An Owner can always “Bond off” a lien—————-
If you are the owner of the property, you may not have been aware that subcontractors were not being paid, if lien waivers were not being submitted or were fraudulently executed by the general contractor. Being served with a Notice of Claim of Lien on Funds and/or a Claim of Lien on Real Property can literally stop work on a project. Many construction deeds of trust and similar bank financing require owners to keep the property free from liens or other claims on title.
If you are the Owner faced with a Lien on your property, what can you do?
Rule #1: Never pay “over” a lien. Even if you owe the contractor $80,000, and the subcontractor’s lien is for $5,000, do not think you can set aside $5,000 for the subcontractor (to be worked out later) and pay the contractor $75,000.
Rule #2: Consider your options carefully:
Option 1: Finish the project without any additional payment to the contractor. Pay for a replacement contractor to finish, offset those payments, pay lien claimants from remaining funds.
Option 2: Issue a joint check payable to the lien claimant and the contractor.
Option 3: Bond off the lien upon funds (N.C.Gen. Stat. 44A-20)
To bond off the lien, you issue either a bond (equal to 1 ¼ ) or a cash payment (equal to the full lien value) to the Clerk of Court, which is held pending resolution of the dispute.
Rule #3: If the project is upside down, consider negotiating directly with a subcontractor for a reduced payment in exchange for a lien cancellation filed by the subcontractor.
Rule #4: Whatever you do, do it after consultation with your construction law attorney. Liens cannot be ignored, and properly handling them can make or break your project.
Experience working with a lien on your property? How did you handle the situation? Also, as always, if you have questions or comments about this or any other post, drop me a line.
Note: While I welcome comments from all, be aware that I do not currently accept homeowner (residential) clients.
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Photo “James bond – quantum of solace” by Julien Haler via Flickr/Creative Commons license.
Sorry, sent off my message before completion,
Vivian Edwards
Vivian:
Sorry to hear of your issues. I would not worry too much about them filing a lien right now, as you can always dispute that if they do. You have a legitimate issue that you want to be resolved, and then they will be paid. If they do file a lien, they also will need to file a lawsuit to perfect the lien, all within a set period of time. Many folks file a lien but never perfect– in that event, the lien is invalid. If they perfect, you *must* answer within the set time for answering. You’ll know they’ve perfected if you are served with the lawsuit (by a Sheriff, by certified mail, or by Fed Ex or similar carrier, or by personal delivery). As far as the warranty being invalid, I cannot comment without seeing the warranty but unlikely a legitimate warranty would be invalidated for a temporary delay in the funds. Best of luck to you.
Hi Melissa,
On June 12,2018 I had a new A/C unit installed. Have contract for $5666.00 which is fine. It pas paid in 2 installments by VISA. The unit has stopped working 3 Times in less than 2 weeks. Have had numerous technicians here, finally was told it was drainage problem and it was corrected on June 23. I called VISA and told them to dispute the payment so I could see if the unit is really working. They would do so for 90 days. I made a courtesy call to the A/C company and told them the payment would be held up for 90 days. They told me that invalidates the A/C warranty and they will file a lean tomorrow.
What should I do? I have no problem paying, but want to make sure the unit works.
Thank you,
Vivan
Hi Melissa, I came across you site and it gave me a ray of hope I’m building a house in nc the house 78% complete, and builder goes out of business, not long after I discover the builder didn’t pay some of the subs for there work and materials supplied. now there are liens filed on my property. I spoke with my bank who supplied the construction loan they said the builder was pay in full. how do I handle the liens?
Jeffrey:
Sorry to hear of your problems. Did the contractors file lawsuits to perfect their liens? If not, and the time has expired, then the liens are no longer valid. Liens have to be perfected within 180 days of the last date of work. If they have filed to perfect with lawsuits, then you’ll need to answer the lawsuit with your own court filing to show that you don’t owe the money.
Good morning Melissa. I am a GC (in NC) that requested a company to supply cabinets and granite tops on a flip home. My VERBAL request was for doing the project for $8000. After the subcontractor visited the job site and evaluated the project they phoned me and said they would need to be at more $9000 than the $8000 I requested. I verbally approved it and with many issues fulfilling and completing the project, even sending cabinets back and having to purchase cabinets through another vendor I was billed roughly $3500 above the $9000. Neither party has any documentation supporting our agreement as we had done business in the past without financial issues, though other issues of fulfilling materials per agreement did. They retained legal counsel and filed a lien against the property. I would like to dispute. Thoughts? Thank you for your time. Kindest Regards, NCGC
Wes:
You can certainly dispute the claim. Question, though: have they actually filed suit to perfect the lien? If not, the lien on the property will expire of its own accord. (I’m assuming you are the owner of the property? If not, they may have also filed a notice of lien on funds, which raises other issues). If they file the lawsuit, you should answer within the appropriate time (30 days, but you can get 30 more by following certain steps). You can raise the defense that you never agreed to the amount, that you had to return the cabinets, they defaulted, etc. Let me know if you get sued, because it is important to timely respond.
