Construction Lien

[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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My contractor says he will take care of the lien amount if drywall guy doesn't. Legally, am I on the hook here if contractor and drywall guy tell me to f off?

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I'd feel confident that your contractor will take care of it, one way or the other. This stuff happens all the time. And it's only $500.

Legally, "not really". I mean, you paid the one guy you were in contract with, the contractor. It is then his duty to make sure his subs get paid with his fee. If you have an affidavit from the contractor, you would have no problem, legally. Unless the contractor flees the country or shut his business down, you'd have a hard time making the claim. But again, don't worry about it.

This is a large reason why liens exist for subs. There are a lot of fly-by-night contractors who will collect their fee and flee the area, screwing the subs (especially if they're illegal aliens). But the owner will always be able to be hunted down to try to collect from. At least immediately after a job is done, whereas a contractor might literally flee town at the drop of a hat.

Just send your contractor a phone call every day or two and make sure it gets done. If he's dragging his feet then tell him you'll report him to the BBB (or something). Light a fire under him.

[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.

[kyleb]

Your Mom,

WTF. Get a lawyer. This sucks.

[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.

[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.

[JasonK]

I don't know how much help this is you to or if it's even applicable since I don't deal with suppliers, but here in Cali I work at an engineering firm and we have to file a preliminary lien notice within 21 days of if we want our work performed covered by a lien. Anything worked before the 21 days we are SOL as far as filing a lien to recover. If they didn't file the prelim notice and it's required where you are the lien is probably not enforceable.

When dealing with contractors we always get a signed lien release before giving them money. Prevents problems like this.

[Mike Gallo]

Go after your contracter. He sub contracted the work out.

[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.