Lien!

[Kureshi]

What is the name of your state (only U.S. law)? California

Hi, I live in Anaheim, CA. I have a question about lien on Property. I hired a contractor last month and he finished the job on the 10/12/2011 and I have paid in full on that day. But my prime contractor did not pay his sub contractors and now these companies are going to put the lien against my house. What are my rights and what can I do to resolve these issues. I have talked to my contractor and he has been saying that I will take care of that, dont worry. And it has been more than 10 days. He did not pay these companies. I just found out yesterday that he wrote the check to these companies from closed accounts. Since I have paid in full and I have the contract he gave me and invoice he emailed me on 10/12/2011. What can I do at this point. Please let me know, I would really appreciate it. Thanks

 

[justalayman]

Does the contractor have a performance bond? If so, contact the bonding company and seek to make a claim against the bond.

 

[NC Aggie]

As justalayman suggested, IF the contractor has surety bonding (more specifically payment/labor & material bond), then that may be the best route to take at this point. However that's a big IF because most often home repair/improvement contractors will only carry the required bonding insurance and in many jurisdictions, they're not required to carry any at all. Also, there is a very distinct difference between a performance bond and payment bond (labor & material), though many bonding companies will bundle them together so if the contractor has any type of bonding insurance, it's a good chance he has both. However, if the contractor doesn't have bond insurance to cover unpaid labor, your best option at this point may be to pay the subs (if you're in the financial position to) and seek restitution from the contractor. What covers owners from these types of situations is generally holding back full payment until you have verification that all subs & materials have been paid or waiting until the grace period for filing a lien expires before issuing full payment to the contractor.

 

[Kureshi]

Lien

As you said, it means I will pay twice, cus I have already full paid to the prime contractor and now I will have to pay to subs? How would I recover this money from prime contractor? I dont think he will pay me, if he is not willing to pay them. Also he wrote the checks to these companies from Closed Accounts, Dont you think it is a fraud and now one of the company wanna team up with me and sue this contractor.
One more question, If the Lien expires and you dont response, what problem you may face after it expires? BTW, when does it expire? What can I do to cover my self and resolve all these issues. Thanks for your help.

 

[NC Aggie]

As you said, it means I will pay twice, cus I have already full paid to the prime contractor and now I will have to pay to subs?

Unfortunately this is a consequence of you failing to protect yourself. Again, I know hindsight is 50/50 but you should have never paid this contractor in full without verfification that the subs and materials were paid first.

How would I recover this money from prime contractor? I dont think he will pay me, if he is not willing to pay them. Also he wrote the checks to these companies from Closed Accounts, Dont you think it is a fraud and now one of the company wanna team up with me and sue this contractor. ?

Well you would seek to recover this money from the contractor by one of two means, you threaten suit or you actually file suit. Did you check this contractor's references prior to hiring him and if he's at all reputable, he's going to attempt to right this wrong. Unfortunately, there are a lot of contractors who are not reputable

One more question, If the Lien expires and you dont response, what problem you may face after it expires? BTW, when does it expire? What can I do to cover my self and resolve all these issues. Thanks for your help.

Well you should not even consider what happens after the lien expires because the options for the subs will likely be suit or foreclosure depending on the laws of your state. So this is a very serious matter. But typically the person who files the lien has about 90 days to file suit to foreclose on the lien. If they chose not to or fail to file the appropriate suit within this given time, then you're free and clear. However, the odds of them not filing suit to foreclose on a valid lien is too risky to even consider.

 

[Kureshi]

Thank you so much for your advice...