When Paid in Full Means No Pay at All: How One Invoice Cost This Contractor Everything

When Paid in Full Means No Pay at All: How a Simple Invoice Cost This Contractor Everything

By Jesse David Eisenberg, Esq. | JDE Law Firm, PLLC

The Story Every Contractor Should Know

A contractor came to my office recently asking for help recovering money from a homeowner. He had performed the work, sent invoices, and even filed a mechanic’s lien to secure payment.

Then, trying to help the homeowner get faster reimbursement from their insurance company, the contractor made two critical mistakes:

• He voluntarily removed the lien after partial payments were made.
• He issued a “Paid in Full” invoice with a $0 balance—despite not having received full payment.

The homeowner stopped paying. And now, because the contractor put in writing that the job was “paid in full,” I could not help him. The invoice and lien release destroyed his case.

Why He Lost His Leverage

Despite reality, the law honors what’s put in writing. A “Paid in Full” invoice is seen by courts as a legal representation of settlement—a release of further claims. The contractor’s good deed turned into a costly error.

3 Legal Lessons for Contractors and Business Owners

1. Don’t Give Up Your Leverage Without Final Payment

Mechanic’s liens work only when they remain in place. Removing a lien too early—without full payment—means giving up your strongest leverage.

2. Never Mark “Paid in Full” Unless You Mean It

That phrase isn’t just a formality. In legal terms, it can waive your rights under the doctrines of release, accord and satisfaction, or estoppel. Even if the homeowner still owes you money, the written $0 balance could kill your claim.

3. Good Deeds Can Cost You—Get Legal Advice First

Helping someone with their insurance may feel right—but before changing documents or removing liens, speak to an attorney. The wrong wording can cost you everything.

Legal Insight: Waiver by Conduct

In both New York and New Jersey, courts enforce what’s put in writing. You may still have a moral claim—but legally, if you signed a “Paid in Full” document, you’ve likely waived your right to collect.

Courts won’t go behind clearly written waivers—even in situations where the parties informally agreed otherwise.

Protect Yourself

• Don’t release a lien unless you’re truly paid.
• Use partial payment receipts—not full ones.
• Consult an attorney before making any concessions in writing.
• Preserve leverage with clear legal language, not favors or handshakes.

Final Thought

This contractor wasn’t wrong to expect full payment. But the second he documented that he had been paid—he shut the door on his own claim.

The document speaks louder than the dispute.

🚨 Don’t Make the Same Mistake

Before you release a lien, send a zero-balance invoice, or help a customer with their insurance claim, get legal backup.

👉 Need legal advice before you mark something “Paid in Full” or release a lien?
🔗 Click here to schedule your consultation now

📞 NY Office: 718-966-0877  |  NJ Office: 732-490-7120
🌐 Website: www.jdelaw.nyc

My business is to protect your business.