What to Do When a Contractor Won`t Pay You

Contractors usually bid on large projects and then hire subcontractors to do a significant portion of the work at hand. Subcontractors typically specialize in certain areas such as: In the above case, the subcontractor has brought a collection action under the prime contractor`s Miller Act payment guarantee. The U.S. District Court for the Northern District of California, James Ware, J., dismissed the action and the subcontractor appealed. The Court of Appeal ruled that subcontractors cannot recover attorneys` fees or penalties as “amounts justly owed” under the Miller Act. Before going too far, it is important to understand the point of view of the general contractor – even if it is completely absurd. There are reasons why a contractor feels fully entitled to withhold a cheque – and certain circumstances that are not the contractor`s fault at all. There are several ways in which communication from your general contractor can cause problems. For one, if they`re not clear with the owner`s expectations, you may find yourself in a whirlwind of disputes or unexpected change orders that will slow down your payments. Most entrepreneurs don`t want to write a check until they know they`re getting paid. If the owner or business does not pay the contractor, the subcontractors will likely pay the price.

However, before filing official lien documents with a court, it may be a good idea to contact the general contractor to try to resolve the issue without formal legal process. Sometimes mistakes occur in complex business relationships and this is possible and if the contractor refuses to pay the subcontractor, it may be because the subcontractor`s bill has only slipped through the cracks. There are a number of reasonable explanations for a general contractor not to release funds to a subcontractor in a timely manner, and you should always consider these reasons before filing a lien or related documents. So, if you, as a subcontractor, have not been paid by the due date of the invoice, you must first call the general contractor and ask them why. This can solve the problem quickly and easily and maintain positive relationships between all parties. As a general rule, the owner or bank requires mechanics to issue the privileges of contractors and equipment men from them or the general contractor before payment can be made. Typically, privilege releases come in a package along with other documents that provide proof of performance, and the money is released. Documentation is essential when trying to enforce a contract, perhaps even more so in the construction industry.

An organized and professional subcontractor should be able to quickly collect and create all documents related to the work performed, including accurate accounting of the money owed. This helps with any litigation and goes alongside the basic information requirements to file a letter of intent to the privilege and privilege itself. Hundreds of thousands of homeowners tackle big projects in their homes every year, with the majority of them hiring licensed contractors to get the job done. Contractors in residential and commercial workspaces must meet certain licensing guidelines to legally operate their businesses in the state in which they work. This means they may need to take an exam on construction practices and skills, hold certain insurance obligations or coverages, or have a certain number of years in the industry. While you take the time to look at a contractor in terms of licensing status, commitment and insurance or experience, there are cases where things don`t go as planned. There are two main ways to make a contractor aware of the need to properly pay a subcontractor: the first is to send one or more payment request letters and the second is to file a lawsuit. Contact Houston defense attorney Seth Kretzer for help determining the right course of action. In his practice, lawyer Kretzer has learned how to best achieve a favorable outcome for clients with the most convenient use of time and resources.

Fortunately, there are other options if builders don`t pay subcontractors. The Texas Legislature has provided other means that allow subcontractors to demand funds due for the work performed. Again, is that fair? No, and in many cases, it is prohibited by law. But it happens, and subcontractors need to be aware of it. Any violation of this section will constitute grounds for disciplinary action and will result in a penalty payable to the subcontractor of 2% of the monthly amount due for each month in which payment is not made. In any action for recovery of wrongly withheld funds, the prevailing party is entitled to his attorneys` fees and expenses. The penalties permitted under this Section shall be separate and shall be in addition to any other civil, administrative or criminal remedy. But there may be another tool that can cause the entrepreneur to reconsider his position. .