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Thread: Possible lien on property

  1. #1
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    Unhappy Possible lien on property

    Hello to anyone with advice here.
    This is kind of off the beaten path for this forum but I have had such good luck getting answers for everything else I thought I would give it a try.
    I recently hired a contractor to build a 12 by 30 foot addition to my garage. The garage is finished and I am totally happy with it and the contractor did a great job. Here is the problem. The contractor hired out a cement contractor to do the foundation, stem walls, garage floor and about 500sf of driveway. There was problems with this subcontractor doing sloppy work which the contractor had to have the subcontractor do over. Also the subcontractor did not do the work in the time frames that were specified and cost the contractor time and money. I have paid the contractor in full and now the contractor is in a dispute with the cement contractor over about $1000.00. The contractor called me to say that the cement contractor had threatened to put a lien on my house. He said he doubted the cement contractor would do it, but if he did, It would not affect me, but rather just force them into court and it would be settled there.
    My question is; has anyone been thru this and do I have anything to worry about over just a $1000.00 dispute? A lawyer is going to cost me way more than that and if it gets dirty I figure worst case I can just settle the case by paying the $1000.00 dollars although I certainly don't want it to come to that. This whole scenario takes place in Michigan if that is any help. Also, I realize this is not a legal expertise forum, I am not really looking for legal advice, I am just looking to find out if other people have been through this and what they did and how it turned out.

    Thanks for any suggestions from anybody.
    Last edited by MRCLUNKER; 08-04-2015 at 03:38 PM.

  2. #2
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    As a GC I can tell you that there are many variables to your question and some can be State by State dependent.
    1. Can a contractor or a sub put on a lien ?........Yes without any doubt in any state and it's relatively inexpensive to do so.
    2. Does it effect your home ?.......Yes without doubt in any state. The unpaid Lien will remain tied to your home right up until the sale of it or any refinancing etc... at that point it would need to be settled or paid in full for any sale or refi to take place. Same would apply for gifted property or estate transactions.
    3. In many cases suppliers have the right to put a lien on your property if the contractor doesn't pay them, regardless of your payments to the contractor. Most invoices include fine print that reads along the lines of >>>> "All materials remain the property of the seller until such time as the invoice is paid in full". The later is particularly important in times of contractors filing bankruptcy.
    4. In my state (NC) whenever work cost exceeds $30 K the general contractor is obligated to take out "lien protection" before any permits are granted from the building department, this specifically protects the home owner. The lien protection certificate is then placed in the work box and all contractors register with the lien company if they want protection from the GC for not being paid.
    5. Is it worth a sub putting on a lien ? NEVER assume they won't, money and arguments over money can lead to spiteful consequences, while an unpaid lien ONLY gets the money to a sub or a GC at the time of sale or refi etc... it is still recorded against the home and can/will effect any financial transaction regarding the home, even though you are a third party and can prove payment.
    I've seen subs put lien's on homes just to spite the GC, they know they will never see the money BUT they feel wronged by the GC and this is a way of "getting back at him" if only through bad mouthing.

    I would be asking your GC for a letter stating that the dispute is between him and the concrete sub contractor including the reason for the dispute and the amount in dispute. If photo's exist of the pre and post "bad work" that would also be recommended to keep in a safe place. Lien's can be disputed and not granted if proof can be submitted to satisfy the court, this would then become a small claims dispute between the GC and the Sub.

    Hope this helps
    Last edited by pushkins; 08-04-2015 at 06:21 PM.
    Little about a lot and a lot about a little.
    Every day is a learning day.

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    Pushkins thanks for the info.

    If a lien is placed on my property, will I be notified? can I contest it without a lawyer by using the Letter from the GC and pictures you spoke about getting from the GC.
    Just not sure how this scenario works.

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    This will depend on your state requirements and they can differ state to state. Typically you are sent a letter setting out the lien request and have a window of time to present opposing arguments. You can represent yourself.
    In most cases you have the upper hand (don't tell the average contractor) the contractor will have to provide not only proof that the money is owed but also upon request, documents to confirm that he/she had advised in advance that failure to pay may lead to a lien.
    Like I said most big supply houses in all that small print on the back of invoices etc...that no one reads, have a simple statement regarding the property ownership until completely paid in full.
    Little about a lot and a lot about a little.
    Every day is a learning day.

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