Part 4 of this SMACNA Contracts Bulletin covers a common subcontractors scenario: when services on a job have been completed and a general contractor gets paid, but then does not pay the subcontractors for their work on the project. Although statutes vary by state, many provide criminal penalties against the GC and civil remedies for the subcontractor.
In this Contracts Bulletin, you receive a general overview of the remedies available to subcontractors in these "contractor theft" situations. Topics covered include:
- When the Situation Arises (or the “Contractor Theft” situation)
- Subcontractor’s Authority to Act
- Four Main Types of Statutory Remedies
- Trust Fund Remedy or Mechanic’s Lien? Or Both?
- Harsh Consequences for General Contractors
- Limitations on the Right to Recover
- How Subcontractors Can Preserve Their Claims
- Do the Work Properly
- Provide Notice of Nonpayment to the GC
- How Subcontractors Can Avoid These Situations
- Examine the Contract
- Try to Get an Express Trust Provision Written into the Contract
Contracts Bulletin No. 5.4 was prepared by SMACNA’s general counsel. All members are encouraged to read this latest update.