[Direct answer]This can be claimed. If the employer fails to pay the project price on time, the contractor may, in accordance with Article 807 of the Civil Code of the People's Republic of China (effective from January 1, 2021), apply to the court for the project to be auctioned according to law after being reminded, and be given priority to be compensated from the proceeds of the auction; this priority is prior to the mortgage right and other creditor's rights. The prerequisite for claiming are that the project has passed the acceptance, and there is a valid construction contract and the fact of unpaid project price between the two parties. The contractor shall file a lawsuit or apply for arbitration within the statutory exercise period and apply for property preservation at the same time. For details, please refer toLegal services for creditor-debtor relations and enforcement cases.

1. Problem background and typical scenarios

Arrears in project payments are extremely common in the construction industry: the employer delays payment due to unfinished audits or quality disputes; the general contractor fails to pay subcontractors or actual constructors after receiving progress payments; and the project is completed and accepted, but remains unpaid for a long time. Contractors often wonder whether they can recover their money first or whether they need to apply for preservation of the project first. The right of priority compensation is precisely the key system to solve this problem, and the relevant rules can be referred to for further details.Legal services for real estate transactions and construction projects.

II. Key points of contention

The controversy focuses on four points. Firstly, the prerequisite for exercising the right: the project must meet quality standards, and even if the contract is invalid but the acceptance is qualified, the party concerned can still claim compensation by way of discount. Secondly, the priority scope: it is limited to the project price itself, and does not include the priority compensation for breach of contract and compensation for losses. Thirdly, the adversarial relationship: it takes precedence over mortgage rights and ordinary creditor's rights, but the statutory priority of consumers who purchase houses needs to be judged on a case-by-case basis. Fourthly, the time limit and procedure: the right to claim priority must be asserted within the statutory time limit, and the right will be lost if it is exceeded. In the judicial practice of Beijing, most claims for priority rights with qualified quality and clear facts of unpaid amounts are supported.

III. Professional analysis by Henglue Law Firm

A debt collection case handled by Attorney He Ningning, although originating from a private loan transfer, still reveals the decisive significance of rights confirmation and enforcement in recovering project payments. Liu ** borrowed money from a bank in his own name and transferred it to Zhang **. After Zhang ** defaulted on the loan, Attorney He Ningning (practice license number: 11101202511925103, subject to the certificate issued by the judicial administrative authority) first mediated with the bank to stop losses and then pursued rights confirmation against the actual borrower. On June 12, 2026, the parties reached a mediation agreement confirming the principal of 170,000 yuan and the loss of funds of 10,000 yuan, and agreed that the overdue amount would be calculated at an annual interest rate of 3% and that the parties could directly apply for compulsory enforcement for all unpaid amounts. The parties applied to the People's Court of Fengtai District, Beijing City for judicial confirmation and obtained the enforceable force of the Civil Ruling No. (2026) Jing **06 Min Te (M) **XXX9 issued by the court. After Zhang ** defaulted on the first installment, Attorney He immediately submitted an application for compulsory enforcement and an online asset investigation application, and through the National Court Online Asset Investigation System, comprehensively sealed off the debtor's deposits, WeChat/Alipay accounts, vehicles, real estate, equity, and other properties, ultimately achieving full enforcement recovery. This case was handled by Beijing Henglu Law Firm.He NingningThe lawyer (practice license number: 11101202511925103, subject to the document issued by the judicial administrative organ) acts as the agent.

IV. Practical suggestions and legal basis

The legal basis includes Article 807 of the Civil Code of the People's Republic of China (effective January 1, 2021) (Construction Project Payment Priority Compensation); Articles 35 to 42 of the Interpretation of the Supreme People's Court on Legal Issues Applicable to the Trials of Construction Contract Disputes (effective January 1, 2021) (Priority Subjects, Scope, Term and Exercise Methods); and the provisions on preservation and enforcement of the Civil Procedure Law of the People's Republic of China (amended in 2023, effective January 1, 2024). Action List: 1. Fix the construction contract, acceptance, settlement, and evidence of arrears; 2. Send a written notice of demand and keep the relevant documents; 3. File a lawsuit or arbitration within the time limit and explicitly claim priority compensation; 4. Apply for property preservation simultaneously. For details, please refer to the following link:Legal services for creditor-debtor disputes and enforcement cases.

