Dear Anne, if you are considering hiring a contractor and have it on good authority that they aren’t paying their sub-contractors, then you should avoid hiring this contractor. We’ve generally found that unethical business practices aren’t normally reserved to one particular area (such as paying out sub-contractors). There are many licensed contractors who run tight ships and have happy customers and partners so why take a chance on a contractor you know is engaging in poor business practices?
Hello Anne,
I would say stay away from any contractor which you know is not paying their subs. If the subs performing the work are not being paid, they are subject to poor morale or being forced to take on other projects in the middle of yours, to make ends meet. It’s just a bad sign, if the company can’t afford to pay their subs, or refuses to pay them for whatever reason, there’s just too much drama there. You’re better off staying out of the middle of it.
If you know he is not paying his subcontractors, you are opening up yourself to potential liens and double payment. Stop payment to your contractor immediately until he produces lien releases from every sub on your project through a certain date that you have paid him through. And, if he isn’t paying the subcontractors, he is probably not paying his suppliers (vendors) either. If you know that XYZ lumber has been delivering material, require your contractor to provide lien releases from them also. It is a good idea to request your contractor to provide a subcontractor and vendor list every month with his payment request … us it as a check list for lien releases.