Must you pay subcontractors when the homeowner pays late?

Work it through

You're the contractor. Pick what you'd do, then see how each choice plays out.

Tony Reeves

Experienced subcontractor who does quality framing and drywall work

Listen

1. APay Tony from your business account immediately — your payment obligation to subs doesn't depend on when the homeowner pays you
   Correct

   Under COMAR 09.08.01.12, the prime contractor has a duty to pay subcontractors and workmen regardless of payment status from the homeowner. This is one of the most commonly tested and most commonly violated provisions. Your cash flow problems are not Tony's problem. Pay your subs.

2. BTell Tony he'll get paid when Sarah pays you — that's how construction works
   Wrong

   That is NOT how Maryland law works. COMAR 09.08.01.12 explicitly states the prime contractor must pay subcontractors and workmen. 'Pay-when-paid' clauses do not override this duty. If Tony files a lien on Sarah's property, you now have an MHIC violation AND an angry homeowner dealing with a lien she shouldn't have. This cascades badly.

3. COffer Tony partial payment now with the rest when Sarah pays
   Risky

   Better than nothing, but you still have a legal obligation to pay in full. Partial payment may delay the lien filing but doesn't resolve your duty under COMAR 09.08.01.12. If Tony isn't paid in full within a reasonable time, you're still in violation.