Home>Levelset Community>Legal Help>Question- We are the owners and GC on a renovation project. We have contracted with several sub contractors and some hav

Question- We are the owners and GC on a renovation project. We have contracted with several sub contractors and some hav

Question- We are the owners and GC on a renovation project. We have contracted with several sub contractors and some have contracts between $250,0000 and $500,000 dollars. When asked for a sworn statement. The sub provide a sworn statement indicating that all materials have been paid in cash. If the materials were paid in cash shouldn't the sub have cash receipts as evidence. What if the sub has lied. Are we exposed to the liability from the supplier even if he didn't post a notice to owner. I need the response as it is crucila to understand the legal consequences look forward to hearing from you. Respectfully.

1 reply

Dec 19, 2019

If a subcontractor submits an affidavit stating they've fully paid their subs and vendors, and if it turns out that affidavit was untrue, then the subcontractor will certainly face some level of liability. Of course, even if a subcontractor doesn't submit such an affidavit, an owner should be able to hold their sub liable anyway - though having an affidavit in hand is that much more powerful. At the end of the day: it's the sub's duty to pay their sub-subcontractors and vendors. So, one way or another, an owner will be able to hold them liable for their debts if they go unpaid. On the point about the pay stub - I'm inclined to agree that on a large cash payment, there should generally be some type of receipt. Asking for physical documentation shouldn't be much of an imposition, especially with high-dollar projects. Or, directly reaching out to the vendor to see if they received payment could help to settle suspicions and see if they've been paid. Note, though, that there's a document specifically designed for the situation you describe above: a lien waiver.

Collecting lien waivers will relieve fear of nonpayment

Before getting too far along, Levelset has a great resource on this topic: The Property Owner’s Guide to Lien Waivers. Anyway, mechanics lien waivers were specifically designed to give owners and general contractors peace of mind about the payment chain on their projects. Lien waivers act as receipts - they're exchanged for payments and serve as proof that payment was, in fact, made. And, most importantly, they serve to eliminate the chances that an owner will face an unexpected lien claim on their job and end up having to pay twice. So, for owners that are a bit wary of whether their subs have paid the sub-subcontractors and vendors on the job, an owner can request that all lower-tiers (i.e. all subcontractors, sub-subcontractors, equipment suppliers, material suppliers, etc.) provide a lien waiver before payment will be released. If payment has already been made, then collecting lien waivers shouldn't raise any issues - why would anyone have a problem with waiving a right they don't even have? But, if lien waivers can't be produced for everyone who worked on the job, that could be an early indicator of potential issues on the job. And, if some of these parties are expecting to be paid by the proceeds of the final payment, conditional lien waivers may be a helpful middle ground so that no rights are waived before payment is received.

Additional resources on Florida lien waives

Levelset has a ton of content on Florida lien waivers which might be valuable to you: - Florida Lien Waivers Guide and FAQs - Florida Lien Waiver Forms & Guide – All You Need to Know - Florida Lien Waivers | Common Mistakes & How to Avoid Them

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