Working With Contractor? Get Lien Waivers From Subs

Q: I have a "materialman’s lien" on my home which I understand only stays for one year. It’s been two years, but it has not been removed.
 

Here’s what happened. We had concrete poured for a patio and we paid the business who we hired in full. They got the concrete from another business (which I didn't know they were going to do), then the person we hired did not pay for the concrete and left town. So the concrete company placed a lien on the property.

How do I get the lien removed? Do I have to sell my house to do it?

A: Your materials supplier (the concrete company) put a material lien on your property. The company you hired sub-contracted the job of providing the concrete to them. Hiring sub-contractors is fairly common, since most contractors can’t do a whole construction job themselves. If the contractor doesn’t pay the sub-contractor, the sub-contractor can file a lien against your home to make you pay up the debt (even though you’ve already paid it).

Typically, the materials supplier or sub-contractor has a certain period of time before the supplier or sub-contractor has to sue to get the money from you. If the materials supplier or sub-contractor doesn’t sue within the required time period, the lien filed against the property will remain on the title but won’t be valid.

What could you have done to prevent this? You could have required your contractor, sub-contractors and suppliers to sign a piece of paper known as a “lien waiver” before you agreed to pay them. The lien waiver waives the sub-contractors or suppliers right to place a lien against your property.

By requiring your contractor and subs to furnish you with lien waivers before you paid them, you would have avoided this sort of problem.

The next time you renovate, add on to your property, or build a house, be sure to have a stack of lien waivers handy. Tell your contractor, subs, and materials suppliers that they won’t be paid unless the lien waivers are signed.

As far as the current lien is concerned, if the time period for the validity of the lien has expired, you probably won’t need to do anything. Anybody that needs to see the title to your home will see that the lien has expired.

As an aside, when you take out a mortgage on your home, the lender files a lien against the property. Since the lender’s lien will and can last for thirty, forty or even fifty years, the lender will file a document to “release” its lien on the property when you pay the loan off.

But when it comes to construction liens, each state has specific rules that govern the length of time that a construction lien will be valid. If the state law states that the lien is good for one year, after that one year period the lien is no longer valid.

For more information, you may want to talk to a local attorney who specializes in construction litigation.

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