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Tips for Subcontractors Dealing with General Contractor Nonpayment

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When you’ve committed hours of labor and resources to a construction project, the last thing you want to deal with is nonpayment courtesy of the general contractor that hired you. Nonpayment is frustrating, but you can’t let your emotions get the best of you. Subcontractors have several options for pursuing a general contractor who refuses to pay them for the work they have already completed. All it takes is some persistence and help from a Raleigh contractor attorney from Cotney Construction Law. Our experienced legal team helps construction professionals, including subcontractors, all over the country get paid for their hard work.

Common Reasons for General Contractor Nonpayment

Why would a general contractor willingly choose to withhold payment from their subcontractors? There are many reasons why a general contractor may not be able to pay. In many cases, nonpayment is unintentional. After all, maintaining good relationships with subcontractors is integral to any successful contracting business.

Here are some reasons a general contractor may not pay a subcontractor:

  • The owner of the project, or the general contractor, have gone bankrupt
  • The owner refuses to pay the general contractor
  • The general contractor owes money and is using the current project to finance their debt
  • The general contractor refuses to pay the subcontractor because they feel the work is subpar
  • The general contractor is unprofessional, possibly unlicensed, or willingly engaging in malfeasance

Subcontractors’ Best Options for Procuring Payment

Subcontractors who are determined to get the payment they are due can partner with a Raleigh contractor lawyer to put pressure on the general contractor via:

Mechanic’s Lien: the subcontractors’ best defense against nonpayment. A mechanic’s lien allows a subcontractor to file a legal claim against the property they worked on to demand payment. This is a powerful tool so long as you don’t unknowingly waive your right to file a mechanic’s lien when signing the contract. By having your contracts reviewed by one of the lawyers at our Raleigh construction law firm, you can rest assured that your rights to file a mechanic’s lien are upheld.

Payment Bond: unlike a mechanic’s lien, a payment bond doesn’t allow a subcontractor to take retroactive action against nonpayment, but it’s still a valuable tool if the owner of the project has required the general contractor to get one. Subcontractors who aren’t paid can file a claim against the payment bond to receive a payout from the surety. Meanwhile, the general contractor will be taken to court.

Lawsuit: sometimes, there’s no ideal alternative to filing a lawsuit against the general contractor who is refusing to pay you. Although lawsuits can be expensive, most judges will order the general contractor to compensate the subcontractor for their legal bills if they are found liable for nonpayment. North Carolina is a “prompt pay” state, which helps subcontractors by requiring general contractors to pay their subcontractors within seven days of receiving payment from the owner. A Raleigh contractor attorney can help represent you in court and improve your chances of obtaining due payment.

If you would like to speak with an attorney from our Raleigh construction law firm, 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.