doing some sub work for a buddy of mine who runs a CC business. ( helping him on a big form job. ) I gave him my invoices and he asked me to mark “PAID” cuz he had to show the owner or whoever that he had paid his subs and suppliers. to ensure no leins come up.
got to thinking about it, and I get why they want to know that he has paids his subs, nothing wrong with that….but it is not a cost plus job. he gave the guy a price so really it’s too much info and none of their business what he pays for subs and materials.
we talked a bit about it tonight when I got my cheque from him. he mentioned what I was already thinking. says he might just asked for statements from subs and suppliers saying they are paid for that month. and even then how would they know that he is even including all suppliers, unless they’re watching everything coming in? I told him I’d give him whatever he needed.
you guys ever deal with anything like this?
Replies
Welcome to commercial construction.
Generally, every sub on every job needs to provide:
- proof of insurance on his business and his vehicles including liability, with the CM deciding what is appropriate.
- proof of workmans comp coverage
- a partial lien waiver for every sub and supplier if that sub or supplier provided material or labor that pay period. At the end of the job on the last draw, final lien waivers for every sub & supplier.
- a detailed breakdown of where the funds paid out will be going. This often has to be sworn to a be accurate before and stamped by a notary.
- if Davis-Bacon Wages apply, you can also expect to have the fun task of certified payrolls.
-even after all of that, the owner can elect to withhold the any retainage up to a year before it gets paid out. Retainage can be a hassle if you are doing work for the wrong company. Ask around, you'll learn in a hurry who's out to make a living and who's out to make a killing at his subs' expense.
Good luck!
what's "Davis-Bacon"?
the lien waiver sounds like it makes sense.
"a detailed breakdown of where the funds paid out will be going."
really? if they get a lien waiver, why do they need that, or is it any over their business? could they not just get the sworn ducument to simply state that all subs and suppliers have been paid?
"even after all of that, the owner can elect to withhold the any retainage up to a year before it gets paid out"
if it's stipulated in the contract that final payment will be due and payable upon completion or 30 days or whatever, would that negate the right to witholding any monies?
Davis-Bacon is sometimes referred to as the "prevailing wage" act. Google for it and you will have some interesting reading.
Partial lien waivers is what your guy should be getting from you, for each pay period of his. If he is paying you weekly, but submitting his draw requests monthly, he should get one per month from you. By your signature on the doc, you are stating that you have been paid your due, and waive lien rights for that amount of payout.
The contract between parties stipulates payment terms. If yours with your guy says nothing about retainage, or being paid only when he is paid, then you have nothing to worry about.
Commercial GCs, however, when entering into subcontracts, write the contracts. They don't accept subs' terms, they dictate the terms, and the payment terms generally say, in one way or another, "you get paid when we get paid."
That is the way it is in commercial work, and plenty of very successful specialty subcontractors are willing to play by those rules.
thnks for info..I'll do that search