"Solving Client Needs"
The burden of proving payment to sub contractors and/or materialmen could rest upon the property owner.
Lets assume you hire a contractor to complete work on your property and you pay the contractor in full. The contractor leaves the job and fails to pay the subcontractors and/or materialmen. The unpaid subcontractors and/or materialmen file mechanics liens against your property. Is it your burden to prove that the contractor was paid for the benefit of the subcontractors and/or materialmen prior to the filing of the mechanicís liens? Or is it the burden of the subcontractor and/or materialmen to prove that your payment was not made prior to the filing of the mechanicís liens? In Browning v. Gaster Lumber Co., S96G0583, the materialmen filed a lien after the contractor hired by the property owner failed to pay for the lumber supplied to the project. The contractor even abandoned the project, leaving the owner to complete the remaining work themselves. The trial court accepted the ownerís proof of payment to the abandoned contractor as a defense. However, the appellate court reversed holding that the owners must demonstrate that the contractor had disbursed the sums. The Supreme court of Georgia held that a owner has a defense to an action to foreclose a materialmenís lien only by showing that the contractor has disbursed sums received for the project prior to the filing of the lien.
Therefore, in some jurisdictions, it is highly important that a owner assure that a subcontractor and/or materialmen are paid by the contractor to assure that their property is not encumbered after the work is completed and the workers discharged. Ways to prevent this scenario from becoming reality in your development are to 1. carefully screen the Prime Contractor chosen to orchestrate your construction to make sure that they are reputable and complaint free; 2. Inherent in your contract with them should be a clause addressing the issue of payment to subcontractors and/or materialmen, and written language of how and when these payments will be disbursed. 3. A clause within the contract that the contractor will shelter you from liability for any claims of the subcontractors and/or materialmen arising as a result of non-payment for work completed.
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