Subcontractors: Why You’re Not Getting Paid And What To Do About It
If you are a subcontractor on a construction project, cash flow is your lifeblood. You simply cannot afford to be in business if you aren’t paid, and often, not getting paid on a single job can send you into a financial spiral.
Why You May Not be Getting Paid
If you are a subcontractor and you haven’t been paid, or a contractor is indicating that you won’t be getting paid, your first question is whether, according to the contract, you are entitled to be paid. There are some contractual terms that can make a challenge difficult, depending on how those provisions are worded.
Defects – Obviously, anything that you do that is defective, or not up to contractually agreed standards, will be seen as grounds for nonpayment
Payment – As a subcontractor, you too have an obligation to pay your subcontractors. If you have not paid them, a higher level contractor can refuse you future payment.
Pay-If-Paid – If this contractual agreement exists your payment will be contingent on when, and if, the owner of the project actually makes payment to the general contractor.
You may have the right to stop work, if the contract calls for payments before completion of the work. Usually, construction contracts will require that you notify the contractor of your intention to stop work for nonpayment. Ultimately though, you should see what your contracts say about your right to simply stop work.
Remember that even if you can stop work, your contract may obligate you to restart the work, after payment has been made. That means you shouldn’t rush to take your men and materials away from the site so quickly. You can negotiate a provision that says that if payment is not made in a given number of days, you have the right to permanently leave the project—even if you are ultimately paid.
Additionally, there may be a dispute over whether you as the subcontractor have performed according to the contract. In that case, should you stop working, and later it is determined that you were not in compliance, you could have a double problem—the work that was not done according to contract and the fact you walked off the job.
Liens and Enforcement
If you aren’t paid, you may have the right to file a lien (called a mechanics lien) on the property, but that is only for private projects.
Mechanics liens require proper notice, recording a claim of lien and serving it within the statutory timelines, and enforcing the lien within 1 year, through filing a lawsuit for foreclosure or other remedies. You should check with a construction law attorney, because you can lose your right to enforce your lien, if it isn’t done properly.
Call our Fort Lauderdale construction attorneys at Sweeney Law P.A. at 954 440-3993 for help today if you are a subcontractor with any kind of legal problem.