This website info is awesome. Thank you so much for helping everyone! Here is my situation. We hired a reputable recommended GC to build our detached garage and back porch. Permit single family residence 9/15/16. contract for 52,000. Started Sept.20,2016 with clearing of the land (1 day) then over the next months things were built with quality construction, mainly due to the fact that I was here everyday and the crews were good. Not much supervision on GC part but I was able to supervise. We have paid in full to contractor on Dec.9,2016. We also paid electrician separately per agreement with contractor/electrician on Dec 19 when his work was completed. (We still need a few more things to pass inspection and the crew has come back twice and due again on Monday 1/16/17 to change out handrails and box in plumbing. The materials for this work were delivered yesterday so I trust it will be done to pass inspection and get our CO.) Around Dec 23 we contacted the original concrete guy and the original grader/dirt guy to get quotes on doing a driveway for us. Guess what! They told us they were never paid. And we found out the framer was not paid either. This is true, the GC told us he was having money troubles/divorce etc.and he was sorry. So over the last 3 weeks we have been getting phone calls and visits from concrete guy and grader guy. Everyday we call the GC and say pay! We have said to subs repeated times, we have paid GC for your work and all work. Then we get the verbal lien threat. We said we were not going to double pay but were very subdued and professional about it. We also said if that’s what you have to do, then move ahead. Today I noticed the concrete guy take information from permit. From your site I have learned that a lien can be put on house and then must be perfected 120/180. But can it be perfected if there is no more money owed GC? Can you tell me what happens after they perfect the lien? Do we take our timeline/ receipts to court with an attorney? Is the contractor named in the lien and what is his responsibility? Basically the project is finished. It seems that subs should be able to go after the GC instead of us. Would you advise for them spend their money going after GC? We feel badly that they have not been paid but there is also a feeling of we are being harassed and they are picking on the wrong person. Thank you!
Beje:
You are in a hard situation, but the good news is the law is on your side. If you have documentation to show that you paid all the money under the contract, their lien/lawsuit will fail. It may take some legal wrangling, which is unfortunate. But they *can* file the lawsuit to perfect (if done timely), and then you must respond timely (30 days from lawsuit; 60 if you follow certain steps). Your defense will be that you paid all that was owed. Also, if the GC signed a lien waiver, he may have waived the lien rights of his subcontractors, so look through your paperwork on that as well. Ultimately, the lawsuit would include both you as owner AND the g.c. as the person they contracted with. You will hopefully get out on legal motions based on the fact that all was paid for the project, but you do need to take the lawsuit (if it comes) seriously. Hope that helps!
Melissa, I received a written estimate from a local roofing company to complete some repairs as well as a “general inspection” and caulking of the roof. The estimator told me that the work would take approximately two hours. When the actual work was completed the next week, it was done in 20 minutes. I called the company immediately and asked them for a reduction in fees and they gave me $100 off. They also sent the crew back to the house (they were still in my driveway) to “recheck” the repairs for another 30 minutes. I was very upset. I told the person at the office that I would pay the reduced amount but was very unhappy.
I never received a bill for the reduced or any amount. Rather, I received a notice of lien a few days later for the full amount.
I have read your website and am prepared to pay the full amount due to the court to “bond off” the lien. But what is the next step if I wish to contest this– either the full amount due or the $100 that they agreed over the phone to give me off. File a lawsuit in small claims court? The total amount at issue is under $1000. Also, may I be subject to attorney fees? The last thing I want to do is subject myself to thousands in attorney fees if I lose this.
Sorry to hear of your woes. First thing first– have they filed to “perfect” the lien? They have to do so within 180 days of the last day of work. Otherwise, the lien is invalid and you don’t need to do anything. (They still could sue under a breach of contract action, but no lien rights would attach). So don’t borrow trouble until they perfect the lien– you’ll know because you’ll get papers by certified mail (green card; requires your signature), Fed Ex/UPS (again, with signature), or by a sheriff handing you (or someone who lives with you and is 18+) papers personally. At that point, you can counterclaim for unfair and deceptive trade practices or other causes of action. That is also the point when you’ll need to bond off the lien; or, you can simply let the lien “sit” on your property while you litigate the matter. If you don’t need to refinance anytime soon or sell the property, that may be a perfectly fine option as well. Just make sure you answer/respond to the lawsuit.
