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Can a general contractor with hold payment due to not being able to provide a lien waiver from a supplier.

North CarolinaLien WaiversSlow Payment

We have completed a project for a commercial project. First payment was paid with no issues. Second payment was 21-30 days late depending on what type of grace period you are willing to give. Our third payment is being held up due to not being able to provide supplier lien waivers. I explained that if the second payment had be paid when it was supposed to our supplier would have been paid. The third payment was going to be used to do this. They only want to release enough monies to pay our suppliers then release the rest later. There is wording in the contract about supplier lien waivers but there is also wording in the contract about the contractor and owner not being held liable for a sub not paying their supplier bills. Any thoughts? Travis

1 reply

Oct 2, 2020

Hello Travis,

Your situation is a strange one but not uncommon.

The fastest way out is to take the funds to pay the suppliers, obtain the lien waivers from the suppliers, and send notice of intent to lien if you are not paid the balance within X days.

You are still on the clock for filing a lien on a commercial property. If you send the notice, they may take you more seriously.

The alternative is to fight them on the hills about the issue but to do that, you will still need to send pre-lien notice and, if they still insist, file the affidavit of lien. If they further insist on not paying full balance until subs are paid, to enforce your lien, you will need to file a lawsuit in District Court. But then they will argue that you have breached your contract by not obtaining supplier waivers prior to disbursement of final amounts. 100% of construction cases go to mediation so it is likely a mediator will ask if there's a way you can get the suppliers paid so you can get the rest of your funds. And you'll have paid an attorney the entire time, costing you more money.

If you have a couple of days or the ability, consider a line of credit from a bank to smooth the transition. Once the suppliers are paid and waivers obtained, if they still don't pay you, slap a lien on the property and consider moving to foreclose.

E. Aaron Cartwright III
214.789.1354
Aaron@EACLawyer.com 

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