Subcontractors can also file for a Mechanic's Lien if they have not been paid.
Did the builder say why they were not going to complete the job?
Are they going out of business?
Are they filing for bankruptcy?
1.5 Years after Dig Day, Our Builder Quit!
- Thread starter sll0037
- Start date
Did the builder say why they were not going to complete the job?
Are they going out of business?
Are they filing for bankruptcy?
The Texas Construction Trust Fund Act (CTFA), also known as the Trust Fund Statute, is a Texas law designed to protect subcontractors and suppliers on construction projects by requiring contractors to hold construction payments in trust for their benefit.
Specifically, it mandates that contractors treat construction payments as trust funds and that they must be used to pay subcontractors and suppliers before being used for other business purposes.
Here's a more detailed explanation:
Key Provisions of the CTFA:
Trust Fund Status:
Construction payments made to a contractor or subcontractor are classified as trust funds.
This means they are held for the benefit of subcontractors and suppliers.
Trustee Responsibilities:
Contractors are considered trustees of these funds and have a fiduciary duty to manage them properly.
This means they must use the funds responsibly and prioritize paying subcontractors and suppliers before using the funds for other purposes.
Construction Account Requirements:
For residential construction projects exceeding $5,000, contractors are required to establish and maintain a construction account at a financial institution to hold trust funds.
Criminal Penalties for Misapplication:
Misapplication of trust funds can result in criminal penalties, including class A misdemeanors and third-degree felonies, depending on the circumstances and the amount of funds misapplied.
Protection for Subcontractors and Suppliers:
The CTFA aims to protect subcontractors and suppliers by ensuring they are paid for their labor and materials.
It provides them with a way to recover funds that have been misapplied by the contractor.
Specifically, it mandates that contractors treat construction payments as trust funds and that they must be used to pay subcontractors and suppliers before being used for other business purposes.
Here's a more detailed explanation:
Key Provisions of the CTFA:
Trust Fund Status:
Construction payments made to a contractor or subcontractor are classified as trust funds.
This means they are held for the benefit of subcontractors and suppliers.
Trustee Responsibilities:
Contractors are considered trustees of these funds and have a fiduciary duty to manage them properly.
This means they must use the funds responsibly and prioritize paying subcontractors and suppliers before using the funds for other purposes.
Construction Account Requirements:
For residential construction projects exceeding $5,000, contractors are required to establish and maintain a construction account at a financial institution to hold trust funds.
Criminal Penalties for Misapplication:
Misapplication of trust funds can result in criminal penalties, including class A misdemeanors and third-degree felonies, depending on the circumstances and the amount of funds misapplied.
Protection for Subcontractors and Suppliers:
The CTFA aims to protect subcontractors and suppliers by ensuring they are paid for their labor and materials.
It provides them with a way to recover funds that have been misapplied by the contractor.
- Nov 12, 2017
- 12,691
- Pool Size
- 12300
- Surface
- Plaster
- Chlorine
- Salt Water Generator
- SWG Type
- Pentair Intellichlor IC-40
I like Matt's advice a lot. Get something "official" that terminates the contract. An email, plus the obvious abandonment, would likely suffice in court, but a signed document might go a long way in keeping the contractor from even trying to pull a stunt. You definitely want, in writing, that all the materials on site are yours to keep, no money owed.
I hope the balance sheet is not too negative. The reality is, you are not likely his only victim. Others will be lining up to grab a piece of a pie that doesn't even exist (which is why you want to safeguard those materials from being considered his assets). Sometimes it's first-come-first-served, other times you all split up the crumbs. I can't imagine either resulting in an amount that will be worth the stress, let alone the legal fees to pursue it. And that's if he doesn't declare bankruptcy, if that's a thing in Texas. The fact that he bothered to notify you at all, and that he has a lawyer, indicates he's probably already on that path. An attorney can advise a course of action. And a good attorney will advise there isn't one if there isn't one.
So there is some urgency, on the off chance that first-come-first-served is a possibility. But the more important factor is our current economy. If you have all of your materials, great. If not, it's very likely they will cost a whole lot more in the coming months. Secure needed materials and equipment asap (pump, filter, etc).
Good luck, and so sorry this has happened to you. Get the pool done, and enjoy it. Focus on that, and maybe let the rest go as best you can. Maybe he took some money from you, but don't let him take anything else (your time, energy, peace of mind, attitude, etc).
I hope the balance sheet is not too negative. The reality is, you are not likely his only victim. Others will be lining up to grab a piece of a pie that doesn't even exist (which is why you want to safeguard those materials from being considered his assets). Sometimes it's first-come-first-served, other times you all split up the crumbs. I can't imagine either resulting in an amount that will be worth the stress, let alone the legal fees to pursue it. And that's if he doesn't declare bankruptcy, if that's a thing in Texas. The fact that he bothered to notify you at all, and that he has a lawyer, indicates he's probably already on that path. An attorney can advise a course of action. And a good attorney will advise there isn't one if there isn't one.
So there is some urgency, on the off chance that first-come-first-served is a possibility. But the more important factor is our current economy. If you have all of your materials, great. If not, it's very likely they will cost a whole lot more in the coming months. Secure needed materials and equipment asap (pump, filter, etc).
Good luck, and so sorry this has happened to you. Get the pool done, and enjoy it. Focus on that, and maybe let the rest go as best you can. Maybe he took some money from you, but don't let him take anything else (your time, energy, peace of mind, attitude, etc).
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This is a most important point. The contractor left you with a partially completed pool. However, if he has not paid his subcontractors they could come back to you (and other homeowners who have non-completed pools as well). So having a lawyer will help sort through all the possible scenarios that may become reality.
- Nov 12, 2017
- 12,691
- Pool Size
- 12300
- Surface
- Plaster
- Chlorine
- Salt Water Generator
- SWG Type
- Pentair Intellichlor IC-40
This is unfortunately a real, and sucky, possibility. In California, contractors are supposed to issue you a prelim (preliminary lien notice), before they begin work. These prelim's serve as notifications of who everyone is that is going to work on your project, and that they have the right to lien your property if they don't get paid. Then it's up to the customer (you) to demand lien releases from the subs before paying the general. Something of which most consumers are unaware, unfortunately.
Technically, if a sub never issued a prelim, then he can't later lien you. But even in CA, that's a grey area, because they can (and will) lien you either way, and then you have to defend against any that failed to issue the pre-lim. Which can be an expensive proposition, even if it's later determined that they can't collect. Then it's up to the judge to decide who gets the bill. If a sub did the work without getting paid, you technically did receive the value of the work. That's the sticky part. Basically the judge has to decide which of the innocent parties, you or the sub, is going to get screwed. I have no idea how that works in TX.
Did you ever receive any prelim's? That would be something to discuss with your attorney. The ideal scenario is to have the aforementioned doc in hand, the one that cancels the contract, awards you all the materials on site, and serves as a lien release for every sub-contractor that worked on the job. That's a wish list that may be difficult or impossible to attain, but that's the goal. In fact, if you'll be interviewing attorneys to find the right fit, a good indicator of that fit would be an attorney that rattles off that list to you, before you mention any of it.
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