QUESTION: COLLECTING PAYMENT AS SUBCONTRACTOR
I was brought on as a subcontractor to install a system at a restaurant in Westchester, NY. It has been about six months since the work has been completed and the restaurant is refusing to pay the contractor for any of the work. I have a written contract with the contractor regarding this project but not with the restaurant. Can I sue the restaurant to collect for money owed or place some sort of lien on the property?
RESPONSE BY JESSE KIRSCHENBAUM, ESQ.
Unfortunately you can’t sue the restaurant for money owed since you don’t have a direct written agreement with them. Getting paid is too common a problem for subcontractors. Because your agreement is with the general contractor you are compelled to look to the general contractor for payment. Your agreement with the general contractor will address payment. Watch out for the “paid when paid” clause, which means you don’t get paid unless the general contractor is paid. That “paid when paid” clause is not enforceable in New York, but may be in your jurisdiction.
General Contractors receive money from the owner/subscriber as trust funds and you can avail yourself of Lien Law remedies against the general contractor, demanding an accounting of the money received by the owner on the job. The statute of limitation for that remedy is short, so make sure you know what it is in your jurisdiction. In New York it’s one year. Another issue you should keep in mind is that often your general contractor’s agreement with the owner is limited to installation of the system. You should try and get your All in One signed by the owner for the RMR services, such as monitoring, inspection and service.
More important than you getting paid is protecting yourself from liability. We offer a Standard Form Subcontract you should use. One of the requirements of the Standard Form Subcontract is that the General Contractor has entered into a contract with the subscriber that protects both the GC and the subcontractor. I also recommend this Agreement if you are the Contractor that is engaging the Sub because another requirement contained in the contract is that the Sub is properly licensed and that it will perform the work it has agreed to. When you order the Standard Form Subcontract we send you two forms, one to use if you’re the Contractor and the other to use if you’re the Sub.
As far as your current situation is concerned, even though you can’t sue the restaurant you may be able file a mechanic’s lien. In New York, a mechanic’s lien can be filed for the value, or agreed upon value, of the work done. The lien can be placed on the subscriber’s title or interest in the property where you performed the work. Because you finished work at the restaurant six months ago I suggest you get going because you only have eight months to file the lien. For single family dwellings you only have four months to file the lien. A mechanic's lien may not be available unless the installation is considered an improvement to the real property, which is usually not the case with alarm equipment.
Our firm has one of the industry’s leading collections department which will maximize your chances of recovering money that you’re owed. For assistance contact Jesse Kirschenbaum, Esq. at (516) 747-6700 ext. 307 or at Jesse@Kirschenbaumesq.com or (516) 747-6700 x 307.
Collecting Payment as Subcontractor - December 4, 2015