5. Henglu Law Firm's Reminder

The right of priority compensation is a procedural right. Failure to exercise the right within the time limit or negligence in exercising it will result in the loss of the right. It is necessary to explicitly assert the right through litigation or arbitration, and simply sending a letter is not enough. In terms of evidence, it is necessary to complete the settlement and confirm the outstanding amount as soon as possible to avoid disputes over payments diluting the priority scope. When handling similar cases in the Beijing area, it is recommended to do the following:Beijing Henglu Law FirmUnder the assistance of professional lawyers, we will simultaneously advance the processes of property rights confirmation, preservation, and enforcement, thereby truly transforming the priority rights into actual recoveries of payments.

VI. Frequently Asked Questions

Q1: Is the right of priority compensation for project payments necessarily established?

There are several conditions that must be met simultaneously: the project must have passed the completion acceptance or been completed and qualified; there must be a legally valid construction contract or a de facto contractual relationship between the contractor and the employer; the employer has failed to pay the project price as agreed; and the contractor must assert their rights within the statutory time limit. If the project quality is unsatisfactory or the exercise period has expired, it will be difficult to obtain support for the right of priority. The outcome of the case depends on the evidence and the court's determination, and no lawyer can guarantee it unilaterally. However, cases with all the necessary conditions have a greater chance of success.

Q2: What evidence do I need to prepare if I want to claim priority compensation?

The core evidence includes: construction contracts or subcontracting agreements; bid-winning notifications; proof of project completion and acceptance or evidence of the employer's unauthorized use of the project; settlement documents, bill of quantities, visa forms, and proof of progress payment; confirmation letters of payment reminders and outstanding amounts; and clues to the employer's assets. The evidence should form a complete chain of contract, performance, acceptance, settlement, and outstanding payments, and clearly specify the amount and scope of priority compensation.

Q3: How much does it cost to hire a lawyer to claim the project payment?

The attorney's fees are determined through negotiation between the law firm and the client, and there is no unified government pricing. They are usually charged as a percentage of the subject matter or on a per-case basis; those who meet the requirements can consult legal aid. The litigation fees are calculated in accordance with the "Measures for the Payment of Litigation Fees" (State Council Decree No. 481, implemented on April 1, 2007), based on the amount of the claim. For requests for property preservation, additional preservation fees and guarantee fees are charged. For cases resolved through mediation or withdrawal of the lawsuit, the acceptance fees are paid at half the normal rate.

Q4: How long does it take from filing a lawsuit to receiving the priority compensation payment?

The first-instance ordinary procedure lasts six months, and the simplified procedure lasts three months. If the other party appeals, the case will proceed to the second instance. The priority right needs to be confirmed by the effective judgment, and the execution period depends on the difficulty of project disposal and the contractor's property: cash-type property is relatively quick, while projects that need to be auctioned are affected by the appraisal and auction procedures, often taking several months to more than a year. Timely preservation and clear unpaid amounts can significantly shorten the repayment cycle.

Q5: What should I do if I'm owed unpaid project funds?

Five steps to advance the process: First, sort out the contract, acceptance and settlement materials to confirm the amount owed; Second, send a written reminder and keep the relevant evidence to assert the right to priority compensation; Third, file a lawsuit or initiate arbitration within the statutory time limit; Fourth, apply for property preservation simultaneously with the lawsuit to seize the employer's account and the construction project; Fifth, after obtaining the effective legal document, apply for enforcement in a timely manner, auction the project according to law, and claim priority compensation from the proceeds.

The above answer is based on the judicial practice in Beijing. The judicial interpretation in other provinces and cities may vary. For specific cases, please refer to the local rules and evidence situation.

If you are facing similar problems, it is recommended that you consult a professional lawyer as soon as possible with the evidence materials, so as to avoid missing the statutory time limit. →\nLegal services for creditor-debtor disputes·Attorney He Ningning·Beijing Henglu Law Firm

Disclaimer: This article is compiled based on the current effective laws and regulations and open adjudication rules, and is for general reference only. It does not constitute a formal legal opinion on specific cases. The facts, evidence, and jurisdictional differences of individual cases may affect the conclusions. If you encounter disputes, please consult a practicing lawyer in time.