In large construction projects, general contractors frequently hire subcontractors to perform specific tasks (e.g., electrical wiring, plumbing, finishing). Problems arise when the project owner pays the general contractor, but the latter fails to pay the subcontractor. While Georgian legislation does not explicitly use the term "Subcontractor Lien" in the same way as US law, there are legal mechanisms protecting subcontractors from non-payment. These include interim measures to secure claims, rights of retention on movable property, or lawsuits based on unjust enrichment directly against the property owner (under certain circumstances).
Protecting subcontractor rights requires rapid response. If the general contractor goes bankrupt or disappears, the subcontractor risks being left unpaid, even though the building owner benefits from their work. Legal.ge offers a service to help you utilize the levers provided by Georgian law: freezing the receivables due to the general contractor, demanding direct payment from the owner, or exercising the right of retention.
What Does Subcontractor Claims Service Cover?
This service focuses on protecting the financial interests of subcontractors:
- Debt Recovery Strategy: Analyzing the situation — does the general contractor have assets, or is it better to target the project owner.
- Securing Claims (Freezing Assets): Petitioning the court to freeze funds that the owner owes to the general contractor (attachment of receivables).
- Exercising Right of Retention: Legal advice on how to lawfully suspend work or retain materials/equipment until payment is made.
- Direct Demand to Owner: Negotiating with the project owner for direct settlement (signing a tripartite agreement).
- Litigation: Preparing a lawsuit demanding payment for work performed.
Common Real-World Scenarios
Subcontractors often face the following issues:
The first scenario is the "Bankrupt General Contractor." The subcontractor finished the work, but the general contractor declared insolvency. The subcontractor must urgently register their claim in the creditors' registry and try to access funds payable by the owner.
The second case is "Pay-when-paid." The general contractor claims they haven't been paid by the owner, so they can't pay the sub. A lawyer checks the contract — often, this clause does not legally exempt the general contractor from their obligation to pay.
The third scenario is "Quality Dispute." The general contractor alleges defects to avoid paying the final tranche. Expertise and proper documentation of acceptance acts are required.
The fourth situation is "Direct Contract." The subcontractor sees the general contractor failing and wants to contract directly with the owner. A lawyer helps legally restructure the relationship.
Georgian Legal Framework and Regulations
Subcontractor rights are regulated by:
- Civil Code: Regulates contractual obligations and creditor rights.
- Civil Procedure Code: Provides for interim measures (attachment/seizure), which is the most effective tool.
- Right of Retention: The right not to hand over an item or result until payment is received.
Process and Stages
The process begins with reviewing the contract and acceptance acts. If documents are in order, a warning is sent. If payment isn't made, the lawyer applies to the court for an attachment order — this blocks the general contractor's accounts and often forces them to pay quickly. In parallel, negotiations may be held with the owner to stop payment to the general contractor and pay the subcontractor directly (via an assignment agreement).
Why Legal.ge?
Subcontractors are often the most vulnerable link in construction. On Legal.ge, you will find lawyers who know how to use the power of the law so your labor does not go unpaid. Do not wait for the contractor to go bankrupt — act in time.
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