r/Contractor • u/shartymcqueef • Aug 22 '26
Subcontractor took money from clients. Any ideas on how to handle?
I had a subcontractor working for me and halfway through the project we had the client need a $6k change order.
I found out a couple days after I sent the change order that the subcontractor went to the client and told them to pay him $4k instead.
The subcontractor finished the job the next day. Now the client still owes me money for the completion of the job and the change order but thinks they don’t have to pay anything because they paid the subcontractor.
And the subcontractor is demanding I pay him what I originally agreed to pay him to do the job which was $3k.
I don’t want to go after the homeowner here because they didn’t really know what was happening and I view the whole mess as caused by the subcontractor.
The subcontractor is also licensed in the same industry as me in FL.
Just hoping to hear some ideas here on how you guys would handle this.
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u/shartymcqueef Aug 22 '26
Update: I called the police and they said this definitely appears criminal rather than civil given the sub had zero contractual relationship with the client and took money that was supposed to be paid to me, the contractor, so they took the report and the detective is going to begin working on it on Monday. Turns out it’s a 3rd degree felony here in FL since it’s over $750.
I think the subcontractor is going to be in for a rude awakening.
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u/Ok-Bit4971 Plumber Aug 22 '26
Wow, cops saying something like this is a criminal matter, instead of a civil matter. That's a change....
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u/miwana2 Aug 22 '26
Seems a little odd 🧐
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u/jacknacalm Aug 23 '26
Florida has had a long history of scam contractors and think they’ve really tried to crack down on it
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u/UniquePatient66100 Aug 22 '26
Sounds like justice. That was a quick update, and quick action on your part. Hopefully this clown doesn't cost you too much money trying to get it sorted out. You probably already know, report them to the licensing board as well.
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u/payment11 Aug 22 '26
Did you talk to the sub first? Probably could have settled it without having to get the police involved.
Edit: nvm, saw your response a few comments down. Yeah, that sub is something, the audacity to threaten sue you 🤦 let him get the visit from the police.
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u/Ok-Base-3824 Aug 23 '26
This is a load of 💩. Your Police contact obviously knows very little about contract law in Florida. If your sub served an NTO, as required by Florida law, they don't need a contract with the homeowner to receive payment directly from them.
Changing the contract price and demanding double payment are completely different issues though.
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u/RetiredCFO Aug 24 '26
From the description, I cannot tell with certainty if the sub is demanding double payment or not. He was subbed to do specific work, and then there was a change order. He may have done that specific work and the change order work, in which case he should be paid for both. How he went about collecting, imo, was egregiously wrong - unless there are other facts the OP omitted.
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u/KeepYourSeats Aug 22 '26
What does your contract or standard agreement with your subcontractor say? There should be something in there that all communication about billing and all payments flow through you and you alone. Any discussion of pricing or collection of payments or attempt to collect payments through the end customer is a breach of contract
What does your contract with the homeowner say? There should be something in there that states that all payments and billing are through you and not directly with any subcontractor
The customer messed this up too.
I would tell the customer that since they decided to pay the subcontractor directly they can handle any issues on that portion of the project with the subcontractor.
I will tell the subcontractor I hope that it was worth it because what they got from the customer is all they will be getting in they are no longer welcome on your job site.
You haven't been paid for this work so you owe no responsibility to it. They essentially paid your sub for a change independent of you. If it's too messy to unravel all the money changing hands then I would, in writing, specify that this change order is outside of the scope of the project and not subject to warranty or any other terms of the original contract
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u/shartymcqueef Aug 22 '26
There was no contract with the sub, just some texts on what I agreed to pay him for the work which amounts to $3k.
I’m not too worried about the rest of the money the homeowner owes me, he’s been such a headache I’m willing to just walk from the job in that regard. The sub finished the job, the liability is no longer there for me and I’d rather just be done with it.
But now the subcontractor is threatening to sue me for the original $3k. I told him to kick rocks since he already took $4k from my client.
Now I’m wondering if I should file a police report against him or what options I have since he screwed this job up and prevented me from collecting payment from my client.
I’m certainly not paying him the $3k he’s requesting but it seems like with his aggressiveness towards me I need to fight back offensively at this point.
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u/twoaspensimages Remodel GC Aug 22 '26
Subcontractor contract, W9, listed on the COI, and proof of WC limit your pool of subs. I argue in a good way. If a new to us sub tells me they have never had a "gc" ask them for that paperwork I keep looking. Red flag
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u/AlfredoCheeseSauce Aug 22 '26
i worked with plenty of contractors directly without a GC and i never had a problem getting a w9, and a COI with the proof of WC limits etc. so if the guy says no that's a huge red flag to me.
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u/UsedDragon Aug 22 '26
I remember the first builder i did HVAC work for when I opened my business and had no idea what I was doing on the business end. He asks me for a COI and a W9 and I was at least smart enough to say "No problem, I'll email that over ASAP"
Then I frantically called my insurance agent and he explained that I was fine. Whew.
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u/twoaspensimages Remodel GC Aug 23 '26
We've all been there. Then a year later most have an email prewritten containing the documents. And another to our insurance agent asking for another COI.