Ultimately, at the end of the day, the prevailing party is entitled to attorney fees, in the court’s discretion. The court will look at refusal to settle or be reasonable, valid defenses, etc in making its determination.
Hope that helps.
Hi Melissa,
I contracted with a general contractor to build my house in North Carolina. The house is near completion. The contractor is declaring bankruptcy and has indicated he will not be paying some of his subcontractors. Some of the subcontractors have already contacted me to complain. The contractor was paid from both private funds and a bank construction loan. The bank kept records of all payments. The contractor has requested the final loan payment, but has not completed some of the work. At what point do I pay him the balance of the loan ( do I wait until the work is completed?) and can the sub contractors place a lien against the house? Also, we did have some overages, but the contract states that change orders were required and the contractor never completed a change order. What about our two year home warranty? is there any way to get that enforced?
Carol:
Has the GC actually filed bankruptcy, or just threatened to? If he has filed, then you should fill out a proof of claim with the bankruptcy court to get a proper share of anything you are entitled to receive. Definitely do not make the final payment until all work is completed to your satisfaction. Subs can place liens, but then they must perfect them. And at the end of the day, if you don’t owe any more money to the GC, then the subs’ lien against your property and on the funds is void. As far as overages, if you agreed to them, you are still responsible to pay for them (at a reasonable rate). If the GC goes bankrupt, you may have trouble making any warranty claims, although if subs did most of the work, they may still warranty their portion of the work.
We own a house in NC that we rent out. In January a national company installed new flooring in our whole house. In order for the job to be installed we had to pay ahead of time. We paid over the phone with a pre paid credit card that we had at the time. The money was taken from our account and the flooring installed. Everything fine we even have notice of completion from installer with indication of payment we also received an approval code. Now they are claiming we never paid them and that they will file a lean or our home. We no longer have the prepaid card or anyway to access the account to show payment but we do have the approval code and notice of completion and the fact that they installed (when they dont install without full payment first) Help should I be worried?
I am assuming that this is a glitch on their part, and the fact that they insist on prepayment and you prepaid should be enough to avoid them getting a judgment against you. However, if it is a national company, it is likely that they may sue and hope you don’t fight it. If you show up / answer timely, and present your information, you can likely prevail. But pay attention to all deadlines. Good luck.
I live in Rowan County NC, I had a contractor come to my property to do grading for a horse arena. He took regular money draws from us and gave us receipts for his time and for equipment/fuel etc. Last worked on the property 11/17/15 (i have texts regarding the dates). We did not have a written contract with him, but hired him to do the job after he did another job for us that we were satisfied with. Last month we received a bill from the man who our contractor apparently rented equipment from (we were told by our contractor that this was “his” equipment). Apparently this “subcontractor” was never paid dime one for anything. Also there was apparently no contract, deposit for equipment etc paid to the subcontractor either.
This “subcontractor initially sent a bill for 3500, and told us that we should get our contractor to pay him, even though they are friends, and knew each other. The most recent letter was for 2500, and calling them the indicated they would drop it to 2000. We still owe the contractor 1250 for the job, which has not been completed.
Lots of information, but hoping you can help a worried owner.
Hi Steve! If you have not yet gotten notice of a claim of lien, then they are *likely* out of time for filing. It is possible though unlikely that the equipment guy filed a notice with the court but not with you, since by my calculations the 120 days would have run by March 16th. Also, there is nothing to stop someone from claiming a later date for last work, but of course if you have proof of the last date you would prevail on that.
You don’t say how much more needs to be done to complete the job, or whether or not you want the contractor to do that work, nor whether the contractor is demanding the last payment. I’d need to know more about those issues to give further thoughts; however, the fact that the 120 days has passed is a good sign. Hope that helps!
Thank you so much for the fast response.
the arena area is approx 75% done, still not draining water away, and looks more like a lake. The original contractor wouldn’t be able to finish on his own, because it is unlikely the equipment owner would be dumb enough to loan the equipment to him. He has not sent a final bill. The man who is trying to bill us told me on the phone that his “friend” our contractor was not reliable, and often didn’t pay his bills. I asked why he loaned his equipment to him given this, he indicated he wanted to help him out. Now that it went bad, he wants me to pay for his bad judgement. My records indicate the last time work was done on the property was 11/17, but I contacted him on 12/3 to inquire when he would be able to finish the job, and never heard back. The machinery disappeared shortly afterwards. The owner of the equipment was on the property sometime in the middle of the job, was driving a dump truck, and was introduced as my contractors friend, that he was helping out. Given that he hadn’t been paid anything, I asked him when I spoke to him on the phone why he didn’t indicate this when I met him, and he didn’t have a response. I would assume that if he had indicated that the equipment was his, and he hadn’t been paid, that we could have come to an agreement at that time.
