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How can I protect myself from subcontractors not getting paid by my general contractor?

ArizonaConstruction Contract

I'm an Arizona resident and recently started renovating my property using a general contractor. In the contract we agreed to specific payment terms (20%, 10%, 30%, 30%, and 10% after completion). At this stage of the project, we've paid a total of 30%. We used a general contractor to manage the project so that scheduling, purchasing of materials, and payment of the employees would be managed. Recently, one of the GC's subcontractors contacted us directly and mentioned that if he does not receive payment for his work, he will place a lien on the property. How can I protect myself from this?

1 reply

Jan 17, 2020

If the property is residential owner occupied, then the subcontractors cannot lien the property. Moreover, the general contractor holds the money paid by the owner in trust for the subcontractors. If the general contractor is using that money for something other than paying subcontractors, there can be serious consequences including personal liability for the owners/managers of the general contractor. A reasonable approach would be to tell the general contractor that you are getting calls from unpaid subcontractors and you want to see proof that they have all been paid before you are going to release anymore money to the general contractor.

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