In a perfect world, you’ll enter into an agreed-upon contract with your Pro, have the work done on your home, pay for it, and go on about your life in your new home. Unfortunately for some homeowners, what seemed like a simple renovation on their home later resulted in a lien being placed against it. This can be a terrifying thing to happen to you as a homeowner, particularly if you paid all of your bills on time. A lien can make it difficult for you to sell your property and in a worst-case scenario, may even force you to sell your property to satisfy it. Getting to know liens and under what circumstances they can be placed on your home can help you protect yourself.
A mechanic’s lien sounds like something that would happen to your car, not your home, but this type of construction lien is levied against your property for failure to pay for services rendered during home improvement, renovation, or construction. Meaning that if a Pro completes the job in good faith and according to the contract, and you refuse to pay him, he can put a lien against your property to try to collect.
Now, in most cases, homeowners do pay their bills, particularly if the work was completed satisfactorily. Unfortunately, this isn’t enough to protect you from having a mechanic’s lien placed on your home. Why? Because anyone who worked on your home is entitled to place the lien if they weren’t paid. This may mean that if a general contractor failed to pay a subcontractor, this subcontractor can place a lien on your home. It doesn’t matter if you paid the general contractor or not; the subcontractor can still place the lien, forcing you to either pay twice or chase the GC down for payment.
A supplier’s lien is similar to a mechanic’s lien and is sometimes even called the same thing. In this case, the Pro may fail to pay his bill at the material supplier, causing the supplier to place the lien on your home. Again, it does not matter if you already paid the Pro for the materials; if the supplier did not get paid, he has the right to take out a lien against your property.
What You Can Do
It is possible to protect yourself from property liens during a home renovation. The first thing you need to do is ask your Pro for a lien release. This is something written into the contract releasing you of any responsibility for the Pro paying his bills. This isn’t always enough, however, particularly in some states where a waiver may be required.
A lien waiver is something you can request your Pro bring you before each payment is made. This is a waiver from each person involved in the job saying they will not place a lien on your home. Some states will only allow a waiver once you have paid the Pro for each stage; other states will allow a waiver right at the beginning of the job. Check with your town hall to find out which applies to you, or visit http://constructionliens.uslegal.com to look up your state’s info.
Remember that you do have the option of paying suppliers and subcontractors yourself, eliminating the middle man, and ensuring that everyone gets paid. Depending on how large the job is, however, this may be a logistical nightmare, or it may be the simplest thing to do. Only you can decide if this extra step is worth it based on your Pro’s reputation.
Finally, you also have the option of making a joint payment. For this purpose, you would specify that the payment you release is done jointly to the Pro and the subcontractor or supplier, increasing the chances that the third party will be paid.
An ounce of preparation goes a long way toward protection in the case of liens. This is why it’s important to research your Pro thoroughly, to ensure that they’ve always paid their bills in the past, helping to ensure the probability that they will continue to do so.
If you’re ready to begin, sign up today with BEYREP to not only get matches with pre-screened Pros but also get access to our escrow protection to help give yourself a further layer of protection. Sign up today to get started, and protect yourself with BEYREP.