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Hiring a Remodeling Contractor
Lien laws - Page 9


by Leon A. Frechette

The majority of states have laws regarding liens placed against property by contractors or suppliers (materialmen) and the posting of bonds by contractors for the protection of property owners. These laws are an attempt to protect homeowners and builders alike against some of the things that happen due to unethical or unfair conduct. However, there is no substitute for vigilance on everyone's part and you are encouraged to familiarize yourself with the laws and practices of your particular state and locality and/or to consult an attorney for advice.

Basically, a lien is a claim filed against your property for payment of a sum of money which the contractor or supplier maintains is due and owing from the property owner. If the sum is not paid, it may be foreclosed by legal action resulting in sale of the property to pay the amount owed. There are liens for labor and liens for materials.

A materialman's lien can be filed by a subcontractor who works for the general contractor or you and who supplies lumber, plumbing supplies, or other materials to the construction site. It is usually only filed if the materialman has not been paid. Typically, the materialman is required to give you a notice in advance that he intends to file a lien. If he doesn't file it within a specific period of time after delivery of the supplies or materials, the lien will be invalid.

Some suppliers automatically send a notice of intent to lien or a materialman's notice every time they deliver materials or supplies. You should not be alarmed if you get one, but you should look into it immediately and make sure the contractor pays the bill before an actual lien is filed.

In Washington State, the Notice Of Intent To Claim Lien and Materialmen's Notice are warnings that a lien will be filed after several days if the supplier has not been paid within the time allotted in the notice. You might elect to pay the supplier and deduct that amount from your payment to the contractor, but be sure the amount is correct. Often liens for improper amounts get filed due to error as well as nonpayment.

A labor lien does not necessarily require the same advance notice or warning as a materialman's lien. The general contractor or subcontractor might file one against your property without notice for the value of labor performed on the premises. Most often, they like to give you notice first.

Regardless of the type of lien (if any) that may be involved, make sure that before you make your final payment to the contractor you get him to sign a Release of Lien form or release of all liens, including subcontractors. Once you have that form in hand, you can make your final payment to the contractor if you are otherwise satisfied with the work. If the contractor never filed a lien, the form was of no use; but if a lien shows up later that you didn't know about, you can file the Release of Lien form and clear it up. A lien filed against your property will stay there forever unless it is released or removed by the court, and you may not be able to sell your property if one was filed and not released. This can be frustrating if the contractor is no longer around for any reason.

An improperly filed lien may give you a legal cause of action against the contractor for "slander of title," but that is a matter to discuss with an attorney if it arises.

Laws regarding registration and bonding of contractors are the counterpart of the lien laws. While lien laws protect the contractor, registration and bonding laws protect the property owner. In many states a contractor or subcontractor must register the name, the individuals involved in owning the business, and file a bond to protect the public before the contractor may begin business. Failure to do so can be a criminal offense as well as carry civil penalties and in some states a contractor may not collect an unpaid bill if he is not registered. If the contractor does a poor job or doesn't finish the work, the homeowner can file a claim against the bond as well as file a court action to resolve the dispute. The homeowner should always obtain the registration number and bond number in those states where it is required, contact the appropriate agency to verify the validity of each, and learn if other homeowners have made claims against the contractor that remained unresolved.

Finally, some states also have warranty laws and federally funded construction may also be subject to an existing or new warranty. Typical of these laws is a one-year period after completion for which the contractor must give a warranty against defects in workmanship. Your contract should also address this valuable protection.

As is true of the entire remodeling and construction process, knowledge is your best protection. If you are prepared, both the law and your care will protect you, and your experience will be a rewarding one, personally and structurally.

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I have developed a series of legal business forms to help consumers and contractors through the bidding and contractual process. The Contractors Helping Hands Packet includes Itemized Bid Sheets along with a Contract/Agreement Sheet and an Extra Work and/or Change Order Sheet. To order your set of forms, click on purchase button to the left!

Copyright © 2006 LAF/C.R.S., Inc. All rights reserved. The previous article, in whole or in part, appeared
on the market in 1988 in The Helping Hands Guide To Hiring A Remodeling Contractor.

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