contract price withheld by the client or general contractor to ensure satisfactory completion of the work. It provides financial security and an incentive for the contractor to fulfill all contractual obligations.
When should I send a demand letter for retainage?
A demand letter should be sent after the project is substantially complete, all contractual obligations are met, and a reasonable period for payment has elapsed without receiving the retainage. Review your contract for specific timelines.
What information should be included in a demand letter?
The demand letter should clearly state the amount of retainage owed, the project name and location, the contract date, a concise summary of the completed work, a formal demand for payment within a specified timeframe, and a statement indicating the intention to pursue legal action if payment is not received.
What legal options do I have if the retainage is not paid after sending a demand letter?
If the retainage remains unpaid after the demand letter deadline, legal options may include filing a mechanic’s lien (if applicable), initiating a breach of contract lawsuit, and potentially pursuing mediation or arbitration if stipulated in the contract.
What are the potential risks of pursuing legal action for retainage?
Pursuing legal action can be costly and time-consuming. There is always a risk of not prevailing in court, and the process may strain business relationships. Consider the amount of retainage owed versus the potential legal expenses before proceeding.
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