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What is contractor's obligation to a sub's sub, when the sub was does not pay sub's sub, but sub was paid?

Georgia

I represent a contractor who signed a subcontract with a subcontractor on a Georgia job. The subcontractor then subcontracted to another subcontractor. The subcontractor's subcontractor was not paid by the original subcontractor. The second subcontractor filed a lien, but the contractor paid the original subcontractor for the work that the second subcontractor is claiming payment. How does Georgia law address this?

2 replies

Feb 17, 2021

Your contract upstread likely requires you to resolve that lien claim. Unless the lien has been waived or a contractor's final payment affidavit was provided to the owner contemporeously with final payment and before the lien was filed, you will need to address the lien claim. What does your subcontract say? You can offer your sub an opportunity to resolve the lien claim. If it is not resolved promptly, your client will need to resolve it. The fact that your client paid the first tier sub is not necessarily a defense to the lien claim. Your client can always pursue his subcontractor for the damages incurred resolving the lien claim.

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Feb 19, 2021
The sub-sub has lien rights against the property.  The general contractor owes no payment obligation to the sub-sub, but its contract with the owner might require it to keep the owner’s property free and clear of liens.  If that is the case, the contractor can remove the lien by filing a lien discharge bond pursuant to O.C.G.A. § 44-14-364.  The subcontractor that received payment from the contractor but failed to pay its subcontractor might be subject to criminal charges under O.C.G.A. § 16-8-15.
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