Have you ever had experience with a construction lien? Let’s hope the answer is no.
For the sake of conversation, let’s say that you hired a general contractor to put an addition on your home. The general contractor rarely does everything involved with the addition. Usually, specialists in the electrical, plumbing,and HVAC systems do these tasks. And this process is called sub-contracting. The general contractor manages the project and hires these companies to do their portions of the job. Additional sub-contractors may be on the job, such as masons for the foundation, framing crews, roofers, sheet rock crews and more.
But if the general contractor does not pay these sub-contractors, what happens?
I’m not an attorney. Don’t use my opinions as legal advice. Instead, use this info as a guideline. And always check with your own legal adviser.
What Happens Next?
You hired a general contractor. The general contractor put the addition onto your home. At that time, you paid the general contractor in full for the job. However, the general contractor didn’t pay one (or maybe more) of the sub-contractors. The sub-contractor will try to collect from the general contractor. However, if the sub-contractor can’t collect payment from the general contractor, the sub-contractor will come after you, the homeowner. To do so, the sub-contractor will file a Construction Lien. This is how they try to legally collect from you, the homeowner.
But You Already Paid
Here’s how a construction lien has been explained to me.
If you’ve fully paid the general contractor, the sub-contractor has no claim against the homeowner. As a result, the sub-contractor must collect payment from the general contractor.
However, the sub-contractor has a valid construction lien against you if you haven’t paid in full.
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