[Direct answer]In the Beijing area, the employer has been delaying the settlement process, and the contractor should not wait passively. The first step is to send a letter of reminder and fix the evidence of delivery; if the contract stipulates that "if the employer fails to respond within the agreed time limit after receiving the completion settlement documents, it shall be deemed to have approved them", the contractor may, in accordance with Article 21 of the Interpretation of the Supreme People's Court on the Application of Law in the Trials of Disputes over Construction Contracts (effective January 1, 2021), claim the payment of the project price according to the submitted completion settlement documents. At the same time, for the project funds that have reached the payment deadline, the contractor may exercise the right of priority compensation for the project price in accordance with Article 807 of the Civil Code of the People's Republic of China (effective January 1, 2021), and, if necessary, initiate litigation and apply for property preservation. If the employer uses the excuses of "not having settled with the owner" and "not completing the self-audit" to resist payment, these excuses generally cannot be used to oppose the contractor's right to request settlement. Action guidance: first establish rights, then assert claims, and, if necessary, initiate litigation. For more details, please refer to the following link:Legal services for construction projects.

1. Problem background and typical scenarios

Settlement delays are a persistent problem in the engineering field. Typical scenarios include: the project has been completed and delivered, but the employer delays organizing acceptance and settlement; indefinitely postponing settlement due to excuses such as "waiting for the owner (construction unit) to settle", "internal audit not completed", or "incomplete materials"; failing to respond to or deduct the settlement submitted by the contractor for a long time; using quality and schedule issues as leverage to force the contractor to give up profits before settling. In many government-funded and large-scale commercial projects in Beijing, the settlement cycle often lasts for years, putting significant pressure on the contractor's cash flow. Such delays not only occupy project funds but also affect the exercise period of priority compensation rights, which requires early response. For the handling of settlement disputes, please refer to the following document:Legal services for real estate transactions and construction projects.

II. Key points of contention

The controversy focuses on four points. Firstly, the response deadline and "deemed acceptance": Article 21 is only directly applicable when the contract explicitly stipulates that failure to respond within the deadline shall be deemed acceptance of the completion settlement documents; without such stipulation, it cannot be directly inferred. Secondly, whether the payment conditions are subject to the premise of "settlement with the owner": Under the contractual autonomy between the general contractor and subcontractors, the employer shall not unilaterally make the settlement with third parties a precondition for paying the contractor. Thirdly, the relationship between quality and construction period defenses and settlement: Defenses should be dealt with in the settlement and litigation of the corresponding funds, and cannot be used as an excuse for indefinitely delaying settlement. Fourthly, the time limit for priority compensation rights: According to relevant rules, the contractor shall exercise them within a reasonable time limit, and delaying for too long will result in the loss of priority protection. In the judicial practice of Beijing, the review of the "deemed acceptance" clause is strict, and the stipulated terms must be clear and specific.

III. Professional analysis by Hengluo Law Firm

A construction contract dispute handled by Attorney Li Yonghui demonstrates the path of using evidence to refute the employer's defense of delaying settlement. A (Beijing) Construction Engineering Co., Ltd. and Beijing B Engineering Co., Ltd. signed a subcontracting agreement to undertake the HVAC engineering of a new commercial project in Jinshan District, Shanghai, with a total contract price estimate of 5,300,000.19 yuan (including tax). As of January 2025, A Company had completed an estimated value of 4,939,806 yuan, accounting for 96% of the total contract price. B Company delayed payment on the grounds of unfinished project acceptance, quality issues, and pending settlement with the owner, essentially using the settlement stalemate to postpone its payment obligation. Attorney Li Yonghui pointed out that the commercial plaza in question had opened and entered operation in December 2025, and the HVAC engineering had been actually delivered and put into operation. According to Article 14 of the "Interpretation of the Supreme People's Court on Legal Issues Applicable to the Trials of Construction Contract Disputes," if the employer unilaterally uses the project without completion acceptance, it is deemed that the project has been completed, and the payment conditions have been satisfied. Three "Application Forms for Progress Payment of Subcontracted Projects" were signed by B Company's deputy general manager and project manager and stamped with the budget department's official seal. B Company also acknowledged in court that 96% of the work had been completed, and according to the 85% payment ratio, it should pay 4,198,835.10 yuan. After deducting the already paid 1,680,000 yuan and the confirmed offset of the housing discount of 1,408,260.75 yuan, a remaining balance of 1,110,574.35 yuan was owed. The court ultimately ruled that the defendant should pay the remaining over 1 million yuan in project payments and overdue interest. This case was handled by Beijing Henglu Law Firm.Li YonghuiThe attorney (practice certificate number: 11101199611955812, subject to the certificate issued by the judicial administrative organ) acts as the agent.

