As a project owner, you don’t need to deal with subcontractors directly. You hire a reliable general contractor to manage them, including handling payments. When you pay the contractor, they are required to pay subcontractors within a particular period of receiving payment from you.
So, what can happen if subcontractors are not paid in full or at all?
Florida’s construction lien law
Subcontractors are lienors in Florida – they have lien rights, which allow them to enforce a claim for payment against a property they work on when they are not paid in full. Thus, if you pay your contractor in full, expecting them to pay subcontractors, your property may be in jeopardy if they don’t.
Can you protect yourself?
You can avoid a mechanic’s lien from subcontractors. Firstly, always provide your contractor with timely and full payments so they can pay their subcontractors.
Further, in your contract, you can ask the chosen contractor to provide a payment bond before the project begins. This surety bond guarantees they will pay subcontractors and material suppliers. The company that sells the contractor the bond ensures they fulfill their obligations to you and the subcontractors.
It’s significantly advantageous, as you can be certain the subcontractors are receiving their payments without your involvement. And it can protect your property from liens.
Surety bonds are common in state-funded projects, but you can also require this insurance as a private property owner. Different factors, such as the project’s cost, the contractor’s financial standing, the scope of work to be performed and the contractor’s past performance, are considered when determining the amount of this bond.
If you have discovered your contractor has not been paying the subcontractors in your project, consider legal guidance to protect your interests.