Q: My sister is building a house and it will be finished soon. She plans on closing in mid-August. Can you tell me the name of a release form from the supplier that she should use? Thanks a million.
A: I think the form you’re looking for is a lien waiver, which is a legal form that builders and suppliers fill out indicating that they have been paid in full from a job and that they waive any right against the property they worked on or delivered materials to.
The key thing is that you have to make sure you get the lien waiver from the supplier before you pay him or her, or in exchange for the check, so you have some protection from a disreputable tradesperson who will take your cash and then put a lien against your property anyway.
Typically, you may not need just one lien waiver, you need a whole bunch. But if you’re working with a builder, the contract with the builder should require the builder to deliver the property lien-free. That means the builder should be the one to get the lien waivers from all of the suppliers and sub-contractors–not your sister.
So, as a condition to any payment, or the final payment, to the builder, the builder will need to deliver a package to your sister to show that all subcontractors and all suppliers have been paid in full and have waived their lien rights against your sister’s property.
If your sister is buying a house from a builder, rather than having the house built on land that your sister owns, she should make sure to that she receives title insurance at the closing of the home that would cover her against any lien that could arise from the work done on the property by the builder. The title company would then have to work with the seller/builder to make sure they are satisfied with all of the documentation.
A real estate attorney will be able to shed more light on the subject. I hope your sister is using one. If not, she should probably invest in an hour or two of a good attorney’s time to go over her contract and make sure that the builder delivers the house he has promised.