I prepaid a subcontractor for him to purchase materials. He never did and is now underwater. The prepayment was over 60 days ago. Is there anything i can do at this point?
Thanks,
1 reply
Sep 25, 2019
When you pay a subcontractor for work or materials and they fail to deliver you have some options, but they depending on the subcontractor's solvency, they may not be very attractive options.
Generally speaking, you and the subcontractor have a contract (whether it is verbal or written). You were paying the subcontractor in exchange for materials and/or labor. Here, you paid the subcontractor in advance. The subcontractor did not perform. You have a basic contractual right to either: (i) require the subcontractor's performance; or (ii) get the subcontractor to return the money to you. In addition to option (i) or (ii), you also may have a case against the subcontractor for damages you incurred through this issue, such as damages for delaying the project, costing you more money, etc., etc.
The biggest hurdle for you is the fact that the subcontractor is now "underwater." It sounds like you're confronted with a simple contractual dispute with the sub. In these circumstances, unfortunately, it's just a matter between you & the sub. If the sub is "underwater" or judgment-proof, this could be a major problem. You could pursue the sub in court, you could win, you could get a judgment...but have a really hard time collecting.
You'll need to make a call as to whether this sub has some ability to pay you (now or later). If so, pursuing the sub for your money back + damages may be worth it. But, if not....