Payment delays, contract disputes and change order disagreements can lead to serious financial challenges when subcontractors find themselves shortchanged in construction matters. Fortunately, while subcontractors may feel they have little power against general contractors or project owners, Texas law provides several tools that can give them leverage in construction disputes.
Most notably, perhaps, is the fact that many subcontractors are empowered to pursue a mechanic’s lien when they are not properly paid for services and supplies rendered. Texas law allows subcontractors to file a lien against the property at issue in such a dispute if they have not been rightfully paid for their work. A properly filed lien prevents the property from being sold or refinanced until the dispute is resolved. This puts pressure on the property owner and general contractor to ensure that subcontractors receive the compensation they are owed.
Bond claims for public projects
For subcontractors working on government-funded projects, mechanic’s liens cannot be filed against public property. Instead, subcontractors may file a bond claim against the payment bond that contractors are required to obtain for public projects. This provides another avenue for recovering unpaid wages and materials costs.
The leverage of litigation
If negotiations fail, subcontractors may pursue legal action, such as breach of contract lawsuits or mediation and arbitration. Sometimes, the mere threat of litigation is enough to inspire a contractor to pursue a resolution to a dispute reasonably. Other times, pursuing litigation can lead to a favorable outcome when negotiations have stalled and the threat of action is not enough to inspire a reasonable approach on the part of the offending party.
Every construction dispute involving subcontractors is unique. As a result, it is generally best to mull these options over, then seek personalized legal guidance and support before committing to a course of action.
