Legal Question in Construction Law in Iowa

Re: proof of financing

Dear Subcontractor: I am unable to provide any "law" to support your inquiry. However, you have every right, as a prudent businessman or woman, to verify the GC's ability to pay you promptly for work and services. I dpoubt however, that your checking with the GC's bank will provide you with any degree of protection, only information.

You should contact and retain an experienced Construction Lawyer to draft your agreement (contract) to provide for prompt payment by submitting your Application for Payment each Thursday evening, for all labor, materials, etc. to that date, and provide that payment be made to you, in full, by noon the next day, or you'll pull off the job, skilled trades, workbox, scaffolds, equipment and all.

I recognize that the GC will balk, but if you are the low bidder, you have every right to be paid promptly and fully, because if you're going to be his banker by funding his job, you should also insist on being paid on time, or that late payments will bear interest at the rate of 2.0% or more each month = 24.0% per year and continue until fully paid. And, if he's more than 30 days late, file your Mechanic's Lien! Or, if it's a Federally funded project, file your (Federal) Miller Act Lien.

Good luck.

Sincerely, J. Norman Stark, Cleveland, Ohio.

Re: proof of financing

The shory answer is yes. This deals with his due diligence that he has as a loan officer to determine that you are an acceptable risk to them as a bank.