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homeowners rights when contractor has been paid in full but hasn't paid the subcontractor

ArizonaPayment Disputes

Been dealing with a nightmare contractor. They have been paid in full in December and as of 1/26/18 got the COC signed indicating i owe them 0 but i put in it as of 1/24/18 sub contractor has not been paid. They have promised to send payment multiple times and i spoke the sub and they still have not been paid. The Sub back in October did file the 20 day preliminary notice but has not filed an actual lien yet. The owner said he would contact me first. The contractor is giving me the run around. It seems like other states the law favors the contractor and sub contractor not the homeowner. What can i do to force the contractor to pay so I can get a lien release from the sub? If i want to go after the surety bond it appears i might have to sue, again not homeowner friendly.

1 reply

Mar 30, 2018
I'm sorry to hear about that. Perhaps the best way to force an unwilling contractor into cooperating might be to remind them of their duty to defend lien action. In Arizona, a contractor must defend an owner from liens filed by any person other than that contractor. Specifically, § 33-995 of the Arizona mechanics lien statute states that "If the owner has settled with the contractor in full, or if such an amount is not owing to the contractor, the owner may recover back from the contractor the amount so paid by him, and for which the contractor was the party originally liable." This means that, if the contractor has already been paid in full, the contractor may be required to return the payments made from an owner to said contractor in order to fend off the lien claim. Notifying the contractor that they are legally required to defend the property owner from a subcontractor's lien claim should help adjust the contractor's point of view - it should remind them that payment to a subcontractor is also the GC's problem, not just the owner's problem. Of course, sending a demand letter to that contractor requesting that payment be made to the subcontractor (or else - legal action would be initiated) is often effective as well. Finally, reporting the contractor to the Arizona Registrar of Contractors or filing a consumer complaint with the Arizona Attorney General (or merely threatening to do so) could be effective.

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