Supply Waiver

[Pennylady]

I received a call from a title company stating that they have a check for us on one of our jobs. A progress payment in the amount of $7000.00. The caller proceeded to tell me ?I don?t know how you were doing things in the past with ?GC? but we are handling this now?. The tone of the call was that we are the new sheriff in town, we?ve got ?GC? under control and now we?re going to work on you.

Background?? Our agreement is with the GC and it was our understanding that the checks would come from the GC (w-9 provided). This is the first progress payment on a 100,000 job. I called them after I sent the 1st invoice to make certain all contractual obligations were met. I was told Yes the invoice is fine nothing more is required.

The caller from the title company continued by stating that they will require a lien release from us. (standard do this all the time no big deal). Then she asked me about our suppliers. Have they been paid? Do you need to pay them out of these proceeds? Said that she will pay them and give us the rest so she knows they are paid. What is the $7000 for? Then she said it AGAIN?. I?LL PAY YOUR SUPPLIERS.

I told her that all our suppliers have been paid. Then she proceeded to make me PROVE it. ?You will be required to get a ?supply waiver? from all your suppliers? (I offered a printout of our online account with one supplier showing a zero balance and they refused it)

I asked her several questions so I could contact the GC and find out what is going on. Info as in?. Who are you? Name of Title Company? Who are you contracted with? (the bank I believe). Who is the bank? I was told ?none of your business? yet it?s posted on a sign on the jobsite. Who is requiring this ect. Getting this info was a real pain but she finally half hazardly cooperated.

We contacted the GC immediately to find out what is going on. They were not one bit happy with how we were treated. Apparently the title company and the bank wanted them to sign a release that they would be 100% responsible in the event that a sub goes bankrupt, a supplier is not paid, someone liens the property etc. They had never been presented with such and animal in past and deferred signing it until they got legal counsel. Who said no way DO NOT sign that. So now when it comes time to make the payout the title company will not release the funds to the GC . The title company is ?handling us? directly.

The title company is demanding that I get lien releases from all our suppliers. I have never done this nor is the additional administrative time part of our contract.

Ideas??? Advice?? Is getting lien releases from suppliers and having Title Companies be so controlling part of the ?new game??

 

[satcom]

Welcome to the world of lien administrative delays and costs, along with the added legal expenses, when I see someone say just file a lien, I don't think they know the real cost to service it, we found that working with a lawyer on any job over 10k pays, and you just add those expenses to your contract price, but with everyone looking to bring in low pricing, they fail to protect themself, paying a little of a lot, is better then having a lot of nothing.

 

[Sierrasparky]

The wors part for you is not the lein releas it's have you really paid the supplier and have your progress payments been substantial for the work or material supplied.

 

[macmikeman]

You need to use the same voice to explain to "General" contractor how your vehicles and men will stop proceeding to said jobsite if she even calls another time, and by the way same goes if the check is not delivered by the end of two business days.

 

[Pennylady]

We have halted all work until this is resolved. I'm pretty peeved.

I provided the title company with a Supplier Waiver and apparently it will appease the Gods. Now we have to work out the language on the lien as they are wanting me to sign a release for work that is not included in the payment. NO GO. I have asked them to fix this and that I will call them at 2pm to see that it is done.

If they release this payment today everything will be up to date. However the next progress payment (monthly on this job) goes out next week so we get to start the nonsense again.

 

[Buck Parrish]

I think a lot of companies are going out of bussiness. It's got others going over board to protect them selfs.
What I want to know. Why would a supplier give a lein waiver? Nothing's in it for him.

 

[satcom]

I think a lot of companies are going out of bussiness. It's got others going over board to protect them selfs.
What I want to know. Why would a supplier give a lein waiver? Nothing's in it for him.

If the EC has paid the supply house on all the open invoices for the project, they will issue a release to the bank, if the EC has not paid, then the fun starts, one of the reasons you want to assure GC has the ability to pay, and have him held to a well composed contract, prepared by an attorney in large dollar jobs, something some EC don't do in a rush to get get the work, they let the GC suck them in.

