Here's How You Can Protect Your Business

Should You Use a Joint Check Agreement? Part 1

The construction industry is notorious for payment issues. Will a joint check agreement secure your payment interests? They could, but how safe are they? In this two-part article, our Ft. Myers construction lawyers give an overview of joint check agreements. We will discuss some of their benefits as well as the factors you should take into account when choosing them as a form of payment security. Part two will conclude our series.

What Is a Joint Check Agreement?

A joint check agreement is a contract between construction parties where one party agrees to make a joint payment to two or more other parties. A general contractor, subcontractor, and material supplier typically enter this type of agreement. All parties agree to the payment terms as outlined in the agreement. These agreements can work well if they are managed properly. If not, they can exacerbate payment issues.

The Traditional Structure of Construction Payments

Traditionally, when work is complete on a project, the general contractor pays the subcontractor for their work and then the subcontractor is responsible for paying their suppliers and so on and so forth. Ideally, all parties will be paid and everyone goes home happy. However, as our Ft. Myers construction attorneys have seen time and time again, things do not always go as planned.

How Are Joint Checks Beneficial?

A joint check agreement allows the general contractor to pay both the subcontractor and their material suppliers at the same time and with the same check. Hence, the term joint check agreement. Contractors, subcontractors, sub-subs, suppliers, and others are always looking for ways to ensure they get paid for the labor and materials they provide on a project; and rightfully so. On the other hand, owners and prime contractors may seek to protect themselves against liens. A joint check agreement is often used to accomplish this.

To speak with a Ft. Myers construction 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.