what type of lawyer helps subcontractors get payments

How do general contractors negotiate with subcontractors?

Business Litigation Lawyers Can Take Public Works Subcontractor Cases on Contingency. Subcontractors depend on a timely payment of costs and wages for projects of all sizes. However, as our litigation attorney has frequently seen, the owner of the property may not pay the construction team on time, and the general contractor does not always pay his subcontractors …

Do subcontractors have a right to get paid?

Dec 14, 2020 · If you have questions about bringing a payment-related suit against a hiring party, consulting an attorney specializing in construction law should yield some answers. Prompt Payment Law Very often, slow payments are the result of upper-tier contractors not making payments to subs in a timely manner.

Who is responsible for subcontractor payment problems?

In addition to the money owed to you, you may have your own subcontractors and suppliers who are expecting to be paid. You have an obligation to your own business and to your subcontractors to make every effort to obtain payment for work performed and supplies delivered. As soon as you are aware of a payment that is late, contact a lawyer experienced with construction law, …

How long does it take for subcontractors to get paid?

Whether helping draft successful indemnity reform legislation or statutory changes to insure that subcontractors receive notices of completion, or chairing the committee of California attorneys who rewrote all of the California Civil Code Statutes relating to Preliminary Notices, Mechanics Liens, Stop Payment Notices, Payment Bond Claims, Prompt Payment Remedies and other …

What is the responsibility of a subcontractor?

While it’s the hiring party’s responsibility to pay the sub for their work, it’s the subcontractor’s responsibility to know and protect their payment rights. Only the sub can take the action required to recover their cash.

What are the rights of subcontractors?

Any way you cut it, subcontractors have the right to get paid for the work and improvements they make to real property . This right is so important, that many states and federal construction laws outline them specifically. Here’s a breakdown of each of these legally protected rights.

How long does it take to pay subs?

The rules vary a bit from state to state, but payment windows are usually pretty short. In most cases, upper-tier contractors need to pay their subs within 14 days (sometimes less). Federal projects are a bit longer, ranging between 15 and 30 days .

What is prompt payment?

These laws state that an owner or hiring party has a specific amount of time to pay the prime contractor.

How to speed up payment train?

The easiest and most effective way to speed up the payment train is by filing a mechanics lien against the property. The lien will make the property less liquid and give the project owner a headache when it comes to securing further financing.

Why do contractors need a preliminary notice?

In some states, contractors, subs, and suppliers need to send a preliminary notice to protect their lien rights. This document can serve as a friendly introduction to project owners and prime contractors. It also preserves the subcontractors’ rights to a mechanics lien in the event that they go unpaid for their work.

What is a NOI notice?

In those situations, sending a Notice of Intent to lien (NOI) will show the paying parties that you know your rights and that you aren’t afraid to file a lien if that’s what it takes to get paid.

Advocates For Subcontractors

In addition to the money owed to you, you may have your own subcontractors and suppliers who are expecting to be paid. You have an obligation to your own business and to your subcontractors to make every effort to obtain payment for work performed and supplies delivered.

Contact Our Attorneys For Help Recovering Construction Payments

Located in Troy, Michigan, Deneweth, Dugan & Parfitt, P.C., serves individuals and companies involved in business, construction, manufacturing, and real estate transactions and disputes. Our construction law attorneys provide our clients with a high level of knowledge and experience.

What is non payment in contracting?

Non-payment creates a risk of legal claims brought by the subcontractor as well as negative implications to a prime’s current and future government contracts. As such, these contractors should take care to pay their subs and suppliers according to the terms of the governing agreement and take any necessary and appropriate action when a payment issue arises, both with the affected subcontractor and the Contracting Officer.

When a subcontracting plan is in place, must the prime self-disclose to the contracting officer?

When a subcontracting plan is in place, the prime must self-disclose to the Contracting Officer when a small business subcontractor receives a reduced or untimely payment and the reasons for such . An unjustified failure to make a full or timely payment must be considered by the Contracting Officer in performance evaluations, and a history of unjustified, untimely payments may result in negative performance history for the prime to such a degree as to affect its prospects for future awards.

What does FAR 32.112-1 mean?

FAR 32.112-1 allows a subcontractor to make an assertion of non-payment directly to the Contracting Officer. If the Contracting Officer concludes the prime has not met its payment obligations, it may reduce or suspend payments to the prime under the government contract.

Can subcontractors be paid?

Subcontractors who have not been paid for their goods or services as a general rule do not have the ability to seek redress from the government. Because subcontractors lack privity, their recourse lies in an action against the prime for breach of contract or some other commercial law claim. The federal government, however, expects primes flowing money down to subcontractors to honor their business agreements. As a result, acquisition regulations exist that create consequences for non-payment at the prime/government level.

How to avoid paying a subcontractor?

