Preventing Home Liens by unpaid workers?
BilljustBill
| Posted in General Discussion on
What is it called that you add to a contract so that when the roofing company is fully paid, but don’t pay their Subs or Suppliers, to prevent those people from filing a lien on your home?
What would you add to the roofing contract that amounts to $42,000, to be sure you get what you pay for? Things like start and completion dates, penalty for non/late job completion, etc???
Thank you for your experience and help,
Bill
Replies
A lien release form.
The form should have a notarized signature of the sub-contractor or supplier on it.
They sign attesting to the fact they have been paid in full for all work or materials used on the job.
Standard stuff with commercial contracting.
No signature, no check.
I am not aware of any kind of contract language that requires the contractor to waive, right up front at contract time, not only his lien rights, but those of his suppliers and subcontractors.
Partial lien waivers can be obtained as a swap for each progress payment, and a final waiver of liens at the final payment. Your contractor can bring them to you as a prereq for getting his check.
Discuss this with an attorney, because things are different, state by state.
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"A stripe is just as real as a dadgummed flower."
Gene Davis 1920-1985
If your project has more than a few participants it is VERY hard to know who they all are, and protect yourself from liens completely. Example: your GC may pay the roofer, but did the roofer pay the supplier? If the supplier delivered to the job then they know where their materials went, and could lien you if not paid. To protect yourself fully you would have to have the supplier sign a lien waiver. Can you identify up front who ALL of the vendors and suppliers are going to be? It's difficult if not impossible for anything but a small job.
FWIW, you need a lien release signed by a principal in the company, not by the office manager or admin person.
To protect yourself you can ask that all subcontractors be listed in the contract and require that any change in that list be agreed to with a change order.
Then, when workers come onto your site, you can verify which company they are with. If they mention a company not on the list, don't let them work.
Then before you make a progress payment, get partial undcondition al waivers of liens from and full unconditional waivers of liens from suppliers and subcontractors.
That's the best way Jim, and you can also check off which ones provide insurance certificates at the same time. But it varies for different states. here in Va, a lien waiver from a gc automatically covers all subs and suppliers. At least that's what my attorney has told me more than once."Put your creed in your deed." Emerson
"When asked if you can do something, tell'em "Why certainly I can", then get busy and find a way to do it." T. Roosevelt
"covers all subs and suppliers. At least that's what my attorney has told me more than once."That's for commercial. Residential has different rules. In MI, the homeowner could get hit and have to pay twice but if they do things right, they can tap the MI lien fund.
Wonder why it would be different."Put your creed in your deed." Emerson
"When asked if you can do something, tell'em "Why certainly I can", then get busy and find a way to do it." T. Roosevelt
In New York, the Owner gets lien waivers from his Contractor, and is not required to tier down and get them from the Contractor's subcontractors and suppliers.
Here is a summary of what's what:
Owners: Request the prime contractor to sign.
Prime Contractors: Request all subs to sign who are receiving your payment. There is no need to get waivers from sub-subs or suppliers of a sub because the sub signing the form represents that such persons have/will be paid.
Subs: Request all lower tier subs you have a contract with and your material/equipment suppliers to sign.
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"A stripe is just as real as a dadgummed flower."
Gene Davis 1920-1985
The companion form to AIA G706A Release of Lien is the AIA G706 Contractor's Affidavit of Payment of Debts and Claims (relating to suppliers).
Jeff
I suspect most people here don't use AIA forms. That's too bad, cuz I happen to like G702 Application for Payment, which breaks things down nicely as long as you use the second sheet."Put your creed in your deed." Emerson
"When asked if you can do something, tell'em "Why certainly I can", then get busy and find a way to do it." T. Roosevelt
I forget the proper term but I currently have a $$$ contract with a contractor that forbids any liens on my project from his suppliers. All subs work thru him, not me.
How could your contract with the GC guarantee no liens by subs or suppliers? Did he post a bond for that purpose?
No, the contact is void (if we want) thus leaving him on the hook for all unpaid balances on our part to him. It's all in the language.
With retainage and there is plenty to satisfy any unpaids plus we just don't pay him any balance due. The big stuff is paid for up front and on site. Truthfully, I don't expect problems working with an upfront company under the same direction as of 1980. Low bid is not the best bid. Checking around helps greatly also.
In most states subs and suppliers can file liens on your property if they have not been paid. Your contract with the GC cannot waive their rights. There are procedures they may need to follow but in some places they don't have to do anything, they automatically have rights. If you are using retainage or holdbacks you may reduce your risk but often those are paid out before lien rights expire.
i don't know about liens,but i have made it a hobby in the last 6 months for having roofs put on. best way to get what you pay for,take a lawn chair up on the roof,and a good book.
i'm batting 50% on getting what i paid for and we just had another round of hail come thru,so here we go again.larry
if a man speaks in the forest,and there's not a woman to hear him,is he still wrong?