Mechanics Lien on home

[Anonymous]

The reason these laws exist is because contractors have trade associations that lobby the lawmakers – and homeowners don’t.

It’s a completely one-sided, bullshit rule. If a subcontractor shows up at a property and doesn’t know who is supposed to be paying them, it should be their problem. But the law lets them show up, do whatever they want, charge whatever they want, and then hold your home hostage until you pay them.

I’ve never been burned by this sort of thing, but I know way too many honest people who have been.

The rule of thumb is this: When a truck arrives at your house that doesn’t have your general-contractor’s name on it, YOU write the check to them.

Funny how people bash realtors, when home-improvement contractors are the real sleaze in the industry. People tend to think that someone wearing a tool-belt and driving a pickup truck is doing “honest” work – not true with many contractors.

Good luck with your situation. I really hope you prevail.

What is the name of the crooked GC that swindled you? He’s probably doing it to others…

[njtosd]

Talk to an attorney – there appear to be pretty significant timing issues for the subcontractor that may help you. Did the subcontractors provide notices to you that they were supplying materials for your project?

[booter1]

Thx Everyone- BG was kind enough to provide an attorney referral so I will let everyone know what happens.

Suppliers did send prelim notices within timeframes required. I was under the assumption that the Unconditional Release/Waiver which I received with final payment to contractor would protect me. As has been pointed out, this is true only if the subs/suppliers sign the waiver, not just the contractor so painful lesson learned for me.

That said, the contractor agrees I have paid in full, said he intends to pay me when the next couple of jobs finish. I said, “not good enough.”

I don’t want a lien on the home so will check with attorney on paying the suppliers and going after the contractor. FWIW, I asked the contractor what happened to the money we paid him for lumber and concrete and he said it went to the subsequent job and that owner is now refusing to pay him. I said was very frustrated to be in this position. His solution was just to let the lien stay on the home for 60 days until he closes some jobs out and gets the money. Told him no deal.

Contractor’s bond is $12,500 which won’t cover full amount (approx $17000) but it’s a start. Thx.

[Coronita]

[quote=booter1]Thx Everyone- BG was kind enough to provide an attorney referral so I will let everyone know what happens.

Suppliers did send prelim notices within timeframes required. I was under the assumption that the Unconditional Release/Waiver which I received with final payment to contractor would protect me. As has been pointed out, this is true only if the subs/suppliers sign the waiver, not just the contractor so painful lesson learned for me.

That said, the contractor agrees I have paid in full, said he intends to pay me when the next couple of jobs finish. I said, “not good enough.”

I don’t want a lien on the home so will check with attorney on paying the suppliers and going after the contractor. FWIW, I asked the contractor what happened to the money we paid him for lumber and concrete and he said it went to the subsequent job and that owner is now refusing to pay him. I said was very frustrated to be in this position. His solution was just to let the lien stay on the home for 60 days until he closes some jobs out and gets the money. Told him no deal.

Contractor’s bond is $12,500 which won’t cover full amount (approx $17000) but it’s a start. Thx.[/quote]

Dude, I’m sorry to hear this. This royally sucks.

Folks I’m just curious, if he does pay the supplier first and go after the contractor, what sort of rights can he potentially lose (besides the contractor not paying him back)…Also, can he tack on any other things. I’m thinking for instance damages associated with not being able to refi, fees associated with borrowing $12.5k,etc.

Lastly, what are the risks if he plays hardball with the contractor, and the contractor gives him the middle finger?

Just curious…

[NotCranky]

Also sorry to see anyone go through this. I hope you get good advice from the Attorney. Either way, I would not be in a hurry to write a bunch of checks.

Svelte had some good ideas for those who want to avoid this risk in the future.

A homeowner can ask for an escrow. It’s called a building fund control.
Dixieline does it. So do some some of the places that do real estate escrows. I know Bill, at Allison-McCloskey Escrow, told me they could do it, but that was a long time ago.
http://www.dixieline.com/fundcontrol.html

[UCGal]

If you are considering filing for the GCs bond, do it sooner. The 12.5k is for ALL claims, on a first come first serve basis… you want to be in the front of the line. We were second in line on a roofer’s bond and even though our claim was much larger and approved as valid, we got a very small payment because another claim was in before us.

Your GC might find the cash to make it all OK with the bond company and you because they don’t want their bond rates jacked up because of a claim.

[Coronita]

[quote=UCGal]If you are considering filing for the GCs bond, do it sooner. The 12.5k is for ALL claims, on a first come first serve basis… you want to be in the front of the line. We were second in line on a roofer’s bond and even though our claim was much larger and approved as valid, we got a very small payment because another claim was in before us.

Your GC might find the cash to make it all OK with the bond company and you because they don’t want their bond rates jacked up because of a claim.[/quote]

You know, I don’t want to add fire to the situation but I have to wonder…You think the contractor is doing this not only to the OP, but other clients as well?
I’m just thinking for a contractor with a decent number of jobs… is $17,000 (I think the quoted amount of material costs) really that much that it cannot pay for it? I mean, maybe it’s just me. For a contractor, that’s solvent, it doesn’t seem like it would be so much that he/she couldn’t just “charge it” or something like that.
I don’t understand why it’s letting the OP deal with it at all. Unbelievably shitty.