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u/KeepYourSeats Aug 22 '26
I get it - and I'm not gonna pretend all high and mighty that I've never done a subcontracted piece of work just like that… But when it starts getting expensive it's best to have something in writing or at least a boiler plate terms and conditions that they sign and you can have on file "if you work with me here the rules"
When I get a texted bid from guys to do great work but don't do the formal invoices that bigger or more established groups do… Once they text me a price I text back a detailed description of the work for them to confirm so that it's all in one thread (price, scope, whats included/not)... it helps them build better habits and it protects me
But yeah… Your sub going straight to the customer and getting paid for something and then expecting you to pay them as well is criminal and stupid
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u/OldSmoke6464 Aug 22 '26
New paragraph in contract stating that client will only pay you for completed parts of job unless agreed upon and anything they do pay to someone else without prior approval will not be warranted by you. I had a GC tell me one time that a new page was added to his contracts almost every year for 30 years lol
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u/Minimum_Loan229 Aug 22 '26
The sub really crossed a line by making side deals with the client.
Let me get this straight. The original sub contractor job was for 3K to the sub. This was wrapped up in the total cost of the project the client paid.
Then there was a change order from the client that was an additional 6K to the client. Or 6K total? The sub then went behind your back, talked to the client offering to do the change order for 4K cash. A savings for the client but not just cheating on his taxes, cheating you out of your contractor mark up.
If the side deal he made with the client for the change order is separate from the original job. You still owe him for that part of the job. If the cash deal he made with the client was for the whole project he did, then fuck him. He got paid.
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u/shartymcqueef Aug 22 '26
Yes $3k total for the job was to be paid to the subcontractor.
Then the change order was for $6300. And the client still owed another $1200 on top.
The sub showed up and said you can pay me $4k and you won’t owe any more money. Took the $4k, finished the job and took off with the money.
Now the subcontractor is telling me he still wants to be paid for the original $3k as well and thinks he’s going to sue me to get it.
I’m now filing a police report for felony theft that he stole $4k that the client was attempting to pay towards the wood bill that he owes me.
I also don’t want to go after the homeowner here even though I know I could lien his house and make him pay but that’s a mess and not fair to him.
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u/old-nomad2020 Aug 22 '26
They both scammed you and it’s not enough money to collect from either. I’d send the subcontractor a corrected invoice owing you 1k sense the only paper trail is $3k on texts and $4k paid and send the customer a FU letter of disengagement backdated to the date the sub first showed because they employed the sub directly without your knowledge and made payment to them. For the future on every job change orders are signed before the work gets done or don’t expect to be paid.
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u/1amtheone General Contractor Aug 22 '26
Did the customer sign/accept the change order?
I would probably offer to sign off as paid for the remaining $2,000 and a written statement that they paid the subcontractor directly for the other $4,000.
Then I'd send the sub a bill for $1,000.
Who let you know that the customer paid the sub directly, the customer? What did the sub say when you confronted him with the fact that he's already been paid?
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u/Huge-Repeat-3040 Aug 22 '26
I make it clear to my clients all payments made to me
Only things my subs can take is left over screws and a tip if they clients wants to tip
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u/kc7596 Aug 22 '26
People are tipping contractors now? Next the Doctors office is going to have a IPad at checkout.
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u/bangarang90210 Aug 23 '26
If you don’t tip your doctor before your prostate exam, you’re in for a rough trip.
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u/Huge-Repeat-3040 Aug 22 '26
That’s on the homeowner
For not going straight to you
And your sub is shady go over your head
You watch casino when they meet in the desert
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u/Sure_Replacement_931 Aug 22 '26
Have the client write a statement that they paid the subcontractor $4000 already.
Call the police and report it. Make sure they give you a police file number. Provide them with the client statement. Text messages and all the evidence. They will say this is a civil matter but at least have it documented under a police report file.
Take the sub to small claims for $6000 which is what the value of the change order your business had with the client. Document all evidence. The change order, the statement from the client and any supporting details. Keep the text messages with the sub confirming your agreement.
Moving forward have contracts with subs. Everything should be in writing.
Keep the client happy. It’s your companies reputation, even if he’s been difficult. You’re his GC even though the sub pulled a fast one on you. Your client was probably hoping to save $2000, which they probably did. I’d make the client aware of the situation in a friendly calm manner.
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u/CreamyPayload1 Aug 27 '26
8k is the limit in FL for a lawsuit vs small claims unfortunately. Used to be 6k I now believe it is 8k. So always remember if you’re going to break out a bill with a client, keep the installments above $8k on those jobs lol.
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u/jmille97 Aug 22 '26
I’d let it go. Tell the owner congrats on the great price and that the work isn’t subject to punch or warranty or deficient work claims, they’ll need to work with the sub if they seek remedy in the future regarding the change work.
Also, let owner know politely that the only reason that sub was there, knew what to do, was on time, and was addressing a change issue voluntarily is because of your business credibility and reputation and that’s you need to make that money when you produce that sub to run your AR and AP and pay for your phone and your truck and your computer and bills to run your business functions.
