A joint check is a payment made jointly to two or more parties (typically a contractor and one of their subcontractors or suppliers) where all named payees must endorse the check before it can be deposited. Joint checks are commonly used by owners or GCs as a risk-management tool when they are concerned that an upstream party (the contractor) might not pay the downstream party (the sub or supplier), creating lien risk.
Joint checks are particularly common in three scenarios: (1) when the GC is in financial distress, (2) when a sub has filed or threatened to file a mechanic's lien, (3) when the supplier requires direct payment as a condition of releasing materials. Joint check agreements should be documented in writing including allocation rules between the joint payees.