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Who is responsible to pay subcontractors if the general contractor has not paid them

In Michigan, if a contractor fails to pay a subcontractor what they are owed, and the subcontractor has filed a Notice of Furnishing with the contractor, is the owner responsible to pay the subcontractor? Even if the contractor has already been paid in full?

3 replies

Jun 5, 2020

The short answer to your first question is, No, the Owner isn't responsible to pay a subcontractor just because it files a Notice of Furnishing or wasn't paid by the contractor. If you served a Notice of Furnishing and weren't paid, you should record a construction lien, if you are still within the time period for recording one (90 days from the last date of work; warranty work doesn't count to extend the deadline). In answer to your second question, if the owner has paid the contractor in full and hasn't paid you as the subcontractor, you have rights under your contract for non-payment (breach of contract) and may have a claim under the Michigan Builder's Trust Fund Act (MBTFA). The MBTFA provides that a contractor who receives money from an owner holds that money in trust for the benefit of its unpaid subcontractors and suppliers and is obligated to use those trust funds to first pay the unpaid subcontractors and suppliers. A contractor who misappropriates trust funds can be personally liable, the officers who hold or direct payment of the contract funds, and such a claim can also survive bankruptcy.

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Jun 6, 2020

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Jun 11, 2020

Subcontractors who are not paid who have provided an improvement to property and filed a timely Notice of Furnishing can file a lien assuming all the prerequisites to a lien are also met, like, licensing, not more than 90 days since last day of furnishing etc.

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