Legal Definitions - joint-check rule

Definition: The joint-check rule is a principle that protects the owner or general contractor from lien foreclosure by a materialman who was not paid by the subcontractor. When an owner or general contractor issues a check that is made jointly payable to a subcontractor and the subcontractor's materialman, the materialman's endorsement on the check certifies that it has been paid all amounts due to it, up to the amount of the check. This rule ensures that the materialman is paid and the owner or general contractor is not left hoping that the subcontractor pays all the materialmen.

Example: Let's say a homeowner hires a contractor to build a new deck. The contractor hires a subcontractor to provide the lumber for the deck. The subcontractor, in turn, buys the lumber from a materialman. The homeowner issues a check to the subcontractor and the materialman jointly. The materialman endorses the check, which certifies that it has been paid all amounts due to it, up to the amount of the check. This protects the homeowner from any potential liens from the materialman, and the materialman is assured that it will be paid for the lumber it provided.

Explanation: In this example, the joint-check rule ensures that the materialman is paid for the lumber it provided, and the homeowner is protected from any potential liens. The materialman's endorsement on the check certifies that it has been paid all amounts due to it, up to the amount of the check. This means that the materialman cannot come back later and claim that it was not paid for the lumber it provided. The joint-check rule is a way to ensure that all parties involved in a construction project are paid fairly and that there are no disputes over payment.