What Happens If a Contractor Does Not Pay a Subcontractor in Missouri?
May 9 2025 On Behalf of David M. Duree & Associates, P.C. Construction Law
Many construction projects involve a prime or general contractor who retains one or more subcontractors to supply additional labor or perform specialized work like masonry, plumbing, or electrical work. However, what happens when a contractor does not pay a subcontractor for a Missouri construction contract? A construction law attorney can help contractors and subcontractors in Missouri understand their respective rights and obligations in a dispute over pay.
Missouri’s Laws on Contractor-Subcontractor Payments
Missouri has various laws that govern payments from contractors to subcontractors. Missouri’s Prompt Payment Act governs contractor-subcontractor payments under public works contracts. Under the act, all public works contracts must require prompt payment from a contractor to a subcontractor or materials supplier unless otherwise precluded by federal funding requirements or a delay in receipt of funds from a state grant. The act states that a contractor must pay a subcontractor or supplier after substantial completion of the contract work and acceptance of such work by the public owner or its authorized contract representative, with such payment issued within 30 days of acceptance.
Furthermore, when a contractor receives payment, it must pay its subcontractors and materials suppliers in proportion to the work completed by each subcontractor, less a retention of up to 5 percent. Contractors who fail to pay subcontractors within 15 days of receiving payment become liable for an additional 1.5 percent monthly interest, beginning on the 15th day.
For private contracts, Missouri law states that contractors must make scheduled payments pursuant to the terms of their contract with their subcontractors. A subcontractor who does not receive payment when required by a subcontractor can bring legal action to recover payment, plus monthly interest of up to 1.5 percent from the contractual payment date. However, this law does not apply to construction work for owner-occupied residential properties containing four or fewer units.
Options for Subcontractors Who Don’t Get Paid
Subcontractors who do not receive payment when required by law or contract may take various steps to secure payment. First, a subcontractor can send a contractor a formal demand letter to notify the contractor that the subcontractor believes that the contractor owes payment. A demand letter should set forth the factual and legal basis for why the subcontractor believes it has a right to payment, including citing documentation of the subcontractor’s substantial completion of its work, contract provisions entitling payment, or Missouri statutes that require payment.
Alternatively, a subcontractor may choose to file a mechanic’s lien against the property where it performed work. Subcontractors must file mechanic’s liens within six months of the last day of work or delivery of materials. However, they must file a notice of intent to lien before filing a lien against an owner-occupied residential property. Subcontractors must file their mechanic’s lien with the clerk of court of the county circuit court. After securing a lien, a subcontractor usually has six months to enforce the lien, typically by pursuing foreclosure of the property to sell it to generate funds from which the subcontractor can collect its payment.
Filing a Lawsuit for Nonpayment
In addition to or instead of filing a mechanic’s lien, a subcontractor may sue a contractor for nonpayment under the parties’ contract. In a breach of contract lawsuit, a subcontractor recovers an award that includes unpaid contractual amounts, interest, and potentially attorney’s fees if allowed by the parties’ contract or statutory law. Although a lawsuit may give a subcontractor the ability to recover compensation owed to it, litigation comes with various risks, including outlaying legal expenses, delay caused by the time-consuming process of litigation, and the possibility of losing the case.
Contractor Defenses and Other Issues
A contractor may raise various defenses to a subcontractor’s claim of nonpayment. Common defenses include:
- Poor Workmanship – A contractor may allege that a subcontractor’s substandard work required revision or redoing, which may entitle a contractor to an offset for the cost of remedial work or provide a complete defense to payment to a subcontractor.
- Incomplete or Delayed Work – A contractor may justify nonpayment by arguing that a subcontractor has left their work incomplete and, thus, the subcontractor has not yet established their right to payment. Alternatively, if a contract includes a “time is of the essence” clause, a contractor may seek an offset due to a subcontractor’s delayed completion.
- “Pay-When-Paid” or “Pay-if-Paid” Clause – Contracts may include clauses that condition a subcontractor’s payment on the contractor receiving payment from the project owner.
Contact a Construction Law Attorney Today
When a general contractor has failed to pay your company for subcontractor work you performed on a project in Missouri, get legal advice and advocacy to protect your interests. Contact David M. Duree and Associates, P.C. today for an initial consultation with a knowledgeable attorney to discuss your legal options.