What is a Subcontractor Lien?
A subcontractor lien is a legal remedy that subcontractors often use to get paid for construction or other labor they were hired to do by general contractors or other subcontractors when they did not receive partial or full payment. It’s called a mechanic’s lien in some legal systems. The owner of the property is affected because the lien is against the real estate he or she owns, and the monies must be paid to the subcontractor before the lien can be removed. Subcontractors often file a lien claim, or claim of lien, on the property if they are unable to resolve disputes with the general contractor. If the owner of the property pays the general contractor in full, prior to any notice of a lawsuit, then the subcontractor is often not successful in obtaining a lien.
There’s often a time limit on when subcontractors can file a lien. For example, some jurisdictions require the subcontractor to file a lien claim within 90 days of performing the last service or delivering final materials. Subcontractors are often denied liens due to failure to follow time requirements in statutes. They may also be required to send a timely notice to general contractors and subcontractors, owners and tenants, sometimes referred to as a notice of lien claim. Mechanic lien and subcontractor lien laws vary from one jurisdiction to the next, and each has its own notice and filing requirements.
A residential real estate owner’s primary legal defense to a subcontractor lien is often proof of full payment to the general contractor. A general contractor may be sued by the owner when a lien claim is brought against him or her so that the general contractor indemnifies the owner. The owner can obtain a final affidavit from the general contractor and use that as evidence in a lien claims lawsuit. An owner can also obtain a subcontractor lien waiver to further protect his rights and avoid a successful lien claim. Attorneys often advise owners to request a waiver and lien release before making interim and final payments.
Owners of real estate must often protect themselves against subcontractor liens whenever they hire general contractors to perform services. It’s important for owners to research reliable general contractors who are financially sound and who have minimal or no lawsuits from other owners. Whenever an owner is aware of a dispute between the general contractor and subcontractor, the owner can protect himself or herself by writing joint checks to both. This ensures that the subcontractor will also get paid or prevents the general contractor from cashing the check alone and not paying the subcontractor.
Can a general contractor notarize his subcontractor's lien waiver for payment on a pay application?
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