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What recourse do subcontractors have when a company doesn’t pay?

On Behalf of | May 3, 2024 | Construction Disputes

Working as a subcontractor can be a way to become one’s own boss. Professionals who have skills, like the ability to smoothly mud drywall or install tile, can negotiate contracts with construction companies for individual projects. Subcontractors can pick and choose the projects that they find the most exciting or lucrative. They generally get to control how they perform their jobs and can command premium wages if they are experts in their area of specialization.

Unfortunately, subcontractors may find themselves in an unusual situation when they need payment. Property owners often have no direct relationship or communication with subcontractors. Instead, property owners hire the primary construction firm, and that company handles hiring and compensating subcontractors. What can a subcontractor do if a construction firm fails to pay them?

Subcontractors can seek a mechanic’s lien

The law in Texas allows those who perform work on high-value assets to leverage those assets as collateral for payments. A mechanic’s lien, also called a contractor’s lien or materialman’s lien, can help construction firms and professionals demand payment from a property owner after the completion of a project.

The company hired to oversee the work and organizations providing materials for the project can request a lien against the property if they don’t receive payment in full according to the terms of the contract that they signed. Subcontractors theoretically have the same rights. Even if the property owner has rendered payment in full to the construction firm that hired the subcontractor, a subcontractor who did not receive full payment for services rendered could pursue a lien against the property.

Construction companies are often eager to avoid liens, as they can sour a client’s opinion about the work that they performed. Complaints from subcontractors about non-payment can also make it more difficult for a construction company to hire the best professionals for future projects. In some cases, simply filing the paperwork to pursue a lien can lead to a client pressuring a construction firm to properly compensate subcontractors for the work that they did.

Those working in the construction sector often need to avail themselves of any forms of legal recourse available when a client does not pay them for services already rendered. Pursuing litigation against a construction firm or property owner is one such option. Ultimately, learning more about the options for collecting on construction debts can benefit those with unpaid invoices.