Can a Contractor Put a Lien on My House

What to Do If a Contractor Puts a Lien on Your House

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If a contractor puts a lien on your business firm, yous'll accept to fight to keep your house out of foreclosure. Here'southward how to defend yourself.

Here's a scary scenario: Y'all've just completed a home improvement project and paid the contractor in full for the work. But the contractor skips out without paying one of his subcontractors.

Adjacent thing you lot know that subcontractor puts a lien on your house -- a legal claim confronting your property that could force your house into foreclosure if you don't pay the debt yourself.

Scary scenario #2: Yous're not getting the best piece of work from a contractor, so you don't pay them the remaining portion of what they're owed. In a surprise turnaround, the contractor files a "mechanic'south lien" to force the remaining payment.

If a contractor puts a lien on your property, hither'southward how to respond:

Have a Structure Lawyer Check the Lien

"Contractors have to follow certain procedures for the lien to be valid," says Tampa attorney George Meyer, past chair of the American Bar Clan's Forum on the Construction Industry. "Information technology'south not uncommon to find that the lien is invalid because a deadline was missed or some other technicality is wrong."

Yous'll pay effectually $one,000 to have an chaser review the lien and get it thrown out if it'due south invalid, a process that usually happens within lx days of the lien existence recorded.

If the Lien is Valid, Here Are Your Options

Your lawyer will help y'all decide whether to fight the lien in court or negotiate a settlement. The decision depends largely on which state you lot live in. In some, yous may exist able to fend off a lien if:

• You lot testify that you lot've paid your structure bills fully and on fourth dimension.
• Yous prove that the contractor who filed the lien has breached their contract and doesn't deserve to be paid.

What Does Legal Action Cost?

You'll be looking at legal fees that range from $v,000-$xv,000. For small disputes, it may be worthwhile to negotiate a settlement rather than going before a guess.

If you've already paid your full general contractor in full, yous tin sue the general contractor to recover whatsoever losses incurred by a subcontractor'due south lien -- assuming the general contractor hasn't filed for bankruptcy or disappeared -- and file a complaint with the state contractor licensing lath.

Related: Contractor Dispute? Local Licensing Authorities are on Your Side

What Could Go Incorrect

If you haven't followed every payment procedure spelled out in the statutes, yous may exist required to pay a subcontractor who's filed a lien, even if you've already paid the full general contractor for the work.

The contractor could sue yous for breach of contract in a separate proceeding even if you get the lien thrown out.

How to Avoid a Lien with a Lien Waver

The best style to protect yourself from a mechanic'south lien is with a lien waiver. This is a legal certificate furnished past the contractor or subcontractor at your request.

There'southward no price to you and no need for an chaser to review it start. By signing a lien waiver, a contractor or subcontractor agrees that they've been paid in full for work completed and that they no longer accept the right to file a lien against your house.

Problem is, to fully protect yourself y'all'd need to get a lien waiver from your general contractor and another from every subcontractor and supplier for each payment you lot make on the project. That's a lot of paperwork -- and something that almost no homeowner bothers with.

Your best bet is to get waivers from the general contractor, and preferably from the subs and suppliers with the biggest chunks of your project.

To exercise that, yous'll demand to discuss the thing with your general contractor early in the process and add a line to the remodeling contract stating that no payments will be fabricated without lien waivers from x, y, and z contractors.

If You Make up one's mind Not to Collect Lien Waivers

Inquire your general contractor whether they'd let y'all to pay each of their subcontractors and suppliers directly. This won't totally protect you from liens, simply it avoids a situation where the contractor stiffs ane of their subs.

The contractor may say no to this arrangement so they can marker up the various elements of the job at their discretion. Or they might exist fine with it, since it saves them some housekeeping work -- and means they don't take to lay out the coin required to pay their bills earlier receiving their pay from you.

To protect yourself, always collect invoices and receipts from everyone you pay directly.

Related: 5 Essential Questions to Ask Before Hiring a Contractor

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Source: https://www.houselogic.com/remodel/budgeting-contracting/what-do-contractor-puts-lien-on-house/

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