Construction Lien

[prohornblower]

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Any info you have on removing a lien of this type once payment has taken place or on fighting the lien.

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If you can, try to get a copy for your records of the payment. Once the payment is made, the lien has to be removed. I'm not sure on the actual nuances of removing a lien, I guess if the supplier is lazy and slow it may take a while. Contact whomever sent you the lien (was it your property title-holder)? and tell them to remove it because you have proof of payment.

[sirtimo]

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The drywall sub should have had to pay before receiving materials...this just doesn't sound normal. A supplier is never under contract. Liens typically deal with those under contract Owner-Contractor, Contractor-many subs. The sub shouldn't have a contract with the supplier.


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Not quite true. The drywall guy probably had a line of credit at the supplier, or bounced a check or whatever. Most material suppliers work on net 30 or net 60 day terms so accounts aren't 'late' until then. This isn't the local Home Depot they are picking up stuff from.

Suppliers can be under contract too, and they can and will place liens on houses or projects their materials go into in order to get paid. A lot of times the GC or builder will work out a joint check with the sub and material supplier (both names on the check) to prevent stuff like this from happening.

[AJackson]

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The drywall sub should have had to pay before receiving materials...this just doesn't sound normal. A supplier is never under contract. Liens typically deal with those under contract Owner-Contractor, Contractor-many subs. The sub shouldn't have a contract with the supplier.



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Actually what happened here is the norm. The supplier provide materials on credit and bill on the first with it due on the 10th. The subs also bill on first and when they get paid, they in turn pay the supplier. Sometimes guys do go under and a lien happens.

When I did a lot of subcontracting I might have 50K in month material cost delivered to 20 different sites. Financially and practically it wouldn't work to have to give them a check for every job upon delivery. The suppliers are going to have a certain percentage default, but if they didn't extend credit they would have zero business.

[Your Mom]

Thanks for everyone's help on this.

[sirtimo]

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Before you submit final payment to your contractor you are supposed to get an affidavit. He is supposed to prove that he has paid his contractors and that your property is free and clear of mechanic's liens. I'm guessing you didn't do this.

Did you even keep a retainage (10%?) of the Contractors fee?

If I were you, I'd first call your contractor and tell him to pay the guy, because he placed a lien on your property. If the Contractor is at all ethical, he will take care of it (especially since he f***ed you already by accepting final payment without paying his subs).

A phone call might be all it takes.

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I guess I didn't know about this kind of stuff, although it makes sense in retrospect. The thing is that my contractor would have signed something saying he paid all his subs because I'm sure he did. It's that the sub didn't pay his supplier.

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It goes on down the line. A reputable General Contractor should be getting 'release of lien' papers signed at every payment he gives to a sub. A sub providing turnkey materials + labor should be providing a signed 'release of lien' from his material supplier to the GC in order to get paid. Sounds like this isn't the case.

Anyway, you signed a contract with the GC not the sub or the supplier so that is who you deal with. The GC should pay the balance of what is due and backcharge his sub. Whether or not he is still in business don't matter, it's still a debt. If the GC doen't have it taken care of in 30 days, take him to small claims court.

oh, a lien on your house doesn't do any to you or the house until you try to sell it.

[Your Mom]

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Before you submit final payment to your contractor you are supposed to get an affidavit. He is supposed to prove that he has paid his contractors and that your property is free and clear of mechanic's liens. I'm guessing you didn't do this.

Did you even keep a retainage (10%?) of the Contractors fee?

If I were you, I'd first call your contractor and tell him to pay the guy, because he placed a lien on your property. If the Contractor is at all ethical, he will take care of it (especially since he f***ed you already by accepting final payment without paying his subs).

A phone call might be all it takes.

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I guess I didn't know about this kind of stuff, although it makes sense in retrospect. The thing is that my contractor would have signed something saying he paid all his subs because I'm sure he did. It's that the sub didn't pay his supplier.

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It goes on down the line. A reputable General Contractor should be getting 'release of lien' papers signed at every payment he gives to a sub. A sub providing turnkey materials + labor should be providing a signed 'release of lien' from his material supplier to the GC in order to get paid. Sounds like this isn't the case.

Anyway, you signed a contract with the GC not the sub or the supplier so that is who you deal with. The GC should pay the balance of what is due and backcharge his sub. Whether or not he is still in business don't matter, it's still a debt. If the GC doen't have it taken care of in 30 days, take him to small claims court.

oh, a lien on your house doesn't do any to you or the house until you try to sell it.

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Thanks for your info too. What would happen if I did try to sell it. The title company would discover the lien and then what? Especially, when I can prove that I already did pay for this stuff even though that money apparently didn't get to the right people.

[prohornblower]

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What would happen if I did try to sell it. The title company would discover the lien and then what? Especially, when I can prove that I already did pay for this stuff even though that money apparently didn't get to the right people.

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Well the title wouldn't be clear, so basically you'd have to eat the $535 or whatever before selling. It would suck, but I mean...are you really not going to sell 6 figures of property to avoid paying 5 hundred bucks? No. It's unfortunate.

[tsearcher]

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oh, a lien on your house doesn't do any to you or the house until you try to sell it.

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Or refinance or try to get a second mortgage or home equity loan. Don't know what the law is in Colorado, but in Illinois a mechanics lien is only good for 2 years.

[AJackson]

I can't speak to Nebraska, but I'm a GC in Kansas and this is standard. If the GC doesn't feel like taking care of the bill, then you'll be stuck with it unless you take him to small claims court. In my opinion, the GC should take care of this if only to keep his reputation. I would pay it without hesitation. It's a sucky system, but the suppliers are going to use whatever leverage they can find to get paid. Over the years I bet I;ve paid out 5K paying off these sorts of liens.

I would keep it friendly with the GC making your position that you hired him to manage responsible subs and part of that is having subs that actually pay for the materials they ordered. If it gets to the point he's just not going to pay, then threaten him with small claims court, report to the BBB, etc. If he's any sort of successful contractor the potential time lost will be worth more than just writing a check.

Check on the laws concerning liens in your state. Last time I checked here they only lasted 12 months and could not be renewed. Unless you have to sell the house or take a second mortgage, it's easiest just to ignore the issue if the GC won't take care of it.

Also, a gigantic LOL at those who told you to consult a lawyer. Clearly these are people who have never consulted a lawyer. What sort of fantasy world do they live in where lawyers take on $500 cases? About all you'll going to get on a $500 case is Encyclopedia Brown. Last time I consulted a lawyer I had to give him a 5K retainer for something that was most likely not going to trial.

[niss]

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oh, a lien on your house doesn't do any to you or the house until you try to sell it.

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Or refinance or try to get a second mortgage or home equity loan. Don't know what the law is in Colorado, but in Illinois a mechanics lien is only good for 2 years.

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In all likelihood, on a private job your state's law requires that the lienor sue to foreclose his lien within a certain amount of time (usually a year) or his lien will expire. The result of such a suit is, technically, a sale of the property to satisfy the lien. While I am sure your case would never get this far, you should be aware that there can be more to a contractor filing a lien than simply hindering you from alienating your property.