You’ve been living in a property that you purchased for some time, so you decided that you’d like to sell it. To your surprise, a buyer backed out because a mechanic’s lien is in place.
This lien is a kind of security interest that can be placed on your home or property when a subcontractor, contractor or supplier has not been paid. Even if there is a general contractor who was paid in full and supposed to pay these individuals, they can still place a lien on your property if they don’t receive payment. In the end, it’s the homeowner who could end up being forced to pay double to cover the expenses that were not paid to the past contractors.
What happens if a mechanic’s lien is on your property but you paid the general contractor already?
In that case, the law presumes that you’ll sue the general contractor to force them to pay the subcontactors or suppliers that went without payment in the past. This is fine if you have a lot of time to handle the situation, but it’s not as good if you’re trying to sell your home.
If you do have a successful case against a general contractor, you can potentially garnish their wages and force them to sell their property to resolve the debts and lien against your home. That can take months or years, though, which can be frustrating. If the subcontractors have come after you for payment directly, you may even be facing a lawsuit yourself.
Are there ways to avoid mechanic’s liens?
If you are worried about the potential for a mechanic’s lien, the best thing to do is to look into getting a lien waiver, to pay with joint checks or to pay the suppliers or contractors yourself. That way, you can make sure that the appropriate parties are paid. A lien waiver might be possible if the contractor gets one from each subcontractor or supplier, but usually this won’t be able to waive a mechanic’s lien until the payment is actually made.
It can be complicated to know whom to trust when you’re getting construction work done, so you should also ask neighbors and friends whom they’ve used to complete work in the past. With good references and some steps taken prior to agreeing to a contract, you may be in a better position to avoid a mechanic’s lien in the future.