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Builder went belly up, now I'm left with the liens he didn't pay!

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pbabuder

Junior Member
What is the name of your state? Ohio

My husband and I invested in what we thought was a great venture in April 2005. We contracted Westwind homes to build a spec home that when finished we could sell it to someone who couldn’t afford the construction portion. In December of 2006 the builder informed us he was having financial problems and was not using the draw money to pay the contractors on the property. We immediately changed the lock box and began finding people to finish the home. He gave us some invoices, which we paid, but were unaware of what was else was out there.


Long story short, we have been inundated with legal notices of liens, and most of the liens recorded are for work done last summer (2005). It is our understanding that contractors have 60 days from completed work to place liens on property. We are not in any way trying to skip our responsibilities, and understand their need for payment, but legally I don’t think they are correct. No one was in that house (at the time we took over in December it was 88% complete) without our authorization as we had changed the lock box.



Some of the liens said they were there when they couldn’t have been and I feel thwarted and cheated, and broke and want to know if there are some steps we can take to get these liens released. I have made copies of all the paperwork I have (invoices where available, and the legal paperwork we received, as well as cancelled checks for the portion of the liens we had already paid in December). We can’t possible sell this home until we clear these liens and the house isn’t going to sell anywhere close to what is needed. My husband became unemployed in Oct of 2005 and just started a new job this past July, so needless to say, doing this on my income has been unsurmountable.

I apologize for the lengthy email, but I am at a loss. We had a little to spare last year when we closed hoping to profit from it and now after nearly 9 months of backpedaling, running ourselves dry, we don’t know what to do. Can you help? Is their false information legal? I called an attorney and he said he tells his contractors to just show up at the property with a broom so you can say you were there! I’m mortified and would appreciate any help you can provide.


Thank you. :(What is the name of your state?
 
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John Se

Member
did you sign contracts with the subs?

the builders liens are not your liens, see your attorney, placing a lien and perfecting a lien are two different things.
 

HappyHusband

Senior Member
John Se said:
the builders liens are not your liens, see your attorney, placing a lien and perfecting a lien are two different things.
The liens attach to the property, regardless of who signed the contracts.

You need to get all financial records for the construction of this house from Westwind. Some of the liens may be bogus, but from the admission of the contractor, alot of people weren't paid for work performed.

http://onlinedocs.andersonpublishing.com/oh/lpExt.dll?f=templates&fn=main-h.htm&cp=PORC
 
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pbabuder

Junior Member
The builder won't reply to any attempts to reach him. he filed bankruptcy for the company and personal uses.
 

HappyHusband

Senior Member
pbabuder said:
The builder won't reply to any attempts to reach him. he filed bankruptcy for the company and personal uses.
Well, that sucks.

He is sitting free and clear and you're left responsible for all the liens against your property, which should have been paid with the monies that he embezzled.
It would be nice if he could give you all the financials for the house, showing which people were paid and for what.

I would recommend a visit to a local attorney.
 

pbabuder

Junior Member
There is 12% left to draw from the construction loan (which I can't pull because of all the liens. IF the house sells for what it's listed, I will have to pay over $30K to clear them all. ) not to mention the money a paid in interest payments on the loan, and contractors to finish it. Nice huh?
 

nextwife

Senior Member
So I'm guessing that you DIDN'T have a title company updating the title search, inspecting to make certain that funds dispursed were for improvements onsite and installed, and disbursing the construction draws in exchange for lien waivers from the subs and material suppliers?
 

pbabuder

Junior Member
At the time of the construction in his hands, we did do lien endorsements and inspection updates. No liens were placed on the property until after he made public his issues, then they went on and I haven't pulled a draw since.
 

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