Getting Paid as a Subcontractor is Always the Name of the Game

General contractors and subcontractors often rely on precise contract language to guarantee payment for their work. In some cases, they may also resort to using a mechanics lien. However, a lesser-known statute in the Virginia Code, §43-11, can also be instrumental in helping ensure you are properly compensated at the end of a project.

Section 43-11 provides the process for making the owner or general contractor personally liable for payment for completed work.

What does personally liable mean?

In this context, it means that you have established the responsibility of the person or entity provided with the appropriate notice via proper means to pay you or your entity the amounts due.  It does not provide a claim to any property or property rights that would be established under the procedures set forth in Virginia Code §43.1, et seq.

Some people in the construction industry refer to this as a “stealth contract.” It provides a method for moving around the traditional hierarchies that exist in the industry. 

Typically, the owner is in privity with or has a contract with the general contractor and not with the subcontractors. This lack of privity can work to defeat the ability of a subcontractor to collect money due for work done on a project directly from an owner. It also works to defeat a claim that the owner or general contractor has already paid another entity above them in the hierarchy. This is generally referred to as the “defense of payment.”

How do I make the owner or general contractor personally liable for payment for completed work?

The first step requires the subcontractor, materialman, or laborer to give a “preliminary notice in writing” to the owner, his agent, or the general contractor.  The “notice” must state the “nature and character” of the contract and the “probable amount” of the claim.

Once the project is completed and the work is done, the subcontractor, laborer or materialman has to provide a second notice within 30 days of the completion of the structure or the work is “otherwise terminated.”  The second notice must be provided to owner, his agent or the general contractor and must provide “a correct account, verified by affidavit,” of the claim that is actually being made against the owner or general contractor.

The statute provides that “the owner, or the general contractor,…shall be personally liable” (emphasis added) to the claimant for the actual amount due to the subcontractor or laborer or for the material provided.