Tips for Hiring a Subcontractor in New York

Posted about 5 years ago. Applies to New York, 3 helpful votes

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1

Get Your Subcontract in Writing

The days of a hand shake agreement are (or should be) long gone. All subcontractors should be hired under a written agreement setting forth their specific scope of work with a specific price for that work. If there is a date of delivery, make sure it is in the written contract.

2

Include Terms and Conditions in the Subcontract

Some subcontracts may be too small to justify (from a business stand point) paying an attorney to draft a full fledged multi-page subcontract. It is a good policy to include a standard terms and conditions page or pages with your proposals/invoices, etc. to give yourself at least some basic protection. Terms and conditions should include, at the very least, payment terms (i.e. net 30 days), any applicable warranties, indemnification agreements, insurance requirements and agreed venue for potential lawsuits. Note that there are a tremendous number of things that can be included in terms and conditions and it is highly advisable to speak to an attorney regarding your specific type of work to make sure that all necessary bases are covered. It is possible that an attorney could prepare a standard terms and conditions sheet, tailored to your business, that you can use on all of the "smaller" subcontracts.

3

Know your Insurance Requirements

Odds are that you have some type of insurance in place to protect your business, most likely a commercial general liability policy. You should take the time to read it over carefully and if you don't understand any of it, discuss it with your insurance broker or an attorney . Most, if not all, policies will require you to get an indemnification and hold harmless agreement from your subcontractor and to make sure that your subcontractors hold certain minimum levels of insurance. Failure to comply with these provisions can result in denials of coverage.

4

Have the Subcontractor add you (and the owner) as additional insureds

To take a step back, you should make sure that your subcontractor has proper insurance in place before even entering into a contract. Subcontractors should be required to provide you with current certificates of general liability insurance as well as proof of worker's compensation insurance. Once the contract is signed, it should be required that the subcontractor add you (the GC) to its insurance as an additional insured and also, in most instances, should add the owner as an additional insured. Check the requirements of your prime contract to find out if anyone else must be added as an additional insured under the subcontractor's policy.

5

Get Lien Waivers and Releases Before Paying the Subcontractor

It should be your standard practice to require all subcontractors to sign lien waivers and releases before you pay them anything. If there will be more than one payment on a particular job, you should require that they provide partial lien waivers in exchange for every payment made.

Additional Resources

New York Construction Law Update

New York Mechanic's Liens Blog

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