I have represented clients as subcontractors of money owed by the New York City School Construction Authority to general contractors. Sometimes, it requires suing both the contractor and the surety company that has bound itself to step in the shoes of the contractor, both to finish the job (Performance Bond) or to pay the subcontractors (Payment Bond). New York’s Lien Law has a provision that protects subcontractors, Article 3 –A, whereby the principals of a contractor are not allowed to divert funds from the project to themselves without potentially incurring personal liability. That section of the Lien Law adds additional pressure to contractors to pay the claims of subcontractors, but even if they don’t, on jobs with a public authority, the Payment Bond from a substantial insurance company assures there will be payment on successful claims.
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