We provided lien waivers stating "PAID IN FULL"
This new GC is asking for the amounts we paid for our materials. Do we have to provide that info?
1 reply
Oct 3, 2019
There are only a few states that have specific lien waiver forms required by statute, and Texas is one of them. The form set out by § 53.284(e) of the Texas Property Code is the required form for final unconditional lien waivers in Texas. And, that template does not require the specific amounts that a subcontractor has paid their suppliers. It does require that the party submitting the waiver confirm that the receipt of funds in exchange for the waiver will be used to pay all sub-subcontractors and suppliers - but it doesn't mandate that specific amounts be given.
At the same time, the party with the money will generally have the most leverage. And, if they're not willing to make payment until their demands are met, it might be hard to hold out and stand your ground.
Finding some middle ground
When a contractor is demanding certain financial information from their subcontractor, like what amounts the sub is paying their supplier, one way to meet in the middle might be to submit a lien waiver from that supplier. That way, the contractor can know that there aren't any outstanding payment disputes on the job, and they'll be able to more confidently release payments.
Alternatively, offering to use joint checks might also help soothe a contractor's fears. By using joint checks, a contractor can confidently release payment since the check can't be cashed unless both parties on the joint check have endorsed it.
Finally, trying to simply talk out the issue may help to uncover what's making a contractor uncomfortable about releasing payment without knowing exact margins. Plus, as long as markups on the job have been reasonable, it might not be all that scary to let a contractor know the price being paid to suppliers. Though, it's natural for a sub to want to withhold its margins from their customer, to some degree.
For more background on Texas lien waivers: Texas Lien Waivers Guide and FAQs.