If you are getting ready to move into a brand new house your contractor built for you and discover there are mechanic's liens on your home, you may need to hire a real estate attorney for help. Before you do this, you could talk to your contractor about this to find out why this happened. If you cannot resolve the issue, a lawyer's help may come in handy. Here are three things to know about mechanic's liens on homes.
What Is A Mechanic's Lien?
A mechanic's lien is a legal tool used most commonly by suppliers and subcontractors, and it is a legal claim to the house. When a lien is placed on your property, the contractor that does this must file a motion with the local court. This will create a judgement against your property, and you will have to fight it or pay it.
A mechanic's lien occurs frequently when a contractor fails to pay a supplier or subcontractor for work. For example, if you paid a contractor $200,000 to build your house, the contractor would use this money to pay for all the supplies and labor required for the house. If the contractor does this, everything will be fine.
If the contractor fails to pay certain bills for your house, the companies he owes can come after you, even though you have paid everything you owe. This may not seem fair, but it is the only way a subcontractor or supplier might be able to retrieve the money that is owed.
If you fail to pay your contractor the entire amount you owe, he can place a lien on your property too.
How Can You Avoid This?
If there are already liens on your house, you will have to fight them, but there is a way to prevent this from happening. When each subcontractor completes a task on your house, you can ask your general contractor for a lien waiver. This is a form that will require the signature of your general contractor and the supplier or subcontractor involved with the task.
When you ask for lien waivers, those that signed the forms cannot come after you for money. If your contractor does not want to sign the forms, you may want to withhold payment for the services until he agrees to.
How Can You Fight These?
If you want to fight a mechanic's lien on your house, your real estate attorney can help you. The first step will be proving that you paid the amount you were supposed to. You can prove this by showing your attorney copies of invoices and bills, as well as canceled checks you wrote for the bills. If there is proof these were paid, the court may release the liens.
In cases like this, the subcontractors or suppliers that placed the liens on your house will have to go after the contractor if the contractor still owes them money. The good news is that they will not be able to come after you if you can get the liens dropped.
If you do not settle these issues or pay the balances owed, you will eventually have to. This typically only happens if you decide to sell your property. When you try to sell your home, the title search of the home will reveal the outstanding liens. For your sale to go through, you will have to pay the balances owed.
Building a new house is a big event in life, and things can go wrong during it. You can protect yourself by hiring a real estate attorney like Jack W Hanemann, P.S. to assist you during the process, or you can hire one if you run into problems such as this.