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Can a sub tier sue a general comtractor if subcontractor file bankrupcty

South CarolinaBankruptcyLawsuitMechanics LienPayment Disputes

The general contractor say they do not owe the subcontractor no more money

1 reply

Jul 31, 2018
From your question it's difficult to really get a handle on the relationships between the parties, but let's see if we can provide some helpful information.

If the sub-contractor that is filing or contemplating bankruptcy is the party who contracted with the GC, then that party would generally be able to sue the GC for any money still owed pursuant to the contract between them. Since the GC disputes that there is any money left due, there is clearly some disagreement related to whether the suit is appropriate.

If the sub-tiered party was hired by the sub (who is filing for bankruptcy and to whom the GC claims no more money is owed) the question is a bit different. Usually, for contract disagreements, a party is not allowed to file suit against somebody with whom they had no direct relation - this is known as whether they had "privity of contract" i.e. - the sub-tiered party could file suit against the sub that hired them, but could not sue the GC directly.

However, in construction there are ways around this - including the mechanics lien. Filing mechanics lien on against the property that was improved obligates additional parties to pay the debt, and if nobody can pay, the property could be sold to satisfy the debt. In order to gain this benefit and file a lien, though, there are lots of specific rules that must be followed and requirements that must be met.

You can see more about the requirements specific to South Carolina, here: https://www.zlien.com/mechanics-lien/south-carolina-lien-law-faqs/
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