Mechanics lien is a weapon for recovering payments by suppliers and contractors who are working on a project. The process entails attaching the property on which the supply was made or services rendered against the outstanding payments so that if payments are not made on time, suppliers and contractors can place a lien against the property to recover the money. There are many companies like LienItnow.com that assist in filing liens online. The practice is not only prevalent in the industry but it is also used in the domestic sector. Suppose your contractor has procured marbles and stones for renovating your home from a sub contractor and has not made the payments on time. The sub contractor can place a lien against your home and you are suddenly caught in the cross fire.
A strange law
It might happen that you have paid the contractor who has actually defaulted but still, you are held responsible for the contractor’s irresponsible act despite not being related to the transaction in any way. The law allows the subcontractor to pull you up and target your property overriding the role of the contractor who is responsible for the problem. To get out of the problem, you either make payment again or lose your house to the sub contractor. The law is really strange but true.
The rationale behind the law
To understand why you should be held responsible for someone else’s irresponsible behavior, you will have to look into the rationale behind the law. Between the parties involved in the transactions, the contractor, you and the supplier the lawmakers felt that the supplier’s need is the greatest in getting paid – hence the law. It has also been presumed that you can sue the contractor which though true is not always feasible. Firstly, it is a long drawn legal battle that you have to prepare or by investing time and money. Secondly, the contractor can declare himself to be bankrupt. Thirdly, it is never easy to recover money from the contractor who does not pay his suppliers and sub contractors. And lastly, to save your house, you have to choose between settling the issue by paying from your pocket or sue the contractor and hopefully you would be compelled to go for the former option.
There are some ways of protecting yourself from the nuisance of irresponsible contractors. LienItNow.com shows the way.
- Make the contractor obtain lien wavers from all to who the contractor is responsible for making payments. The law in some states stipulates contractors to provide a waiver for all work that he has done and received payment before he can accept further payments from you.
- Checks can be issued jointly in the name of the contractor and sub contractor (or supplier) that makes it mandatory to obtain the endorsement of the ultimate beneficiary, the sub contractor, to ensure that he gets paid.
Monitoring the payment chain of contractors and suppliers, maintaining proper paperwork for the project and requesting for lien waivers at the right time can help you to remain protected from the threat of mechanics lien.