5 TIPS TO PREVENT A MECHANIC'S LIEN ON YOUR CONSTRUCTION PROJECT
Nov. 20, 2018
You have a lot to worry about overseeing a construction project. The last thing you need is to end up with a mechanic's lien on your property. A mechanic's lien is a claim against your property for an unpaid invoice to a contractor, material supplier, subcontractor, or laborer. A lien can happen if your general contractor fails to pay one of the other providers. Here are five tips to help you prevent a mechanic's lien.
Choosing the right contractor. Of course you want a contractor who will do the job well, but do you know how to do your research? You should always check your contractor's history and license. The California Contractors State License Board website can tell you if your contractor's license is current. You also want to check on all subcontractors your contractor plans to use. Get a list upfront. Make sure your contractor has a good reputation for paying subcontractors and suppliers.
Read the fine print. Make sure your contract identifies suppliers for materials, identifies the planned subcontractors and laborers, and includes a payment schedule for each phase of the work.
Making payments. Ensure that everyone gets paid on time by writing joint checks. First, you should make sure everyone completed their work as stated on the invoice. Then make the check out to both your contractor and the subcontractor or supplier. They will both have to endorse the check, thereby acknowledging payment.
Get your lien releases ahead of time. You should always request a conditional release and waiver from all parties before making any payments. Your contractor should then give you an unconditional release after you make payment. Make sure the proper individuals sign the release.
File your Notice of Completion. Once the work is finished, you may want to file your Notice of Completion with the county recorder right away. This notice cuts the time for a contractor to file a lien from 90 days to 60, and for a subcontractor, from 90 days to 30.
Before they even do the work requested, subcontractors and supplier must provide you with a Preliminary Notice that they could file a lien if they are not paid. General contractors and laborers do not have to provide them. Hang onto those notices so you can track payments to those providers in the future.
Mechanic's liens are a headache that no one wants to deal with, but hopefully these tips with help you prevent a mechanic's lien on your next project.