How long a contractor has to collect payment depends on which legal tool they use. A breach-of-contract lawsuit generally must be filed within two to fifteen years, depending on the state and whether the contract was written or oral. A mechanic’s lien is far less forgiving, with some deadlines running as short as 30 days after the last day of work. Federal payment-bond claims give one year. Miss any of these cutoffs and the debt still exists, but the courts will no longer enforce it.
Deadlines for Suing on the Contract
Every state sets a statute of limitations that caps how long a contractor can wait before suing a client for nonpayment. The length turns almost entirely on whether the contract was written or oral.
Written contracts get significantly more time. Across the states, the limitations period ranges from about three years to as long as fifteen, with many states clustering between five and ten. A signed document gives a court a clear record of what was promised, so there is less urgency to resolve the dispute while memories are fresh.
Oral contracts get a much shorter runway, typically two to six years. Without a signed document, the parties rely on memory and circumstantial evidence, and courts want those disputes resolved before recollections fade. That gap alone is a strong reason to put every agreement in writing, even for small jobs.
When the Clock Starts
The statute of limitations does not begin running when the contract is signed. It starts on the date of the breach, which for a payment dispute means the date the money was due and went unpaid. If an invoice gives the client 30 days to pay after project completion, the clock starts on day 31. If the contract does not specify a due date, the breach generally occurs when the work is finished and the final bill is submitted.
Construction projects add a wrinkle. Courts in many states tie the start of the limitations period to the date of “substantial completion” rather than final completion. Substantial completion means the project can be used for its intended purpose, even if minor punch-list items remain. A contractor who spends months on small finishing touches may assume the clock has not started when, legally, it began weeks or months earlier. Miscalculating this start date is one of the most common reasons contractors lose the right to sue.
Mechanic’s Lien Deadlines
A mechanic’s lien is a legal claim against the property the contractor improved. If the client does not pay, the lien gives the contractor the right to force a sale of that property to satisfy the debt. It is one of the most powerful collection tools available, but the deadlines are far shorter and less forgiving than a contract lawsuit. There are actually three deadlines to track, sometimes four.
Preliminary Notice
Before a contractor can file a lien, most states require a preliminary notice sent near the start of the project. It is a routine disclosure telling the property owner who is working on their property, and it preserves the right to file a lien later if payment becomes an issue. The typical deadline is within 20 days of starting work. Skipping it usually means losing lien rights entirely, and no later action can fix the mistake.
Filing the Lien
After the work is done and payment has not arrived, the contractor must file the lien with the county recorder’s office. State deadlines range from as few as 30 days to as many as 200 days after the contractor’s last day of work, with most states falling in the 60-to-120-day range.
Enforcing the Lien
Filing the lien is not the end. A separate deadline requires the contractor to enforce the lien by filing a foreclosure lawsuit. This ranges from as little as 180 days to as long as two years after the lien is recorded, with a one-year period being the most common. If the foreclosure suit is not filed within this window, the lien becomes invalid regardless of how much is owed. These deadlines allow for virtually no exceptions.
Notice of Intent to Lien
Some states add a formal notice of intent to lien that must be sent to the property owner after payment is overdue but before the lien is actually filed. This is distinct from the preliminary notice sent at the beginning of the project. A handful of states make it mandatory; a contractor who skips it in those states cannot file a valid lien. Even where it is optional, the notice often prompts payment and avoids the cost of filing.
Public Projects Do Not Allow Liens
A contractor cannot place a mechanic’s lien on government-owned property. Public construction projects are covered instead by payment bonds, which take the place of the lien as the contractor’s security for payment.
On federal projects, the Miller Act requires the general contractor to post a payment bond on any contract over $100,000. A subcontractor or supplier who has not been paid in full within 90 days after their last day of work can bring a claim against the bond. The lawsuit must be filed no later than one year after the last day of labor or material delivery. Subcontractors who do not have a direct contract with the general contractor face an extra step: they must send written notice to the general contractor within 90 days of their last day of work, stating the amount owed and identifying who the work was performed for. Missing that 90-day notice eliminates the right to claim against the bond.1Office of the Law Revision Counsel. 40 USC 3133 – Rights of Persons Furnishing Labor or Material
Most states have their own “Little Miller Acts” imposing similar bond requirements on state and local government contracts. Deadlines and notice rules vary, but the structure is the same.
Federal Contracts and Automatic Late-Payment Interest
Contractors working directly for the federal government have a different set of rules. The Prompt Payment Act requires federal agencies to pay contractors within specific timeframes, and agencies that pay late owe interest automatically. For the first half of 2026, that interest rate is 4.125% per year.2Federal Register. Prompt Payment Interest Rate; Contract Disputes Act The rate is updated every six months and applies to all federal construction contracts. The contractor does not need to file a claim or threaten legal action to trigger it.
Events That Can Extend the Deadline
Statutes of limitations are firm, but certain events can pause or restart the clock. The most common is a partial payment on the outstanding debt. In many states, receiving even a small payment restarts the entire limitations period from the date of that payment. A written acknowledgment of the debt can have the same effect. Some states will also restart the clock based on a new oral promise to pay; others require the promise to be in writing.
The details matter. Some states merely pause the clock (called “tolling”) rather than restarting it. And if the statute has already expired, a partial payment may not revive the right to sue at all. Before relying on a partial payment to buy more time, verify how the state treats it.
What Happens if the Deadline Passes
When a contractor fails to file a lawsuit before the statute of limitations expires, or fails to enforce a mechanic’s lien within its deadline, the claim becomes time-barred. The debt still exists and the client may still owe the money, but the contractor can no longer use the courts to force payment. No lawsuit, no wage garnishment, no lien.
Time-barred does not always mean the contractor cannot ask for payment. In most states, an original creditor can still send letters and make phone calls requesting payment on an old debt. What they cannot do is file suit or threaten to file. For third-party debt collectors, suing or threatening to sue on a time-barred debt violates federal law, and the collector does not need to know the limitations period expired to be liable.3eCFR. 12 CFR 1006.26 – Collection of Time-Barred Debts That rule applies to third-party collection agencies, not to original creditors collecting their own debts.4Federal Trade Commission. Think Your Company’s Not Covered by the FDCPA? You May Want to Think Again Even so, if the client raises the statute of limitations as a defense in court, the case will be dismissed regardless of how strong the underlying claim is.5Consumer Financial Protection Bureau. Can Debt Collectors Collect a Debt That’s Several Years Old
Writing Off an Uncollectible Invoice
When a contractor gives up on collecting, the tax consequences depend on their accounting method. Accrual-method contractors report income when it is earned, whether or not payment has arrived, so they have already paid tax on the unpaid invoice. When the debt becomes uncollectible, they can claim a business bad debt deduction for the amount previously included in taxable income.6Office of the Law Revision Counsel. 26 USC 166 – Bad Debts
Cash-method contractors are in a different position. Cash-basis income is not recorded until payment is actually received, so if a client never pays, the money was never reported as earnings. There is nothing to deduct.7Internal Revenue Service. Topic No. 453, Bad Debt Deduction
For contractors who do qualify, timing matters. The deduction must be taken in the tax year the debt becomes worthless. If a contractor misses that year, they can file an amended return, and the window for claiming a refund based on a worthless debt is seven years from the original filing date rather than the usual three.6Office of the Law Revision Counsel. 26 USC 166 – Bad Debts