In the construction industry, it’s fairly common for subcontractors to face delays in receiving payment, even after the work has been completed. Maybe the general contractor is waiting on funds from the project owner, or maybe there’s a disagreement over the scope of the subcontractor’s work. Sometimes, unfortunately, the contractor simply refuses payment without a valid reason. Whatever the cause, non-payment issues can quickly become a serious problem, especially for small construction companies that rely on steady cash flow to stay in business.
If you’re a subcontractor or property owner caught in the middle of these construction contract disputes, it’s important to know your legal options. Texas has prompt payment laws in place that protect subcontractor payment rights, and there are clear steps you can take to pursue legal action, file a mechanic’s lien, or withhold payment until the situation is resolved.
In this blog, we’ll walk you through what happens when a contractor doesn’t pay a subcontractor and what you can do about it. Whether you’re trying to get paid or avoid legal trouble on your construction project, this guide will help you take action with confidence.
What Happens When Contractors Don’t Pay Subcontractors?
When a contractor fails to pay a subcontractor for their work, it can lead to serious financial and legal consequences for everyone involved in the construction project. Payment issues can delay progress, create tension on the job site, and even lead to legal proceedings that affect the entire project. Whether the nonpayment is intentional or due to cash flow problems, it’s important to understand the ripple effect this can cause for subcontractors, general contractors, and property owners.
Common Reasons for Nonpayment in Construction Projects
Nonpayment can happen for several reasons. In some cases, the contractor is facing slow payment from the project owner and is unable to pay subcontractors on time. In other situations, there may be a dispute over the work performed or the amount owed. Sometimes, it’s simply poor money management or a breach of contract. Regardless of the cause, refusing to pay a subcontractor can create serious legal risks.
The Ripple Effect: How Unpaid Subcontractors Impact the Entire Job
When subcontractors are not paid, it can delay the rest of the construction project. Crews may stop working, suppliers may withhold materials, and project owners may face legal claims, especially if they’ve already released full payment to the contractor.
These situations disrupt the schedule, damage trust, and lead to costly legal action. Delayed or incomplete payments can quickly spiral into larger problems that hurt everyone involved.
How Texas Law Views Payment Obligations
Texas has clear laws that support prompt payment and protect subcontractors’ rights. Under the Texas Property Code, subcontractors who haven’t been paid for work completed have the right to file a mechanic’s lien against the property. If the property owner has already made payment to the general contractor, they may still be legally responsible if they failed to withhold payment after receiving proper notice. These local laws are designed to hold contractors accountable and give subcontractors legal recourse when payments are unfairly delayed or denied.
Legal Rights for Subcontractors Who Haven’t Been Paid
If a contractor refuses to pay a subcontractor, the law offers several ways to seek compensation. Subcontractors have legal rights that allow them to protect the money owed for the work they’ve completed.
In Texas, these rights include filing a mechanic’s lien, sending required notices, and in some cases, taking the matter to small claims court. Knowing how to use these tools—and when to use them—can make a big difference in resolving nonpayment issues quickly and legally.
Understanding Mechanic’s Liens in Texas
A mechanic’s lien is a legal claim against the property where the work was performed. It allows subcontractors to secure the value of their labor and materials by placing a lien on the property itself. This is one of the most powerful tools available in the construction industry to help subcontractors get paid.
In Texas, the filing process must follow strict deadlines and include specific project information, but when done correctly, it puts real pressure on the property owner and contractor to resolve the issue.
When and How to File a Lien Affidavit
To file a mechanic’s lien, subcontractors must prepare and submit a lien affidavit to the county clerk where the property is located. This document should include details about the work performed, the amount owed, and who hired them.
Timing is critical. Texas law requires the lien to be filed within a certain time period after the work is completed. For example, on commercial construction projects, a subcontractor typically has until the 15th day of the fourth month after the work was done. Missing the deadline can result in losing lien rights altogether.
The Importance of Pre-Lien Notices for Subcontractors
Before you file a lien, Texas law requires most subcontractors to send a pre-lien notice. This document alerts the property owner and general contractor that payment is still outstanding and gives them a chance to resolve the issue before legal steps are taken.
The notice must be sent by a specific deadline—usually by the 15th day of the third month after the work was performed for commercial jobs. Sending a timely pre-lien notice is a key part of protecting your subcontractor payment rights and maintaining a legally binding claim.
How Property Owners Can Protect Themselves
While subcontractors are the ones most affected by nonpayment, it’s helpful to understand how property owners respond when payment issues arise. This knowledge can give you an advantage when communicating with the general contractor or the owner directly.
In some cases, the property owner may not even know you haven’t been paid, especially if you were hired by the contractor, not them. Fortunately, Texas law gives property owners tools to protect themselves, but it also creates opportunities for subcontractors to assert their rights.
Why Property Owners Should Withhold Payment
When a property owner receives a valid pre-lien notice from a subcontractor, they are legally allowed—and often required—to withhold payment from the general contractor. This is a key protection under Texas law and can work in your favor.
If the owner does not withhold payment after receiving your notice, they may be held personally responsible for the amount owed to you. That means they have a strong reason to take your claim seriously once the notice is sent.
