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In Texas, can we make a GC provide us proof of payment to subcontractors after draw payment to him?

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I am a residential homeowner in Texas. My wife and I are contracted through a custom home builder to build our plan. We have continually paid him when draw requested initially after the job was completed, then during progress and lastly before work was even performed. The last several draws have pulled us into a heated dispute concerning quality of work or timelines for completion. Recently, we were notified of a subcontractor filing a lien against us from a draw we paid to him 3 months prior and another 2 additional subs discovered by us still unpaid. After confrontation, a month ago, he now says all bills are up to date. He won't provide paid receipts or invoices for proof and we have nothing in the contract that forces him to. He has slandered us with the subs and they will not discuss details with us to ensure our financial future. How do we keep from paying twice or additional charges from contractors he has failed to pay up to date? Can we make him provide lien waivers from these subs under Texas law now after time has passed? The contract does state all subs will be paid by him although, there is no timeframe listed unlike what's found in the Texas Prompt Payment Act? Where do we go from here so that it will not happen?

5 replies

Apr 30, 2021

Hello,

There is a lot going on here. Let me make sure I have it all. Contractor is supposed to be doing work on the project. Initial contractual draws were: Deposit, Progress Payments, and Final Payment. Contractor is doing poor quality work and taking too long to do that. Contractor is also not paying subcontractors. Project is not yet finished. Did I get everything?

General Contractor
The first thing needed to be done is to write down a list of your issues with him and what you would like to see as a resolution. You want to document everything in case you have to fire him. Also, you are going to send him this letter via Certified Mail. Keep a copy with you or on your computer.

In your letter and via text, you are going to request that he provide Unconditional Lien Waivers on Progress Payment signed by the subcontractors. This is just going to show that they are paid and will not be pursuing liens against your property. Request very strongly. Insist. Demand.

Subcontractors
In the notice of intent to lien was contact information for the subcontractor. Call them and demand that they provide you with confirmation that they received payment. With all of them, you want to confirm payment. If you have to, go visit the property while they're there and ask about payment. It's your property and your money, you need to know.

Also, consider sending letters to their last known address (if you have them), stating the same thing as the above.

Finally
Pay very close attention to the draws versus completion. Your money should be going to your project not some other project he has going so you want to make sure that the progress payments you are making are in line with the work being completed.

If none of this works out, just sue them all and find out where your money went.

E. Aaron Cartwright III
214.789.1354
Aaron@EACLawyer

1 likes
Apr 30, 2021

The legal analysis would start with a review of your contract, and then extend to any advertising, or promotional materials issued by the contractor, including its web site, and then extend to any communications which have occurred.

If the contractor is in breach of contract (say, for not paying its subcontractors or suppliers), then you may have remedies in the contract to resolve that matter. Regardless, you should approach the various subcontractors and suppliers to check on whether they have been paid up to date, and request that they provide a lien waiver to reflect their payment status. It is likely that the contractor had an obligation to provide a listing of its subcontractors and suppliers (under Texas Property Code sections 53.254, et seq.), so you have a right to know who they are.

Retain a construction attorney to evaluate your legal situation and to provide advice.

Good luck.

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Apr 30, 2021
Yes, that is correct. The project is incomplete, we are about 60-70% finished. We have DEMANDED on multiple occasions both verbally and written for him to provide proof of payment, we were asking for copies of paid receipts and he refuses. We have also been very insistent with the subcontractors but they too refuse to provide copies of paid invoices. The state their contract is with the builder not us and they will not share his financial information with us. Moving forward, in our certified letter can we request the Unconditional Lien Waivers on Progress Payments be notarized? Is there a rule, law, or something in the Texas Property Code, that would force him to provide lien waivers from subcontractors upon our request as the homeowner. Clearly, we don’t feel comfortable paying another dime to him until we know everyone else has been paid. We have already paid him over $200,000 leaving a lot of potential lien damages.
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Apr 30, 2021

The link to the Texas Property Code sections 53.251, et seq., concerning your rights as a homeowner are set out as follows:

https://statutes.capitol.texas.gov/Docs/PR/htm/PR.53.htm

The provisions concerning homestead protection start at section 53.254.

Retain a construction attorney to review your legal situation, and to provide advice.

Good luck.

1 likes
Apr 30, 2021

Hello again,

Yes. Texas Property Code.

Chapter 53.085. AFFIDAVIT REQUIRED. (a) Any person who furnishes labor or materials for the construction of improvements on real property shall, if requested and as a condition of payment for such labor or materials, provide to the requesting party, or the party's agent, an affidavit stating that the person has paid each of the person's subcontractors, laborers, or materialmen in full for all labor and materials provided to the person for the construction. In the event, however, that the person has not paid each of the person's subcontractors, laborers, or materialmen in full, the person shall state in the affidavit the amount owed and the name and, if known, the address and telephone number of each subcontractor, laborer, or materialman to whom the payment is owed.

If requested and as a condition of payment. Before he gets any other dime from you, you may demand that he provide the affidavits stating everyone has been paid. The affidavits can include the lien waiver.

-Aaron

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