Sunday, April 23, 2006

Paying Subcontractors

When a homeowner hires a contractor, his contract is with the contractor. The contract is usually for a specific sum and the general contractor (GC) hires subcontractors to do various aspects of the work, and pays them out of the proceeds received by the homeowner. At least, that is the way it is supposed to work. The GC is also responsible for the work of the subcontractors if a problem arises.

In the real world however, that is not always what happens. GCs do not always pay their subcontractors, and then subcontractors are faced with the possibility of having to go after the GC, who may be in financial trouble. Their only other alternative is to turn to the homeowner and ask to get paid directly. The homeowner is then faced with the issue of whether she should pay "twice" in order to avoid trouble with the subcontractor. In Massachusetts, subcontractors are protected in part by the lien law, because they have a right to place a lien on the homeowner’s property if they are not paid. The procedural requirements are very specific, however, so the subcontractors must make sure they follow the law to the letter in order to perfect (activate) their lien.

I would love to hear from homeowners and subcontractor who have dealt with this issue. How have they resolved the matter? Are there any subcontractors out there who have sued homeowners in quantum meruit (unjust enrichment), and what has been the result? I will be researching Massachusetts case law on this subject, and will report back with advice about how to deal with this problem.

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