I had renovations performed by a contractor on my investment property. Although I paid the prime contractor, the contractor failed to pay his subcontractors. The subcontractors have placed a mechanic’s lien on my property. I am unable to sell the property until the lien is removed. What can I do?
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Answer: (1)
Sometimes dishonest prime
Sometimes dishonest prime contractors do fail to pay subcontractors. The property owner, however, is legally responsible for paying subcontractors even if the prime contractor was already paid. Subcontractors are entitled to file a mechanic’s lien to receive payment from the property owner. A state’s statutory law governs a mechanic’s lien. A mechanic’s lien, also known as a construction lien, allows a person that supplies labor or material on a person’s personal or real property to record a lien on a house for nonpayment of the services. Once the lien has been filed and the property owners fails to pay off the lien, the lien claimant is entitled to foreclose on the property.
To have the lien removed, a property owner can pay the subcontractors even though this is double payment for the same job. However, you may want to consult with an attorney to determine whether the lien is valid. A valid mechanic’s lien and a lien foreclosure action must be filed within a certain timeframe. If the subcontractors fail to meet these guidelines, the lien is invalid and the property owner may petition the court to remove the lien. Consult with legal counsel to determine what are the options in your situation.
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Posted by Jess Mcelrath on 18 Feb 2010