When a contractor isn’t paid for work done on someone’s property, he or she has legal recourse in the form of a mechanics lien. The contractor can use a lien to basically stake a claim to the property. That property then cannot be sold or refinanced without dealing with the debt asserted by that contractor. And if that contractor wants to pursue payment further, he or she can get an order from the court forcing a sale of the property and payment of the debt.
Liens aren’t just available to general contractors. Subcontractors and materials providers can pursue them, as well. When payment isn’t made, it can be because of a dispute about how the work was performed, when it was completed or the quality of the work. Unfortunately, there is no way realistic way for a property owner to simply return the product. You can’t return a new driveway, or a kitchen renovation. This can lead to unresolved issues.
Subcontractors are a bit different from contractors. Often, a property owner doesn’t have any contact with subcontractors; they only deal with the general contractor. And it’s the general who pays the subcontractors. For this reason, a subcontractor who wishes to pursue a lien for nonpayment must first notify the property owner of their intent to do so.
If property owners aren’t careful about hiring those who work on their home or business, they might find themselves with a lien against their property. A good way to avoid this is to have a clear agreement with the general contractor, at the outset, about the project. If you aren’t clear, and the contractor does more work than needed, they will still charge you for that extra work. If you refuse to pay, they might record a lien. Also, make sure you get a list of all subcontractors, as well as lien waivers once payment has been made. If a lien is recorded against your property, consult with an attorney. It may be invalid if all the requirements weren’t met.
From the perspective of a contractor, sometimes the initial steps of recording a lien (or giving notice if you’re a subcontractor) is enough to get the issue resolved and the debt paid. A lien is not good for the title on the property, and most owners will be motivated to settle the dispute. If not, however, you can file a lawsuit. The court can order that the property be sold and your debt paid from the proceeds of the sale. It’s recommended that you hire an experienced attorney to guide you through the process of recording a lien, and filing a lawsuit if it comes to that. Both have specific requirements that must be met. If your lien isn’t valid, then you won’t be able to move forward.