A mechanic’s lien is the claim made against a property by contractors, laborers and material suppliers if a property owner fails to pay what he/she owes for the work done. The work includes any type of construction, remodeling, landscaping and supply of materials needed in order to improve the state of the property.
During the process of building or remodeling your home, you may receive a Preliminary Notice, and it only serves to let the owners know that if people are not paid, then a lawsuit can be filed against you. This should not scare you as the notice only serves as a reminder and is a necessity if the subcontractors and material suppliers don’t have any direct contract with you. The notice is usually provided 20-30 days after beginning the work, and if the necessary parties are not paid after the work is complete, then a lien is filed. The subcontractors and/or suppliers then have up to six months to work something out with the property owner or file a lawsuit if no common ground is met. If the lawsuit hasn’t been filed within that time frame, then you as the property owner has the right to get a court order which clears your property of the claim.
Homeowners need to know exactly how a lien works in order to protect themselves from shady contractors who don’t pay their laborers and suppliers. If they place a lien on your property without your knowledge of where and how payments were made then you may have to pay double or sell your house. This may seem like an unfair law but it’s only there in order to protect subcontractors and suppliers from being shortchanged by irresponsible contractors.
There are ways in which you can protect yourself from a lien. The first thing you can do is make all payments using joint checks to the general contractor and subcontractors/suppliers so that all parties get paid. You can also give anyone working on your construction project a lien waiver, but in most states, this is only viable if all parties have already been paid and serves as protection from shady contractors. Keeping all your paperwork and receipts is also very important if you want to avoid a lien on your property as it serves as proof of all payments that you have made and notices that you receive.
Most importantly, always make sure that the contractors you hire are qualified and licensed, and have no history of lawsuits or withholding payments to their workers.
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