Really appreciate booter1 for sharing this experience with us… It’s been an eye opener… I really hope you get this resolved in your favor.

[svelte]

I bet he is doing this to others…that was my first thought. Once you get into a pay-for-the-prior-job-with-the-next-job cycle, it usually goes on and on and is in reality a death spiral.

[quote=flu]
Really appreciate booter1 for sharing this experience with us… It’s been an eye opener… I really hope you get this resolved in your favor.[/quote]

I’ll second that, thanks booter1. Especially considering I’m beginning discussions with contractors about an entirely new backyard, pool, and spa. Now I’m scared…

[Coronita]

[quote=svelte]I bet he is doing this to others…that was my first thought. Once you get into a pay-for-the-prior-job-with-the-next-job cycle, it usually goes on and on and is in reality a death spiral.

[quote=flu]
Really appreciate booter1 for sharing this experience with us… It’s been an eye opener… I really hope you get this resolved in your favor.[/quote]

I’ll second that, thanks booter1. Especially considering I’m beginning discussions with contractors about an entirely new backyard, pool, and spa. Now I’m scared…[/quote]

What if you (as the homeowner) buys all the materials?

[svelte]

[quote=flu]What if you (as the homeowner) buys all the materials?[/quote]

I’m hoping that would do it…can subcontractors that only supply labor – and not material – put a lien on your house? Anybody know?

[sdrealtor]

I dont know that a contractor would agree to that because they likely make a nice mark up on the materials (i.e. they pay wholesale and charge you retail).

[UCGal]

[quote=svelte][quote=flu]What if you (as the homeowner) buys all the materials?[/quote]

I’m hoping that would do it…can subcontractors that only supply labor – and not material – put a lien on your house? Anybody know?[/quote]
Yes they can. If the gc doesn’t pay them AND they’ve served you with preliminary notices within 20 days of the start of work, they can attach a mechanics lien for any unpaid work.

Keep track of these notices and insist on unconditional releases (or partial releases if progress payments are being made.) Do this for every sub that you know of.

[UCGal]

[quote=sdrealtor]I dont know that a contractor would agree to that because they likely make a nice mark up on the materials (i.e. they pay wholesale and charge you retail).[/quote]
Some contractors will agree to this, others won’t. They can often get materials for less than retail. If your contractor is having cash flow problems you can offer to issue joint checks… checks made payable to both the contractor and supplier or sub.

[booter1]

Hi Piggs, wanted to provide an update in the hope that someone else may benefit from the information..

First of all, thanks to all the helpful advice you all provided and thanks BG for the attorney referral. Very helpful- I did speak with the attorney.

Contractor is paying #2 supplier-$3500.

I placed claim with Insurance company today against conractor’s bond which is $12,500. Like UCgal said- it is first come first serve.This claim was for supplier #2 that was owed $13,500.
I am told this bond amount is typical so keep that in mind if undertaking larger job. Insurance company tells me they will contact me within fifteen days and resolve within 45 days. You can file a claim without having to go to arbitration or court.
I will still be owed about $1000 and if contractor does not pay either go to arbitration or small claims court.

Things I learned….

1) As was mentioned by others, get suppliers to sign off on Unconditional Release/waiver and call them when you get prelim notice to confirm they have been paid before you give the contractor money. Or pay suppliers directly….

2) Suppliers/subs are only legally required to send you the prelim notice. After that, hey can file a lien on your home without telling you or giving you advance notice of lien. some do but they are not required to…

3)Most contracts don’t have attorney’s fees in the language so you are on the hook for all your attorney’s fees if you litigate and if you go to arbitration the costs are split so either way it will cost you some money.

4) Paying off the supplier (which i did in my case because i didn’t want to screw up the refi) does not give up any of your rights in any way.

5) I talked to both suppliers and both said that the last couple of years has seen a significant increase in contractors not paying suppliers and homewoners are now calling suppliers when they get prelim notices which did not happen before…

6) I asked both suppliers if they would actually initiate foreclosure proceedings on these type of liens. Basically, they said it depends on the situation. First they file the lien and then after a period of time go after the contractor’s bond.
If the bill exceeds the claim amount (either due to the bond maximum or because others also filed claims) then the supplier has to evaluate whether it is worth it to go after the homeowner.

7) I have not filed a complain against contractor’s license with CSLB.Focused on recovering the money owed right now. Attorney’s view was to create as much pain for contractor (he used slightly different words) to get them to pay.
I will wait to see what happens with the bond payoff first and then decide.

Thanks again.

[CA renter]

Sounds like things are moving in the right direction. Good for you!

Best of luck, and let us know how things turn out when it’s all settled.

This should never happen to homeowners who are trying to do the right thing and who have made all the payments they agreed to per the contract.

[Author]

Posts