What to Do if a Subcontractor Files a Lien on Your Property
If a lien is filed, the owner must deal with it before they can sell or refinance the property. This often motivates them to resolve the issue quickly.
As a subcontractor, this gives you leverage. Once the lien is filed properly, it becomes a public record tied to the property. The owner may reach out to you directly or pressure the general contractor to settle the debt. Filing a lien doesn’t guarantee payment, but it significantly improves your chances of getting what you’re owed.
Retainage: A Built-in Safety Net in Construction Contracts
Retainage is a portion of the contract price that property owners are required to hold back—typically 10%—until the job is complete and all claims have been resolved.
If you’re a subcontractor working under a construction contract, it’s helpful to know that retainage can be used to pay you if the contractor fails to do so. By filing your lien and notices correctly, you may be able to claim a portion of the retained funds, even if the owner has already paid most of the contract.
Options for Subcontractors Beyond Filing a Lien
Filing a mechanic’s lien is a powerful option, but it’s not the only way to handle nonpayment. Subcontractors have several legal options to pursue the money they’re owed, depending on the project, contract terms, and time period involved.
In some cases, a simple reminder or formal notice is enough to get results. In others, you may need to escalate the issue through official claims or legal action. Here’s a look at the different paths available to help you protect your rights and get paid for the work you’ve completed.
Sending a Demand Letter or Filing a Bond Claim
Before filing a lien or going to court, many subcontractors start by sending a formal demand letter. This letter outlines the amount owed, a summary of the work performed, and a request for full payment within a certain number of days. It’s a straightforward, low-cost way to remind contractors of their obligations and show that you’re serious about collecting.
If your work was on a public construction project, such as a city or state job, you won’t be able to file a lien, but you can file a bond claim. Public projects are typically protected by payment bonds, which ensure subcontractors and suppliers are paid even if the prime contractor defaults. These claims have their own deadlines, so it’s important to act quickly.
Using Online Tools to Pay Subcontractors or Track Documents
You don’t need a lawyer or a court appearance to protect your subcontractor payment rights. Online services allow you to prepare, notarize, file, and mail lien-related documents from any device—often in less than 15 minutes. These tools are especially helpful for small construction businesses that need fast, affordable solutions. They guide you through the filing process step-by-step, help ensure your documents meet legal requirements, and provide access to accurate property information statewide.
By using digital filing and mailing services, you can track delivery, confirm receipt, and maintain a complete record of every legal step you’ve taken. This simplifies the process and strengthens your claim, all while avoiding expensive attorney’s fees.
Taking Legal Action in Court (and When It Makes Sense)
If a contractor still refuses to pay after you’ve sent notices or filed a lien, your next step may be to pursue legal action. For smaller claims, many subcontractors choose to file in small claims court, which is faster and more affordable than a full lawsuit. Each county has its own limits and procedures, so be sure to check your local laws.
For larger claims or more complex disputes, taking legal action with an attorney may be necessary. This route can involve higher costs and longer timeframes, but it may be worth it if the amount owed is significant or if the contractor is known for slow payment across other jobs. Just be sure to weigh the potential costs against the money you expect to recover.
Avoiding Payment Problems in Future Construction Projects
While there are legal steps to take when you’re not paid, the best outcome is to avoid payment issues before they start. In the construction business, taking a few proactive steps at the beginning of each job can save you time, money, and stress later. Here’s how to reduce risk and improve your chances of getting paid on time.
Verify Payment History Before Signing
Before agreeing to any construction contract, research the company or contractor you’ll be working under. Ask for references, look into their payment history, and find out if other subcontractors have had issues receiving payment. If the contractor has a reputation for slow payment or legal disputes, that’s a red flag. You deserve to work with partners who respect your time, labor, and legal rights.
Use Online Lien Services to Track and Enforce Payment Rights
Digital lien services make it easy to protect yourself before and during a construction project. These platforms can help you stay organized with automatic reminders, deadline trackers, and quick access to official lien forms. They also give you the ability to prepare, notarize, file, and send documents without having to visit a lawyer or county office.
For subcontractors juggling multiple projects, this can be the key to staying compliant with prompt payment laws while saving time and costs.
Clear Contracts and Communication: Best Practices for Everyone
One of the most overlooked tools for avoiding disputes is a clear, written agreement. Every construction contract should spell out who’s responsible for payment, how much will be paid, when payment is due, and what happens in case of delays.
Always keep a record of all communication related to payment, change orders, and work performed. If there’s a disagreement later, this documentation can support your claim and make it easier to file a mechanic’s lien or take other legal action.
Open communication with the general contractor or prime contractor throughout the project can also go a long way. A quick check-in about payment status or retainage can help prevent surprises and remind contractors that you’re paying attention.
Don’t Let Unpaid Work Go Unnoticed: Take Action Now
When a contractor doesn’t pay a subcontractor, it can disrupt the entire project—but you can take action. By understanding your rights, following the proper legal steps, and using the right tools, you can protect your work and get the money you’re owed.
At Texas Easy Lien, we make it simple for you to file a mechanic’s lien, send notices, and secure payment—all online, in just minutes. When you’re ready to take action, we’re here to help you get started. File your lien now.
