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Pay when paid

Good morning. We are a Electrical Contractor in Fl and I have a question regarding conditional releases. We routinely setup job accounts with suppliers. The suppliers in turn issue NTO's to owners and the GC's. We have had a few situations where the GC with withhold payment (to us) until they receive a unconditional release from said supplier. We pay the supplier with the monies received from the GC so we are in a constant loop where the GC will withold payment to us until we pay our supplier. Is this legal? Is there a workaround for this? I would love to have you guys at my disposal, it seems that you are well versed. Thank you

3 replies

Dec 4, 2020

It seems like the GC should accept a conditional release signed by the supplier reciting its waiver of rights "upon receipt of" the amount due. This would allow you to submit the waiver to the GC and the payment should be funded. I am a Georgia lawyer, not admitted in Florida. However, here is a sample form for a conditional release under Florida law: CONDITIONAL WAIVER AND RELEASE OF LIEN UPON PROGRESS PAYMENT (Pursuant to Florida Statutes Annotated § 713.20) Upon receipt by the undersigned of a check in the sum of $____________________, payable to the undersigned, and when the check has been properly endorsed and has been paid by the bank on which it is drawn, this waiver and release document shall become effective and enforceable. Subject to the above language, the undersigned lienor, in consideration of the sum of $______________, hereby waives and releases its lien and right to claim a lien for labor, services, or materials furnished through (insert date) to (insert the name of your customer) on the job of (insert the name of the owner) to the following property: ______________________________________________________________________ (description of property) ______________________________________________________________________ ______________________________________________________________________ This waiver and release does not cover any retention of labor, services, or materials furnished after the date specified. DATED on _______________, 20_____ _________________________________________ (Claimant name) By: ___________________________________ Its: ___________________________________ Address:____________________________ ___________________________________ Phone: ____________________________ Fax: _______________________________

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Dec 4, 2020

The answer really depends on what your subcontract says. Does it require you to provide unconditional releases for your suppliers BEFORE you are paid? If so, then you have your answer. But if that is the case, there are two workarounds: (1) negotiate better subcontract language so you provide unconditional releases AFTER you are paid, or (2) find better GCs to work for.

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Dec 4, 2020

Wow, thank you, thank you, thank you, you guys are spot on and amazing.

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