Tool to Manage Disputes
The Subcontractors’ Charges Act 1974 can be used as a valuable tool allowing subcontractors to secure a statutory charge over money owed to them by their contractor. It can be particularly powerful when dealing with a potentially insolvent contractor.
In short, this means that a subcontractor may be able to have unpaid money paid directly by the employer/owner to them and effectively bypass the contractor.
The subcontractors’ charge covers money that is payable by the employer/owner to the contractor under the contract, including retention money. Strict time limits apply.
Notice of Claim of Charge
The Notice of Claim of Charge must be given to the employer within 3 months of the subcontractors’ work being completed or from when the subcontractor last performed work on site.
If the contractor accepts the claim, the subcontractor is paid directly by the employer/owner.
However, if the contractor disputes the claim, the subcontractor must then commence proceedings to enforce the charge. Legal proceedings must be commenced within one month of serving the Notice of Claim of Charge.
Subcontractors’ need to also be aware that they can either use the Subcontractors’ Charges Act or the Building and Construction Industry Payments Act 2004 – they cannot use both. It is important to act promptly and seek legal advice as to your best option – remembering strict time limits apply!
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