Thursday, August 11, 2016

Get Everyone Paid: How Property Owners Can Prevent the Mechanic’s Lien

Mechanic's liens are a headache for all entities involved in a real estate project. Unpaid workers must contend not only with lost wages but the possibility of dealing with an equally irked homeowner, who is now legally obligated to pay for a service twice. Mechanic's liens are confusing affairs and homeowners who receive them often risk foreclosure on their homes if the case is not adequately handled.

Careful management of a construction project can reduce the likelihood of an unwanted lien. Preventing liens starts with ensuring payment for both the main contractor and the subcontractors, with ample documentation of the payments to prevent liens being wrongfully sent to the property owner.


Image source: multibriefs.com

One method is to write a series of checks, made out jointly to the general contractor and the particular subcontractor or supplier, which would only be cashed if the ultimate beneficiary endorses it. This ensures that the subcontractor or supplier gets paid. Another way is to have the contractors take a lien waiver from every person the contractor is responsible for paying. In many states, such a waiver is needed before a contractor can even receive additional payments.


Image source: fundinggates.com

Homeowners should also take the opportunity to ensure the credibility of the contractors they hire to prevent any underhanded actions that could leave them with a lien. Homeowners should hire only licensed contractors and check if their contractor has had a history of litigation.

Olympia Law, P.C. provides representation for a broad range of business, real estate, and personal injury cases. Visit this website to learn more about the practice.

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