I have a question that I can’t find the answer to regarding the timing of vendor releases. Here’s the scenario. I’m a first-tier sub to a general contractor and I turn in my progress billing on the 20th of each month with a conditional releases. I then soon after start the process of requesting an Unconditional Progress Release from each of my vendors for the previous month. When I have all of my vendor releases, I give them to the general contractor and they release my payment. The exception is for my first billing as the vendors will not have filed prelim and I get paid without any vendor releases. This is how it’s been for me for the last 20 years as best I can remember. I now have a new project with general contractor that is requiring that my vendor releases be through the same month that I am billing before they will release my check. My argument to them is, “you are getting paid by the owner without my Unconditional Progress release for the same month.” Thank you for your time. Thanks, Scott Van Diest Van Diest Bros., Inc. 15315 Lakewood Blvd., Paramount, CA 90723 Office 562.232.2801 Fax 562.633.0414 CA Lic. 157555
Thanks for posting a great question, we are seeing this issue almost daily, especially since the start of the COVID crisis. Everyone from owners, GC's, 1st tier subs, 2nd tier subs and suppliers are concerned that if the music stops unexpectedly they will be left holding the bag. The best way to handle this is to keep your side of the street as clean as possible, meaning to pay all your subs, suppliers and vendors when you bill for a particular period.
The obvious problem this creates is it puts the 1st tier sub (you in this case) at greater risk since you are paying your subs and suppliers before you get paid. This is where cash management and funds control companies come in. They will lay out these funds to your subs, suppliers and vendors and hold the GC accountable if they don't pay. The result for someone in your position is you get the GC what they want, proof that all SSV's have been paid at the time you submit your monthly billing, HOWEVER, they are ultimately liable for the funds that are advanced should they not pay.
I can give you a call and explain in greater detail if you would like.
Scott