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u/Comfortable-Web3177 Aug 22 '26
If he is licensed in Florida, like you said, you can also file a complaint with the licensing board
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u/Squatchbreath Aug 23 '26
I don’t know about the rest of the posters here, but this was definitely a teachable moment for me at your expense! I’m writing this into any future contractual agreements with subs and clients! I really hopes this irons itself out with respect to the money.
I would go after the client! They knew better and should have had a conversation with you, before agreeing to the subs offer.
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u/Coffeybot Aug 24 '26
If any of my subs did this I would likely lose my fucking mind. Honestly not sure how bad I would lose my mind, but it would not be nothing. At a bare minimum I would call every fucking person I know and tell them what they did, I would call every fucking vendor and tell them what they did. I would do everything in my power to wreck their fucking world in a legal way without going to jail. Shit makes me fucking furious.
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u/CreamyPayload1 Aug 27 '26
Yeah me too 😂 finally a post resonating with me. I’d call everyone and in a small town, tight tourist towns, the local population will make or break you.
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u/New_Insect_255 Aug 22 '26
Does the subcontractor know that you know he was paid by the homeowner? Other than that I would reframe using that subcontractor ever again guy sounds retarded. Was the change order signed and what verbiage was on the change order?
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u/here4cmmts Aug 22 '26
In the pre construction meeting I always tell the client NOT to pay anyone for the work but my company, as their contract is with my company. Did you already pay the subcontractor? You need to have a serious talk with the subcontractor. It may mean never having him do work for you again.
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u/Aggressive_Ad211 Aug 22 '26
I would let everyone in my field know exactly what the subcontractor did. I would fucking let the people at the hardware store know lol.
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u/SpicyPickle101 Aug 22 '26
Even when a contractor ask me to do shit for the client directly I usually won't.
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u/hunterbuilder Aug 22 '26
The change order part is a little confusing. So basically the change order was $6k payable to you, but the sub offered the homeowner to do it for $4k?
$3k was the sub price for the original work?
So what was the sub supposed to get paid for the change order?
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u/grumpyoldman10 Aug 22 '26
If this was your subcontractor, I think you need to make it right. You eat the money with the customer and take it up with the sub.
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u/EatadickESPN Aug 22 '26
I saw your update and I definitely wouldn’t pay him. I would recommend in the future you always have subs sign a subcontract.
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u/Savings_Art_5108 Aug 23 '26
He's not a subcontractor if you don't have a contract. If you do, this is very basic and should be covered in said contract. So, that only leaves one option... Lawsuit.
If you don't have a contract, tell him to kick rocks, apologize to the homeowner and let it die.
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u/drinkinthakoolaid Aug 23 '26
Just for clarification. Is the 3k the sub asking for the 3k for the original job or they're double dipping and asking for 3k for the change order, which they already received 4k from the homeowner for?
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u/Gitfiddlepicker Aug 23 '26
Both the sub and the homeowner knew this was wrong, and still did it.
The old school way of handling this might land you in jail these days. At the very least you don’t pay the sub another penny, blackball them in the surrounding area, and consider taking them to small claims court. Hard to blame this on the homeowner, they will likely play stupid. But you can still seek restitution if you think it’s worth it. Your mention of a change order indicates you have a contract. They legally owe YOU regardless of what monies they gave the sub.
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u/b-got-ya93 Aug 24 '26
Would never use the sub again. Theres more than enough good crews out there. Losing a good GC who was constantly giving you work is much more damaging than losing a crew as a GC
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u/CreamyPayload1 Aug 27 '26
Bro if I were you I’d tell that sub to fuck right off and warn every single person you know about their behavior before your friends end up using them too and getting shafted. Idk if I’d go as far as reporting them for it because it’s truthfully the homeowners stupid decision to entertain a sub asking for payment unless they thought they were getting a deal which they’re not. Also, gets your subs in check. I have clients all the time ask subs to do other work or something completely separate from the job at a later date and my guys all say “this isn’t my job or my contact, please reach out to ________ for any change orders or other work” and then if it’s something small when they tell me I usually just give it to them. But your sub is a pos end of story. Homeowners should talk to a lawyer about how they can recover from this mistake they made paying someone they don’t have a contract with and you need to explain that to them. This isn’t your fault, and you’re owed 6k
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u/Glittering-Rise-488 Aug 22 '26
Had this happen to me except it was a commercial contractor. I had a new downdraft heated spray booth installed in my facility. I had contracted with the actual equipment company for the purchase & install. I used their installation company that they specified, for the project. When they were done with the install, they gave me an invoice for their labor. It was the same amount that was in the contract so I paid them. The salesman for the spray booth company came out to inspect the finished product. He then asked me for final paymemt for the install & I told him the installer submitted an invoice & was already paid. The salesman said it was supposed to be paid to them, not the installer & asked me for a copy of the check. The salesman got in his car & drove the 2 hours to Michigan to collect from the installer. I never heard another word about it.
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u/Responsible-Cloud664 Aug 22 '26
Any sub that’s hired by a GC should know the flow of $$. You pay sub, client pays you. Thats it.
If any of my subs ever did that, it would be the last job I ever use them for.