As a Texas attorney, I advise construction project owners to take the following steps when faced with a situation where the general contractor fails to complete work and runs away with payment:
- Review the Contract: The first step is to review the contract between the owner and the general contractor to determine the rights and obligations of each party. The contract may provide specific remedies for non-performance or default by the contractor, such as termination or liquidated damages.
- Provide Notice: If the contract requires the owner to provide written notice of default, it is important to comply with this requirement. This written notice should set forth the specific breach or default by the contractor, the date of the breach, and the remedies sought by the owner.
- Consider Bond Claims: If the contractor was required to provide a performance or payment bond, the owner may have a claim under the bond for completion of the work or recovery of funds. The bond claim should be filed promptly and with proper documentation, such as invoices and lien releases.
- Consider Stop Notice Claims: If the contractor was required to provide notice to subcontractors and suppliers, the owner may have a right to assert a stop notice claim to recover funds paid to the contractor.
- Consider Legal Action: If the contract provides for alternative dispute resolution or arbitration, the owner may be required to comply with these provisions before seeking legal action. If the contract does not provide for alternative dispute resolution or if it fails, the owner may consider filing a lawsuit for breach of contract or other claims.
In conclusion, when faced with a situation where the general contractor fails to complete work and runs away with payment, it is important for a construction project owner to take prompt and informed action to protect their rights and recover any damages. It is advisable to seek the assistance of legal counsel to ensure compliance with applicable laws and contractual provisions.