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When Subcontractors are Owed Payment Part 1

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When an owner and a general contractor agree to work on a project, it’s the contractor’s obligation to complete all work according to the terms and conditions in the contract. For the majority of projects, hiring subcontractors is a necessity. Although the owner and general contractor have an agreement in place, it’s the general contractor’s obligation to enter an agreement with every other professional working on the project. This is why it’s critical that construction firms partner with a Charlotte construction lien attorney

In this two-part article, the attorneys at Cotney Construction Law will discuss subcontractors that are owed compensation from a contractor. We will first discuss the process of filing a mechanic’s lien. In the second part, a Charlotte mechanic’s lien attorney will discuss other options available to a subcontractor to ensure that they receive payment. Remember, for any of your construction firm’s legal needs, consult Cotney Construction Law.  

Filing a Lien 

When a subcontractor wants to be paid for work they have completed, the general contractor (not the owner) is obligated to compensate them. This includes situations in which the owner refuses to pay the general contractor. Although a general contractor may try to create a clause in their contract absolving them of responsibility to pay a subcontractor when they haven’t been paid, they cannot successfully do this. For subcontractors that want to be compensated for completed work, they will need to file a mechanic’s lien against the property. 

As we discussed above, if the general contractor hasn’t paid the subcontractor, the end result is that the subcontractor can file a lien. However, in the scenario of dealing with an entity that refuses to pay, the subcontractor may consider foreclosing on their lien. This is the process of enforcing the lien when a lawsuit commences that forces the sale of the property. The end result is that the subcontractor will receive compensation after the sale of the property. 

Lien Foreclosure   

There can be some negative ramifications to foreclosing on a mechanic’s lien, so it’s critical that you consult a Charlotte mechanic’s lien attorney if you are considering taking this action. For example, the subcontractor will need to invest more in court costs in order to retain their lien rights. Another issue is that the subcontractor can only collect payment for what the general contractor is owed by the owner. If the general contractor has been paid, and they elected not to pay the subcontractor in a timely manner, the mechanic’s lien would be invalid. Even if the mechanic’s lien was filed correctly, as long as the owner can show that they fulfilled their end of the obligation, the lien is unenforceable.   

If you are a subcontractor that hasn’t been paid for completed work, the first step you should take is to consult a construction lawyer. Whether it’s filing a lien or exploring civil action, the attorneys at Cotney Construction Law can help you determine the most effective strategy for procuring due payment.     

If you would like to speak with a Charlotte construction lien 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.