A subcontractor not paid by contractor can be a problematic situation as you are benefiting from work that you paid for, but the actual laborers were not paid. There are many ways to prevent hiring a contractor that does not pay their subcontractor and protect yourself in the event it does occur. When working with a contractor: 1 Be sure they are insured and registered. 2 Ask for and verify references. 3 Stay wary of contractors with substantially lower bids. 4 Begin your relationship with a strong contract that has a payment agreement for milestones. 5 Make sure that your payment schedule is extremely detailed and spread throughout the project. 6 Do not provide a large deposit, so you don't have as much to lose if problems arise. 7 Have lien waivers in place that state that subcontractors need to complete their work and receive payment. 8 Exercise caution with contractors who will ask for payments earlier than the payment schedule allows. 9 Be sure that all materials have been ordered by the contractor. 10 Regularly check in with your subcontractors and the suppliers to make sure they are being paid. 11 If you cannot make physical checks yourself, hire a construction manager to oversee things. 12 Don't ignore red flags, address them with your contractor immediately. 13 Include in your contract the right to terminate the agreement if the job is not being performed properly.

How long does a contractor have to pay a subcontractor?

This section applies to all private and public works of improvement and lays out the statute that a contractor must pay their subcontractor within 10 days of their receipt of the progress payment, to the extent of the subcontractor's interest.

What happens if a contractor violates the contract?

If a contractor violates this law, they can be subject to disciplinary action such as a penalty that the contractor must pay the subcontractor for two percent of the amount they are due, to be assessed each month that they are late with the penalty.

What is a 178 subcontractor?

Section 178 of the 3rd Building and Construction Contracts allows a licensee to be disciplined for a willful or deliberate failure to pay money to their subcontractor when due, for any materials or services that were rendered in the connection with an operation performed by the contractor. The licensee may also be disciplined for falsely denying that an amount is due as well as any attempt to defraud the persons who provided them with materials or services. When violating this section, a licensee could face license suspension or removal as well as incur a two percent penalty.

How to make sure contractors are paid?

Be sure that all materials have been ordered by the contractor. Regularly check in with your subcontractors and the suppliers to make sure they are being paid. If you cannot make physical checks yourself, hire a construction manager to oversee things. Don't ignore red flags, address them with your contractor immediately.

Can a contractor be disciplined?

The contractor can be disciplined by the Contractors' State License Board and subject to a penalty payment. The provisions in this section apply to any contract after January 1999 and can alter the cost-benefit analysis for parties that are in dispute.

How long does it take for subcontractors to get paid?

If you thought the 30-day timeframe for residential payments was long, commercial projects can take months. It can take an average of 83 days for subs to get paid on these invoices.

Who is the general contractor on a construction project?

On a construction project, an owner will hire a general contractor to oversee the entire project. The general contractor could be one person or a large firm specializing in general contracting. The general contractor will then hire out aspects of the project to subcontractors.

What happens when a contractor strikes out on their own?

When a general contractor strikes out on their own, they have the opportunity to design their business how they want to. They can take the projects that they want, hire who they want, and create payment terms that work for them. But, if you’re a homeowner or subcontractor, even the most common contractor payment terms might make you ...

How long does it take to pay a construction invoice?

Almost half of all construction businesses offer their customers 30 days or more to pay their invoices. On top of that, 8 percent offer terms in excess of 45 days.

What is payment terms?

The payment terms of a contract are the result of an agreement between a contractor and subcontractor. They two set the terms when they negotiate the contract. Any part of the contract is up for negotiation — pay schedules, price, discounts — so, ideally, the parties will reach terms that work for both sides.

What is a mechanics lien?

States provide a tool that contractors and subcontractors can use to speed up the payment train: the mechanics lien. If project owners or general contractors aren’t adhering to payment deadlines, the other contractors in the payment chain have the right to file a mechanics lien against the property.

Do contractors have to pay upfront?

On some residential projects, general contractors will negotiate , or require, a down payment or upfront deposit from the homeowner. This upfront payment serves to cover the costs of materials and initial labor. This is a common, everyday occurrence, and it’s entirely legal.

What is a worker's compensation lawyer?

If you’ve been injured while on the job, or have had to face the death of a loved one as a result of a workplace accident or occupational disease, a lawyer who specializes in workers compensation law can help you navigate the issues you face, such as the extent of the employer’s fault and the amount of benefits to which you are entitled.

What can a corporate lawyer do for you?

A corporate lawyer will be able to help you with issues related to the formation of your corporation, general corporate governance issues and corporate compliance issues.

What is an estate planning lawyer?

The estate planning lawyer specializes in wills and trusts, and can help you to draw up a will to pass on your assets. Among other estate planning legal services, this type of lawyer can help you set up a trust which will help take care of your children’s financial needs.

What is an IP lawyer?

Also known as an IP attorney, an intellectual property lawyer can advise you with regard to issues relating to intellectual property, such as copyrights, trademarks, patents, industrial design and trade secrets.

What is an employment lawyer?

Employment Lawyer. Whether you’re a company that’s having a problem with an employee, or an individual who’s having problems with the company you work for, an employment lawyer can generally provide advice about legal issues which arise from an employment contract or within an employment relationship.

What is general practice law?

Unlike lawyers who specialize in a particular area of law, a general practice lawyer has a practice that handles a wide range of legal issues. Different general practice attorneys will have different areas of law with which they are most comfortable, so if you consult with a general practice lawyer, it’s always prudent to discuss his or her experience in handling the type of legal issue you’re facing.

What is a disability attorney?

The Social Security Disability system can be a particularly complex system in which to navigate. An attorney who specializes in Social Security Disability issues can help you with any step in the Social Security Disability process, including assisting you with eligibility issues, launching an appeal of a decision to deny you benefits and dealing with the reduction or termination of your benefits.