Q&A: How to Fire a General Contractor

Q. We want to terminate a contract with a general contractor (GC). We have experienced payment issues with this GC since day one of a project. Every single pay application we send in, they manipulate it without discussing with us, submit the lower number to the owner on our behalf, and then come back and say, 'Here is what you are getting paid.' As a lark, the GC’s project accountant moved a comma over and we got paid $4,200 instead of the $42,000 billed. He never mentioned it, and we never knew about the manipulation of our pay app until the lien release came at the lower number. What makes matters worse is that it’s a prevailing wage job and they disregard our certified payrolls. These games go on every billing and we are done dealing with them—we want OUT. Any ideas on how to terminate a contract with a GC are appreciated.

                                   —Stiffed by the GC

A. According to Andrew Freedland, an attorney with the New York firm Anderson Kill, P.C., “Most cooperatives and condominiums that engage general contractors to perform construction projects will rely on a form contract prepared by the American Institute of Architects (AIA). Such contracts should not be signed without having an attorney review them first. Normally, counsel for the co-op or condominium will prepare a rider and make other various comments to the standard form agreement to protect the cooperative or condominium.

“I have not reviewed your particular agreement; however, if one of the parties to an agreement is not performing as specified in the agreement, it can be terminated by the non-breaching party. Specifically, if a contractor is not properly paying its subcontractors for labor or materials, an owner can terminate the agreement. Additionally, an owner can terminate for other breaches of the agreement, including, but not limited to, failing to comply with applicable laws or otherwise failing to comply with material provisions of the agreement. Usually, the non-breaching party must provide the breaching party with written notice and an opportunity to cure their breach—the amount of time for curing the breach will depend on the terms of your agreement. If the breaching party does not cure their default within the time prescribed in the agreement, the agreement most likely will be deemed cancelled at that point. I strongly suggest that the writer consult counsel to review their specific agreement and write an appropriate letter to protect the rights of the writer.”

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