Mechanics Liens: Protecting Your Home
For a major home improvement or renovation, a homeowner usually hires the services of a contractor to do the job efficiently and quickly. For a first-time homeowner, however, he would be surprised to know that there is a law that would attach his property to his contractor, a legal remedy known as mechanics liens. Although a mechanics lien is unavoidable, there are a few things a homeowner could do to protect his home.
The basics of mechanics liens
For every major contracting job that a contractor, supplier or worker engages into, the law permits him to file for a mechanics lien into the property of the homeowner. This lien serves as protection for a contractor in the event that a homeowner fails to pay after the completion of a project. Enforcement of a mechanics lien is usually done like a regular foreclosure proceedings. When the property is sold, the amount unpaid to a contractor would be taken from the sale.
Although a mechanics lien this is something good, especially to contractors, a homeowner may be placed in an unfavorable position in some circumstances. One instance is when a contractor hires a subcontractor or a supplier. Even though the subcontract or a supplier is under agreement with the contractor, under the law the subcontractor and the supplier can attach a lien to the homeowner’s property. This means that if a contractor failed to pay the subcontractor or a supplier even if the homeowner has paid the contractor in full, the subcontractor and the supplier may file to the court for the enforcement of a mechanics lien
How to protect your home
1. Hire a reputable contractor – Find someone with a good track record. Get the numbers, such as number of completed projects, number of pending projects, number of unfinished projects and number of cases field against a contractor. These figures will give a clear picture whether or not a contractor finishes a contract, pays his employees or subcontractors on time and avoids litigation by getting the job done.
2. Ask for a detailed agreement – Put into writing everything that needs to be repaired or done, including the timeframe for each work. Ask for the names, contact details and job description of each subcontractor and the expected period of work completion. This gives the specific numbers of key players in the project, and prevents the coming in of a new subcontractor without the knowledge of the homeowner.
3. Issue separate checks – A homeowner may issue separate checks for the contractor and the subcontractors, which is better than coursing every payment through the contractor. This ensures that every payment goes into the right hands.
4. Ask for receipt of payment – Ask the contractor as well the subcontractor for a simple letter that states they received payment for a specific contracting job. Say, for a kitchen improvement, the kitchen slab has been attached and the plumbing has been done. Pay for these first and ask for receipt of payment and do so again after the contractor is done with the kitchen cabinets, the floor tiles and the wallpaper.
5. Get liens wavers – If the contractor wouldn’t want the homeowner communicating with his subcontractor or supplier, the homeowner may ask for a lien waver from the subcontractor or supplier. This is to prevent them from claiming for a mechanics lien against the homeowner even after the homeowner has successfully paid the contractor in full.
Joe Cline writes articles for Guillermo Ochoa-Cronfel. Other articles written by the author related to Austin Realtor and Lakeway Homes can be found on the net. For more information visit at http://www.joecline.com/whowelike.php and http://www.affinityproperties.com/lakeway.php .