Who is responsible for payments to a subcontractor?
Who is responsible for payments to a subcontractor?
Cash flow is the lifeblood of the building industry. The owner pays the contractor who pays the subcontractor. The subcontractor looks to the contractor alone for payment. Absent unusual circumstances (such as an owner guarantee or subcontractor mechanics lien), the owner has no direct liability to an unpaid subcontractor.
What happens when a contractor refuses to pay?
When a contractor refuses to pay subcontractor, the subcontractor has grounds to pursue legal action to collect the money that is owed to them.
What happens if I Leapfrog a subcontractor?
Leapfrogging may abridge another subcontractor’s mechanics lien rights or rights under a trust fund statute. A performance bond surety for a defaulting contractor may refuse to credit the direct payment as against the contractor’s account. The owner must consider these issues before leapfrogging. He who has money makes the rules.
Can a contractor withhold payment from a subcontractor?
In most cases, you can’t legally withhold payment from a subcontractor when the job you’ve been contracted on fails to pay on time or, even worse, doesn’t pay at all. You’re still responsible for making sure your subcontractors are paid.
What happens if general contractor refuses to pay subcontractors?
If a general contractor refuses to pay his subcontractors, they can make a claim against the payment bond. The surety company will pay out the subcontractors for at least part of their money and take the contractor to court.
How can I get payment from my subcontractor?
Lawsuit One of the final ways to try to receive payment from the general contractor is through a lawsuit; however, going to court costs money. If the subcontractor wins, the judge might order the general contractor to pay their legal bills. And in states with “prompt pay” laws, it is easier on the subcontractor than the general contractor.
In most cases, you can’t legally withhold payment from a subcontractor when the job you’ve been contracted on fails to pay on time or, even worse, doesn’t pay at all. You’re still responsible for making sure your subcontractors are paid.
Who is responsible for paying subcontractors and suppliers?
Usually, the main contractor is responsible for coordinating and supervising all of the subcontractors. One of the contractor’s responsibilities involves making sure each of the involved subcontractors and suppliers is paid for their work.