Am I Liable To Pay Subcontractors If the Main Contractor Doesn't?

Many large commercial and residential construction projects are completed by multiple companies. While the property owner (or homeowner) generally deals directly with the contractor that they hired, that company may hire one or more subcontractors to carry out parts of the work. For example, the owner hires a general contractor for a remodel project, and that general contractor then hires a painter. Such situations raise an important question: What happens if the contractor fails to pay the subcontractor?

“If a painter doesn’t get paid, they have a legal contract claim against that general contractor that hired them,” says Mark A. Cobb, a commercial construction lawyer at Cobb Law Group in Thomasville, Georgia. “But the painter may also have lien rights against the owner of that business.”

The Subcontractor Claim Against the Main Contractor

Subcontractors are hired by the general contractor. As a property owner, you may not even be aware of the specific terms of agreement between the main contractor and subcontractor(s).

If the general contractor fails to abide by the agreement, the subcontractor likely has a breach of contract claim directly against the main contractor — assuming you paid the main contractor. In some cases, the dispute between the general contractor and the subcontractor may not involve you at all.

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Georgia Construction Law: Mechanic’s Lien

While residential and commercial property owners are not always parties in disputes between general contractors and subcontractors, it is still important that you pay close attention to an issue that arises. The primary reason is that an unpaid subcontractor could potentially get a mechanic’s lien against your property. Simply stated, a mechanic’s lien is a security interest in title of real property for which labor or materials were provided for the purpose of improvement.

“The owner generally has an obligation to make sure the money flows downstream,” explains Cobb. “This goes back to medieval law, literally. People who owned land back then were rich and educated. The laborers were the serfs, who were uneducated and had little resources.

“Today, just because you own land doesn’t mean you’re rich, but an owner still has an obligation to make sure that money goes to the general contractor and that the general contractor sends it downstream to the painter and then actually downstream again to the paint and supply store. And the easiest mechanism for that is something called a lien waiver.”

If you were a client, Cobb continues, “I would say every time that general contractor sends you an invoice or an application for payment, they need to also give you lien waivers from each of the subcontractors, and they need to provide it from each of their subcontractors or their material suppliers. Then you know the amounts that are due and that they’ve been paid the previous invoices.”

Who Can File a Mechanic’s Lien?

Under Georgia law, any subcontractor or laborer can file to obtain a mechanic’s lien on your property if you didn’t pay them properly. Notably, there are very strict deadlines for filing a mechanic’s lien in Georgia. A party must seek a mechanic’s lien within 90 days of the last date they furnished labor or materials.

If someone files a lien against you, Cobb says he first looks to see if the lien has any deficiencies. “Did it meet the deadline? Does it meet whatever format is required by that state’s lien statutes? Was it properly recorded? Were proper notices given? Whatever that state law requires, I’m going to go through all the technicalities and see if there’s any way to defeat that lien. In Georgia, the form has some very specific language in it. So regularly I will see the wrong lien form.”

A Construction Law Attorney Will Protect Your Rights

To summarize, you do not have any general, overriding liability to an unpaid subcontractor. However, an unpaid subcontractor could potentially seek a mechanic’s lien against your property if they act before the Georgia state deadline expires. Should a subcontractor file a mechanic’s lien, it is imperative that you take immediate action to protect your legal rights.

Attorneys typically charge hourly fees in these circumstances, Cobb says, and hopefully they can resolve the dispute quickly. “I love mediation provisions in contracts for that reason: Mediation can be fast,” he says. “It can bring parties to the table, and you can use a business decision to help figure out how to solve the problem rather than a legal decision.”

Find Legal Help

If you have questions about your potential liability for paying a subcontractor if the main contractor (prime contractor) fails to do so, contact an experienced Georgia construction law attorney for legal advice.