Payment Problems, Performance Issues, and Lien Laws—Solved
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Construction projects are like orchestras — every player needs to be in tune and on time for the project to succeed. When one subcontractor misses a note, the entire project can be thrown off balance. Disputes with subcontractors over payment, performance, or scheduling can quickly escalate into liens, costly delays, or litigation that eats away at profits.
For general contractors and property owners, learning to manage these disputes proactively isn’t just good business — it’s essential risk management. In this comprehensive guide, we’ll explore why subcontractor disputes happen, how to prevent them, and what to do when they arise — all while staying compliant with Florida’s lien laws and keeping your project moving forward.
The Roots of Subcontractor Disputes
Subcontractor disputes can arise from several common pain points, including payment delays, disagreements over scope of work, poor performance, or scheduling conflicts. Sometimes, issues stem from vague or incomplete contracts, unclear change orders, or breakdowns in communication between general contractors, subs, and owners. When these disputes aren’t handled quickly, they can snowball into liens, project delays, and even lawsuits that eat away at profit margins.
Statistic: According to Arcadis’ 2023 Global Construction Disputes Report, the average construction dispute in the U.S. lasts 15 months and costs millions — proof that prevention and early intervention are crucial for controlling costs.
Build Strong, Detailed Contracts
The first line of defense against subcontractor disputes is a well-crafted contract. A detailed subcontract clearly outlines each party’s rights and obligations, reducing the chance of misunderstandings later. The contract should define the scope of work in precise terms, specify payment schedules and retainage, establish clear procedures for handling change orders, and address dispute resolution options like mediation or arbitration.
Pro Tip: Always have a Florida construction attorney review your subcontract agreements. Florida law has specific requirements regarding indemnification, lien rights, and payment obligations, and getting it right upfront will save you headaches later.
Stay Compliant with Florida’s Lien Laws
Florida’s lien laws (Chapter 713, Florida Statutes) give subcontractors and suppliers strong rights to secure payment — which means you need to follow the rules carefully to avoid double payment or lien exposure. Tracking Notices to Owner (NTOs), collecting lien waivers with every payment, and paying subcontractors promptly within statutory timeframes are all critical steps. If a Claim of Lien is filed, act quickly to investigate and, if necessary, bond off the lien to keep the project moving and preserve financing.
Important Note: Florida law generally requires contractors to pay subcontractors within 10 days of receiving payment from the owner. Missing that window can lead to lien rights being enforced against the property — and potential liability for the general contractor.
Document Everything
When disputes escalate, the party with the most organized documentation is often in the strongest position. Keep detailed project records, including signed contracts and change orders, inspection reports, progress photos, emails, and proof of payment. These documents can help you demonstrate compliance with building codes, confirm the quality of work, and prove that payments were properly made.
Pro Tip: Use cloud-based project management tools to store and organize documentation. Easy access to records makes resolving disputes faster and less costly.
Address Problems Early
One of the most effective ways to minimize disputes is to address issues as soon as they arise. Schedule regular progress meetings, document verbal discussions in follow-up emails, and issue written cure notices promptly when performance falls short. This proactive approach allows you to correct problems before they escalate into costly delays or litigation.
Statistic: Studies show that early dispute resolution can reduce legal costs by as much as 60%, making prompt action a smart business strategy.
Handling Payment Disputes
When payment disputes occur, take a systematic approach. Review the subcontract to confirm the agreed terms, compare invoices to completed work, and reconcile change orders. If the dispute is legitimate, negotiate partial payment or set up a payment plan to keep work moving while you resolve the issue. Always document your communications and adhere to statutory timelines for responding to Notices to Owner or lien claims.
Important Note: Having an attorney send a formal letter early in the process can often resolve payment disputes before they turn into liens or lawsuits — and shows you are serious about enforcing your rights.
Managing Performance and Scheduling Issues
Performance problems and missed deadlines can derail a project. If a subcontractor fails to meet quality standards, issue a written cure notice giving them a chance to fix the issue. If they don’t respond, follow the contract’s backcharge or termination procedures carefully. Document any additional costs you incur correcting their work — this may allow you to offset amounts owed.
Pro Tip: Wrongful termination of a subcontractor can expose you to legal claims. Always consult with counsel before terminating to ensure you’re complying with your contract and Florida law.
Consider Alternative Dispute Resolution
Litigation is often the slowest and most expensive way to resolve disputes. Mediation and arbitration offer faster, more private options that can get the project back on track. Mediation is a facilitated negotiation that is nonbinding, while arbitration results in a binding decision. Many construction contracts in Florida require ADR before litigation, so follow those procedures to avoid breaching your agreement.
Important Note: ADR can save months of delay compared to litigation — and often preserves business relationships that might otherwise be lost.
Protecting Your Reputation
How you handle subcontractor disputes will affect your reputation and your ability to secure quality subs for future projects. Maintaining professionalism, treating subcontractors fairly, and paying promptly when appropriate help build long-term trust in the industry. This reputation can also help you avoid disputes altogether, as good subcontractors are more likely to prioritize reliable general contractors.
Pro Tip: Your professionalism in resolving disputes today can be the deciding factor in whether top subcontractors are willing to work with you on your next project.
Final Takeaways
Subcontractor disputes are a fact of life in the construction industry, but they don’t have to derail your project. With strong contracts, strict lien law compliance, thorough documentation, early intervention, and a willingness to use mediation or arbitration, general contractors and owners can minimize risk and keep projects running smoothly.
Facing a Subcontractor Dispute That’s Holding Up Your Project?
Don’t let payment conflicts, performance issues, or lien threats derail your timeline or drain your profits. The earlier you involve experienced legal counsel, the easier it is to resolve disputes and protect your bottom line.
At DuFault Law, we work with general contractors, property owners, and developers across Florida to navigate lien law requirements, resolve payment and performance disputes efficiently, draft and enforce strong subcontractor agreements, and represent clients in mediation, arbitration, or litigation when necessary. Act now — resolve disputes quickly and keep your project on track.
- Call us at (239) 422-6400
- Email us at contact@dufaultlaw.com
- Or Visit our Contact Page to schedule a consultation
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