A subcontractor can file a mechanic's lien against the property if he doesn't get paid.
Contractors and subcontractors can file a mechanic's lien on a homeowner's property if they don't get paid for the work they've completed. A homeowner who has a mechanic's lien on his property can face a number of legal and financial consequences. In certain cases, a homeowner may find himself paying twice for the subcontractor's work if the general contractor fails to pay the subcontractor.
Identification
A mechanic's lien is a security interest in a property for the benefit of a contractor or a subcontractor who has provided work or materials to improve the property. If unpaid, the lien allows a foreclosure action and a sale of the property to cover the outstanding contractor invoices. A general contractor, subcontractors and suppliers can file a lien on a property. This includes carpenters, plumbers, painters, electricians, general laborers, engineers, architects and land surveyors.
Solution
If a lien has been filed against your property, the first step is to determine if it's a valid lien. Check if the work has been completed according to the contract. Also, lien claims are often invalid because the subcontractor failed to meet the required time lines for lien filing. An attorney can help you to determine the validity of a lien claim. Both valid and invalid liens remain on the property until removed and prevent you from selling or refinancing your property. You can mail a request to the subcontractor to release the invalid lien. Keep copies of the documents and letters on file to present in court if you need to take this step to have the invalid lien removed.
The Legal Aspect
A homeowner pays the general contractor, who is responsible for overseeing the work process and paying the subcontractors. A subcontractor can file a lien against the property if he doesn't receive payment for his work. A homeowner is legally responsible for paying the subcontractor, even if he has already paid the general contractor. If the homeowner doesn't pay or can't afford to pay, the property may go into foreclosure and be sold at an auction. The sheriff disburses the payment to the subcontractor from the sale proceeds.
A subcontractor or supplier must provide the homeowner with a 20-day preliminary notice that states he'll be providing work or materials to improve the property and has a right to file a mechanic's lien if he doesn't receive a payment.
Prevention
To avoid paying twice for the same work or having a mechanic's lien filed against the property, choose your general contractor and subcontractors carefully. You can request references from previous projects. Hire only licensed contractors and subcontractors. You can check a license status at the Contractors State License Board (see Resources). Describe a payment schedule in the contract. Don't pay the full amount to the general contractor at once. Make payments in stages, as work is being completed. As you make a payment, obtain an unconditional release and waiver of lien from each subcontractor or the supplier.
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