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Should You Use a Joint Check Agreement? Part 2

There is no denying that joint check agreements are common in the construction industry. Owners, contractors, subcontractors, and suppliers primarily use them for greater peace of mind regarding payments and liens. In part one of the article, our Ft. Myers contractor attorneys discussed joint check agreements and their benefits. In this final section, we will discuss factors that construction professionals should be cautious of.

They Are Not Regulated

Be advised that joint check agreements are completely unregulated. There is no industry standard nor are they governed by state or local law. Since there is no standard joint check form, parties are free to draft a legally sound agreement that suits their project needs and personal best interest.

Signing the Agreement

Joint check agreements are essentially contracts and therefore need to be agreed to and signed by all parties before issuing the check. Agreements that are not signed by all parties are invalid.

Keeping Track of Agreements

When dealing with several lower-tier parties, it can be difficult to keep track of which have agreements and which do not. If the general contract is not careful, an intended recipient may not receive the check and the funds designated to that recipient could be pocketed by another party on the joint check. To avoid this, all parties should endorse the check before it gets cashed.

Understanding the Terms of the Agreement

When it comes to contracts, language matters. Do the terms state that the paying party is required (obligatory) to issue a joint check or if issuing the check is optional (a permissive agreement). The difference between the two is the deciding factor on whether or not a party can file a lawsuit for nonpayment. Weak language exposes you to legal issues, which is why you should always seek the expertise of a Ft. Myers contractor attorney to either draft an agreement or to review the agreement to ensure it is mutually beneficial.

To speak with a Ft. Myers contractor attorney, please contact us today.

Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.