 

[Sierrasparky]

I think a lot of companies are going out of bussiness. It's got others going over board to protect them selfs.
What I want to know. Why would a supplier give a lein waiver? Nothing's in it for him.

You're joking right?
If you supply house is set up properly only materials sent and billed for a specific job are on that particular account. You can have several accounts at a supply house. The supply house should give a prelim when material for a specific job/acount is sent out.
If the supply house has been paid for that portion of the material then a lein release can be given.
It's part of doing buisness.

 

[Buck Parrish]

Yeah , I understand if he has been paid,

 

[Pennylady]

The Supplier Waiver (Lien release) from the supplier was a big nothing to get. At least in this case. Other suppliers may be different. The guy I talked to said he personally does 50-60 Supplier Waivers a month. Quoting the 'economy' and banks tightening up requirements in order to release money. I had it in my e-mail in about 10 minutes.

 

[bradleyelectric]

If the EC has paid the supply house on all the open invoices for the project, they will issue a release to the bank, if the EC has not paid, then the fun starts, one of the reasons you want to assure GC has the ability to pay, and have him held to a well composed contract, prepared by an attorney in large dollar jobs, something some EC don't do in a rush to get get the work, they let the GC suck them in.

Not to be an advocate for someone else controlling your or my business, but you can get whoever is writing the check to write the amount of any open supplier invoices directly to the supplier, or as a joint check. You don't need the cash in hand to buy supplies or to finance the material part of the project. They can sign the same basic contingency partial lien as the rest of us. Only difference is there lien is for goods not services. They can lien a project same as us.

 

[nakulak]

we have had to do this for some time on certain types of jobs. for jobs that require this, its nice to have the supplier create a job account just for that job so that the paperwork is easy on all ends (especially for them).

 

[dduffee260]

Just tell them you want 25% up front, 25% when materials are delivered to the site, 25% after the rough in and the rest of payment before you call in for a final inspection.

 

[MarkyMarkNC]

Lien release is not a big deal for the suppliers, as the OP already found out. When I was working for a supply house, we used to get lien release requests all the time.

It might actually be better to be going through a bank than going through the GC as far as making sure you got paid. We know the banks have money for sure, after all the bail-out money they got from the government.

 

[Sierrasparky]

Just tell them you want 25% up front, 25% when materials are delivered to the site, 25% after the rough in and the rest of payment before you call in for a final inspection.

Where did that come from.
Do you really think the terms of the contract will change after the fact?

 

[nhfire77]

I would throw a lawyer at that for a $100k job.

That's a joke. I would be pissed too.

 

[Pennylady]

UPDATE?.

We went round and round over the language in the lien release. The title company was DEMANDING I sign the lien release with inaccurate information and refusing to release the check until I did so. Basically saying that we are in full control of what it says, you sign it or else you won?t get paid. The inaccurate information namely was that the lien release was tied to a date and not just the amount of the check. And the date is wrong. There was also not any language to cover the retainer withheld from my check.

I ended up telling them that refusing to release my check unless I signed an inaccurate document could amount to extortion. i.e. to obtain from another by intimidation. I closed the last phone call to them by asking them for their agent of service. Further stating that another member of my company will be in contact with them yet this afternoon.

It was not even 5 minutes and I received an e-mail with a scanned copy of an amended lien release with the date corrected and language added to cover the retainer. I don?t know what the change of heart was but we were please they came around. The corrected lien release was acceptable and we signed it. We have the check.

We also received a letter in the mail from the GC explaining that the title company put them in a very compromised situation and that they will have to amend the contract. That the title company has to disperse the funds because the title company will not pay them and let them pay us. It has to do with the document the title company wanted them to sign trying to make the GC fully responsible for all actions of subcontractors and vendors (performance, liens, bankruptcy etc) even if they are paid and the GC has documentation (lien releases, cancelled checks etc) they are paid. If the GC didn?t sign this the title company would not allow them to receive a lump sum.

I know this is crazy and that the GC cannot unilaterally amend (they know this) the contract but for some reason it seems this title company is abusing their authority and running roughshod over everyone.