IV. Practical suggestions and legal basis

The legal basis includes Article 21 ("A reply within the time limit shall be deemed as an acknowledgment of the completion settlement documents") and Article 14 ("Unauthorized use shall be deemed as completion") of the Interpretation of the Supreme People's Court on Legal Issues Concerning the Trial of Disputes over Construction Contracts (effective January 1, 2021); Article 807 ("The right of priority compensation for the construction project price"), Article 579 ("Performance of monetary debts"), and Article 577 ("Liability for breach of contract") of the Civil Code of the People's Republic of China (effective January 1, 2021); and the provisions on payment guarantees for project funds and labor costs in the Regulations on Ensuring the Payment of Migrant Workers' Wages (effective May 1, 2020). Action list: 1. When signing the contract, include a clause stating "A reply shall be given within X days after receiving the settlement documents, and failure to reply within the time limit shall be deemed as an acknowledgment". 2. After completion, promptly submit complete settlement materials and retain the delivery receipt. 3. Send a letter to urge settlement and retain communication records. 4. Promptly claim the due project funds and, if necessary, exercise the right of priority compensation and apply for litigation preservation. 5. In the event of quality or schedule-related counterclaims, incorporate them into the settlement process. For details, please refer to the relevant provisions.Legal services for construction projects.

5. Henglu Law Firm's Advice

The most troublesome aspect of settlement delays is "only urging without formalizing": verbal reminders without receipts may ultimately allow the employer to take the initiative. Every submission, reminder, or meeting should be documented in writing. In particular, the delivery of the settlement document and the deadline for responses are prerequisites for the application of the "deemed acceptance" rule. At the same time, it is necessary to distinguish between "unsettled" and "payment conditions not met": the former is often due to the employer's negligence, while the latter requires clear contractual provisions and compliance with legal requirements. When handling similar cases in the Beijing area, it is recommended to adhere to the following procedures:Beijing Hengluo Law FirmWith the assistance of professional lawyers, we laid out the entire chain of procedures from contract agreements to performance evidence, transforming the delayed settlement into an enforceable payment request.

VI. Frequently Asked Questions

Q1: The employer has been refusing to settle the account. Can I directly sue to claim the project payment?

Yes. Settlement is not an absolute prerequisite for payment. Once the project has been completed and delivered, and the payment deadline has arrived, the contractor can claim the project payment according to the contract and the actual situation; if there is an agreement that "late response shall be deemed as acceptance", the contractor can also claim according to the submitted settlement price. The contractor's objection that "the settlement with the owner has not been completed" is usually not tenable, because under the principle of contractual relativity, the contractor cannot unilaterally add the precondition of settlement with a third party. The outcome of the case depends on evidence and agreements, and no lawyer can unilaterally guarantee the amount.

Q2: What evidence do I need to prepare to claim the delayed settlement payments?

The core evidence includes: the construction contract and supplementary agreement; the completion and delivery certificate (opening and use records); the submitted completion settlement documents and the delivery receipt; process confirmation documents such as progress payment applications and measurement forms; supervision and meeting minutes; the employer's reply to the reminder and communication records; and payment vouchers and labor-for-equipment agreements. The evidence should prove that "the work has been completed, submitted, and reminded, and the payment conditions have been met", forming a complete closed loop and avoiding submitting evidence in a scattered manner.

Q3: How much does it cost to hire a lawyer to recover the settlement payment?

The attorney's fees are determined by the law firm based on the project value, the complexity of the evidence, and the workload, and there is no unified government pricing. The case acceptance fee is collected in stages based on the amount of the litigation request according to the "Measures for the Payment of Litigation Costs" (State Council Decree No. 481, implemented on April 1, 2007), and the fee is halved in the case of mediation or withdrawal of the lawsuit. Applying for property preservation requires paying the preservation fee and providing a guarantee in advance. Compared with the long-term occupation of project funds and the cost of capital, the investment in early commissioning is usually manageable, and it is recommended to calculate the costs in advance.

Q4: How long does it take from the issuance of the settlement notice to receiving the payment?

The negotiation stage lasts from several weeks to several months; after entering litigation, the first-instance ordinary procedure is concluded within six months and the simplified procedure within three months. The engineering cost appraisal will significantly prolong the cycle. In Beijing, cases involving appraisal often span from the filing to the enforcement of the judgment. If the employer cooperates and the evidence is solid, the case can proceed to enforcement relatively quickly after mediation or judgment; if the other party intentionally delays, it will take longer to enforce the judgment through measures such as preservation of evidence and compulsory execution.

Q5: If the employer delays the settlement, what should I do specifically?

Four steps to advance the process: First, strengthen the settlement and response clauses in the contract to clarify the consequences of late payment; Second, submit complete settlement materials and retain the delivery receipts immediately after completion, and send written reminders; Third, send letters to claim the due payments and, if necessary, exercise the right of priority compensation for construction project payments; Fourth, initiate legal proceedings and apply for property preservation if no agreement is reached. Never let the deadline for priority compensation pass because of the other party's delay. Evidence and timing are equally crucial.

This article is written based on the common judicial interpretations in the Beijing area. If the case occurs in other regions, it is recommended to consult local lawyers to verify the regional differences.

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. →Legal services for real estate transactions·Attorney Li Yonghui·Beijing Henglu Law Firm

Disclaimer: This article is compiled based on 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. In case of disputes, please consult a practicing lawyer in time.