Thursday, March 19, 2009

Faced with a Mechanics' Lien?

Be afraid; be very afraid.

What is a mechanics' lien? It's basically a lien put on your property by a tradesman who has performed work on it and has not been paid.

Does this mean you intentionally stiffed the guy or gal? Not necessarily. For example, let's assume you decided to hire a general contractor to remodel a kitchen or build a deck for you.

Part of the contractor's responsibility is to hire the subcontractors needed - plumbers, electricians, roofing contractors, whatever. It is his responsibility to pay them; this should be transparent to you. You don't care how much they make or whether that master finish carpenter provides his own woodworking power tools.

But if the GC fails to pay them, and believe me, it happens all the time, the building subcontractors can put a lien on your home. And until you satisfy it by paying them, you are very limited to what you can do to your own property.

Basically, you're tied to it because you can't sell it. Wow.

Find A Contractor

But with a bit of common sense forethought, there are ways to protect yourself and avoid a mechanics' lien:
  • Have the GC and subcontractors sign a “Waiver and Release” form.
  • Check out all the companies involved with the BBB.
  • Ask for references from the general's past ten completed contract jobs.
  • Make sure he is currently bonded and insured.
  • File a "Notice of Completion" form.
A final note of caution: if you won't be around to monitor your home while the work is being performed, a prudent step to take is to perform a criminal background check. An ounce of prevention is worth a pound of cure.

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