Subcontractors – How to Get Paid
Subcontractors face additional challenges in getting paid. They are working for the General Contractor and only have a claim against an Owner if they comply with mechanics lien law in Massachusetts.
Here are the rules for getting paid:
- Make sure you have a contract with the General Contractor that indicates your scope of work and when you will get paid.
- Include a provision in your contract that allows you to stop work or suspend the job if a payment is not made when due. For that reason, make sure that the payment schedule is broken down into more frequent payments. That way, if one is missed, it will only constitute a small percentage of the job.
- Charge finance charges. As long as your state allows you to do so, charge finance charges for late payments. You can also include a discount for immediate payment if you would like.
- Include a provision in your contract that entitles you to attorney’s fees and all costs of collection. In Massachusetts, you can’t get your attorney’s fees back if you don’t include a clause in your contract saying that you have a right to them if you have to pursue a General Contractor for payment.
- Avoid “pay when paid” clauses with your General Contractors. Unless you are working on a commercial job in MA that is >$3,000.000.00, a General Contractor can put a clause in his schedule saying that you won’t get paid until he gets paid.
- Insist that all change orders are in writing and reflect the change in contract price. In addition, indicate in your contract when payments are due for change orders. Then, do not make any additions to projects without written change orders!
- File a Notice of Contract at the beginning of a job. Massachusetts lien law says a subcontractor may only collect against an owner if he has filed a mechanic’s lien. Then, the owner only owes the subcontractor money to the extent that money is owed to the General Contractor at the time the lien is filed.
- Make sure you send notice of the lien by certified mail to the owner in MA.
- Invoice on a regular basis and keep proper accounting of your job
- Finally, if all else fails, make sure you are in compliance with the timing of your state’s law for filing mechanic’s liens. Subs can file liens 90 days from the last time a sub working for the GC was at the premises. Mechanic’s liens are an excellent tool for getting paid, but the rules for filing them are usually very specific, so consider hiring an attorney so they are done properly.
If you are a subcontractor not getting paid, contact the us to see how we can help you!