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Can a contractor face criminal charges for unpaid subcontractors after full payment?

Can a contractor face criminal charges for unpaid subcontractors after full payment?

Full question:

Can you be charged criminally as a contractor if you have been paid in full on a contract and the subs haven't been paid and leins are being filed?

Category: Contractors
Subcategory: Construction Liens
Date: 04/07/2025
State: Texas

Answer:

The answer depends on the specific circumstances, such as whether the project is residential, if a lender is involved, and whether an affidavit of payment was provided. For instance, if a contractor submitted an affidavit claiming all subcontractors were paid, they could face criminal penalties if that statement is false.

According to Texas law, specifically § 53.259 of the Property Code, a contractor must provide an affidavit at the time of final payment, stating that all labor and materials have been paid in full. If not, the contractor must disclose any amounts owed and the names and contact information of those owed payments. Making a false statement in this affidavit is a misdemeanor, punishable by a fine up to $4,000, jail time up to one year, or both. Additionally, the person signing the affidavit is personally liable for any damages resulting from false information.

This content is for informational purposes only and is not legal advice. Legal statutes mentioned reflect the law at the time the content was written and may no longer be current. Always verify the latest version of the law before relying on it.

FAQs

What voids a contractor contract?

A contractor contract can be voided for several reasons, including lack of capacity (if one party is not legally able to enter a contract), illegality (if the contract involves illegal activities), or mutual mistake (both parties misunderstood a key fact). Additionally, if one party was coerced or misled into signing, the contract may also be void. It's important to consult legal advice to understand specific circumstances that may apply.

What are 3 things that can cause a contract to be void?

Three common reasons that can cause a contract to be void include: 1) Lack of capacity, where one party is not legally able to enter into a contract, such as minors or mentally incapacitated individuals. 2) Illegality, where the contract involves illegal activities or violates public policy. 3) Mutual mistake, where both parties are mistaken about a fundamental fact that is essential to the agreement.

What makes a construction contract invalid?

A construction contract may be considered invalid if it lacks essential elements such as offer, acceptance, and consideration. Additionally, if the contract is for illegal work or if one party did not have the legal capacity to contract, it can be invalid. Furthermore, failure to comply with state laws, such as licensing requirements or necessary permits, can also render a construction contract invalid.

Are construction contracts subject to the Statute of Frauds?

Yes, construction contracts are generally subject to the Statute of Frauds, which requires certain contracts to be in writing to be enforceable. In many states, contracts for the sale of real estate or construction projects exceeding a specific dollar amount must be written and signed by the parties involved. This helps prevent disputes regarding the terms and conditions of the agreement.

How do I file a criminal charge against a contractor?

To file a criminal charge against a contractor, you typically need to report the issue to local law enforcement or the district attorney's office. Provide them with all relevant documentation, such as contracts, payment records, and evidence of wrongdoing. They will review the information and determine if there are grounds for criminal charges. It may also be beneficial to consult with a legal professional for guidance.

How much can you sue a contractor for breach of contract?

The amount you can sue a contractor for breach of contract typically depends on the damages incurred due to the breach. This can include the cost to complete the work, any additional expenses incurred, and lost profits. In some cases, you may also seek consequential damages if they were foreseeable. It's advisable to consult with a legal professional to assess your specific situation and potential damages.