A Homeowner’s Guide to Preventing Mechanic’s Liens0
site admin posted in Construction Law on November 15th, 2005
When you hire a prime contractor to do construction on your home, he or she typically hires laborers and subcontractors to do some of the work, and purchases materials for the job from materials suppliers. No one would dispute that a homeowner should pay for goods or services provided to improve their home. If the contractor–or the subcontractors, workers or suppliers–who provide goods or services to improve your property aren’t paid, they can file what is called a mechanic’s lien on your home.
What is a Mechanic’s Lien?
A mechanic’s lien is a “hold” against your property that, if unpaid, allows a foreclosure action, forcing the sale of your home. It is recorded with the County Recorder’s office by the unpaid contractor, subcontractor or supplier. It means that any of these unpaid entities can claim a lien against the property until they are paid.
The prime contractor has a direct contractual agreement with the homeowner. If the contractor isn’t paid, he can sue on the contract and record a mechanic’s lien. But subcontractors, workers and suppliers don’t have a contract with the homeowner. A problem occurs when the homeowner pays the prime contractor for all or some of the work, but the prime contractor fails to pay the laborers, subcontractors and materials suppliers that were hired to do portions of the job. If they are not paid, often their only recourse is to file a mechanic’s lien on the home.
What happens when a lien is filed against your property?
A lien can result in a range of problems:
Please read on to find out how you can protect yourself when entering into a construction contract.
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