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TexLaw, Attorney
Category: Business Law
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Experience:  Internationational Commercial Attorney
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Can a General Contractor hold all payments to a subcontractor

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Can a General Contractor hold all payments to a subcontractor even if the subcontractor has already completed the work billed and bought materials. There is a single line item in the subcontractors contract that is being discussed but that scope of work has yet to be performed but the general contractor is holding all monies because they anticipate that this one line item is going to cost them more money that what the subcontractor initially bid. We are in Arizona.

Thank you for your question. If the GC is withholding payment to the sub for work that has already been performed, the sub needs to file a mechanic's lien on the property. This will force the owner to put pressure on the GC to pay the sub.

The fact that the GC is premising payment for work already completed on the sub's agreement to the scope of work on future work is a bad faith breach of the contract between the GC and the sub.

Please let me know if you have further questions.

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