Here is the situation:
I am the GC and one of my sub-contractors has not paid their supplier. Now that supplier is demanding payment. I want to ensure that he will not come after me or my client. Please help!
1 reply
Jan 24, 2020
First, if you're looking for a document that will waive lien rights in exchange for payment, then a lien waiver (rather than a lien release) will typically be appropriate. You can learn more about New York lien waivers and even download free templates here: New York Lien Waivers Guide and FAQs. Of course, a lien waiver will only be effective if the waiving party agrees to it - and a supplier hired by a subcontractor likely wouldn't be interested in submitting a lien waiver unless they've been paid - and you can't just force a waiver on someone who's not willing to sign one.
The easiest way to ensure that a supplier won't file a lien claim or some other claim for payment is to make sure they're paid for the materials they provide. And, putting some pressure or threatening legal claims on a sub could push them to pay their supplier. Alternatively, reaching some sort of payment agreement with a supplier - like negotiating a partial payment, or leap-frogging the sub to pay the supplier then going after the sub to recoup payment - could be effective.
Finally, note that New York is generally considered an "unpaid balance" state. Meaning, if the contractor has been paid in full by the owner, then subs' and suppliers' lien claims might not be very effective. However, lien claims may attach to the extent that final payment is outstanding between the owner and their prime contractor. So, the ability to lien will be limited some there.