Home>Levelset Community>Legal Help>What can an owner do if the contractor is not paying the subcontractors on a project under a construction contract within the time period required by the construction contract?
What can an owner do if the contractor is not paying the subcontractors on a project under a construction contract within the time period required by the construction contract?
the contractor has not been paying the subcontractors providing labor and materials on the construction of a building within 30 days of receiving payment from the owner.
1 reply
Nov 8, 2018
That's a good question! Slow payment is all too common in the construction industry. When payments aren't coming, there are a host of things Texas subs and suppliers can do to compel payment. For one, Texas has monthly notice requirements, and unlike other states, Texas notices work to spark a fire under the contractor (or other customer) to make payment. In Texas, when monthly notices must be sent will vary based on the unpaid party's role and the type of project. It can get a little confusing, but the notice requirements are broken down on the following pages: Texas Mechanics Lien & Notice FAQs and Texas Mechanics Lien Law: A Simple Explanation of Construction Notices To Help You Protect Lien Rights. Anyway, these notices work to notify recipients that payment is due and owing for work previously performed, and they indicate that the sender is serious about making sure they get paid. Plus, when sent properly, these notices work to "trap" funds on the project and ensure payment of the sender (zlien discusses that on the above pages). Of course, there are also other options to help recover payment when being slow-paid. Another option is to send a Notice of Intent to Lien. This document isn't a required one in Texas, but it can be effective considering how drastically a mechanics lien can affect construction projects. Threatening a lien claim will often work to compel payment (or at least catch the attention of parties up the chain) - regardless of whether the sender actually intends to file a mechanics lien. Finally, the Texas prompt payment statute can also be helpful to compel payment - often, through threat of making a claim for payment. Essentially, prompt payment laws require that payments be made within a set amount of time on construction projects. You can learn more about those laws here, and how to make a claim under prompt payment laws here. Finally, note that these are only a handful of many potential options, and sending demand letters or taking other actions could be fruitful as well. Good luck getting paid!