If a contractor refuses to pay a subcontractor, the subcontractor has reason to take legal action to recover the money owed to it. Read 4 min As a subcontractor, you rely on the contractor to hire you to pay you. You may not want to ask the contractor about their creditworthiness, but protecting yourself as a subcontractor is an essential aspect of becoming profitable enough to stay in business. While getting a contract that clearly expresses the work you need to do to get paid is a good start, there are other ways to make sure you get paid for the services or products you offer. The list of the construction industry continues, but it is a general list of project types. Construction projects usually involve multiple subcontractors such as: No matter what type of work, large or small, you do for a client, you will always receive a signed contract that will determine the exact scope of work, the amount of salary and the number of amounts to be paid. Even if you have a long-standing relationship with a client, the contract gives you protection if the client asks for extra work without extra pay or wants to wait until the work is completed if you prefer weekly payments. If you usually do the same work on a regular basis, for example. B mow the lawn around a company every week, make the contract indefinite and say that the terms will remain in effect indefinitely or until the contract is terminated by one of the parties.
This gives you the protection you need to make sure you get paid without having to sign a new contract every week. Another option is to request payment after the completion of the phases of a project. For example, if you write custom database code for Websites, payment is required when you create the database schema and after the database is halfway there. Request full payment when the database can be put online. If the contractor does not pay you, stop all work until payment is made. This gives you some control over securing payment for the work you do. Send invoices immediately after each step so you can get paid and continue working without fear of working without pay. It`s funny enough, but for our customers, using Levelset isn`t just about depositing privileges. What Levelset really does is help you get paid. And on the contrary, people in the industry who actively and effectively manage their privileges rarely have to file a lien. That`s because companies that secure their payments end up being paid long before a lien deposit is required.
The purpose of my statement in our to-do list is to remind general contractors that they need to be aware of the signs of financial difficulties with a specialized contractor. If the specialized contractor experiences financial difficulties and this is not resolved, he will go bankrupt. Of course, this harms the specialized contractor, but also the general contractor, who now has to find a qualified subcontractor to build his jobs. In most cases, you cannot legally withhold payment from a subcontractor if the order you ordered is not paid on time or, even worse, is not paid at all. You are always responsible for the remuneration of your subcontractors. Subcontractors will likely be able to place a mechanic lien on the property in question to get back the money owed to them, which could cost you more. To legally withhold payment in these scenarios, your contract must include a “payment if paid” clause that states that you do not have to pay subcontractors if you are not paid for the work yourself. Subcontracting forms, mistakenly referred to as “standard subcontracts,” often contain specific language that states that payments to the subcontractor will not be made until the contractor receives payment from the owner.
The wording itself seems clear – if the contractor is not paid, its subcontractor will not be paid. In return, the contractor agrees to pay the subcontractor the amount of $_ in ___ payments. The said amount shall be paid as follows: $X deposit at the beginning of the installation and $X on .. . . Instead, these courts have held that the clause simply gives the contractor a reasonable period of time to make reasonable efforts to recover from the owner. If the contractor fails in these efforts, he still has to pay his subcontractor. The theory behind this rule is that the subcontractor enters into contracts with the contractor and the contractor is required to pay for the subcontractor`s work. The risk of non-payment is therefore borne by the contractor and not by its subcontractor.
We talk to people in the construction industry like you every day. Many of them contact us about an immediate problem, which is that they are struggling to get paid, and it is happening to them right now. At other times, we talk to people who may not have a payment problem right now, but still have a bad taste in their mouth the last time they struggled to get paid for one of their projects. An electrician sent us a note about subcontractors` payment plans: many contracts contain clauses stating that payment depends on the contractor`s payment. If the contractor is not paid, you will not be paid. To avoid this, ask if this clause can be changed so that the contractor is responsible for payment no matter what. .