Thank you for your help
Hello. An electrical contractor made a repair on my building with NO written contract between us. The contractor told me verbally the cost should be $750. They took a long time to send me a bill, and when it came it was for $2,000.-
Because there was NO written contract I would like to know if he can successfully lien my property for the $2,000. amount ??
Thanks,
Susan
Susan:
Thanks for your comment. Anyone can assert a lien on a property, but your question really is– will be successful in doing so? Having an oral contract is tough because it is a he said/she said situation. However, if you can prove (they believe you and not him) that you only agreed to $750, then the lien would be invalidated. Not having a written contract doesn’t matter with respect to filing a lien. However, many contractors file the notice of lien and never actually follow it up with a lawsuit. Also, you state that there was a long time before you got the bill– if he did the work too long ago, he wouldn’t be able to file a lien (short of lying about the completion date in the lien notice). Hope that helps.
I had a lien( Claim of Lien – Individual, 44A-12) placed on my home by a vendor for an outstanding balance for work done on an audio and video system. This company had been subcontracted originally by my builder to install the security and home integration system during the re-build of my home earlier destroyed by fire. Based on my builder’s recommendation and before the security and home integration system was fully vetted out, I elected to hire this small company to place the sound and video system in my home as well. I experienced a slew of problems with the security and home integration systems that ultimately had to be replaced or reconfigured by another vendor. In realizing the shoddy work and unethical business practices of this individual, I elected to stop the audio/video work in its tracks. I held back the remaining balance of approx. $3800 until the system I paid for was installed. Shortly thereafter in a meeting in my home with this person and my builder, this person threatened me physically and he was immediately fired. After a third party review of all of the systems, it was found that equipment and services promised and listed on estimates and invoices were not actually installed or provided, but replaced with inferior products and substandard service.
The lien was placed on Feb 17, 2015 and I have heard nothing since. I keep reading about “perfecting” a lien, but it is unclear to me what that is all about. Also, my brother is an attorney in NY and he indicated that the lien document, at least in that jurisdiction, has to be absolutely accurate and can be voided if information is inaccurate or unsubstantiated. Is this the case in this State?
Incidentally, after some research I found no record of this person having a license to install residential alarms in NC. I filed the appropriate complaint, the State investigated and ultimately found him in violation of the law in NC. The authorities issued a cease and desist order and have been trying to locate him in order to charge him. He is nowhere to be found. I realize the alarm issue is a separate issue, but I wanted to give you a sense of the type of person I am dealing with
I have gone to the courthouse a few times and asked what I need to do to vacate this lien. They have not been helpful at all. I can not seem to find any information on line regarding what the subject of a lien can do to have it released. Can you help? Thank you.
Pete:
Sorry for the late reply- this got into my spam filter.
If a person puts a lien on, but then never files a lawsuit to “perfect”, then the lien becomes void as a matter of law. So, if you were to get a loan on your property, they’d do a title search, see the claim of lien, and see that it has been more than 180 days and they’ve not filed a lawsuit. At which point, they’d approve the title on your property as it truly is as if the lien notice never existed. Hope that helps!
Thank you so much for taking the time to follow up with me. FYI – I prompted the State to investigate the vendor and he and his company are now facing criminal charges.
Sure thing!
I have a problem, Just built a new home, took out the construction loan in my name and after closing my builder states we owe over 30,000$ in overages and is threatening a lien. We had no idea we were going over budget, as we transferred the construction loan $$ to the builders account and they paid the bills. Our contract states we would get written notices along the way of anything we were going to be over on for the following month, which we never once received. HELP we feel we owe nothing.
Kelsey:
I cannot give legal advise over the internet, but if the builder was required to follow written change order requirements and failed to do so, you may have a defense to any claim for overages. It is a little more complicated then that, but rest assured that if the contractor cannot substantiate the overages he won’t ultimately prevail. Often times contractors threaten to file liens but never follow through, or they file a lien but do not perfect it with a lawsuit. I’d wait to see what, if anything, he actually does. If he files a lien, give me a call and we can talk more about your individual situation.
Hi Melissa, I have an interesting one somewhat related to your comment….where my GC filed a lien and did not perfect it(he can’t he’s got no ground to stand on..i have lien waivers etc) but imagine my dismay where he refiled a new lien (the last one died a natural death in december) and he just mailed me a new copy of a lien he just filed again we are way outside the 120 days of last furnishing….how would a district judge allow this filing(not that i am looking there is no mention of the date of last furnishing on the actual lien itself…..is this as easy as me going to the county and asking them to vacate on the premise it’s outside of 120 days?
If there is no mention of dates of last furnishing, then it fails the criteria to even BE a valid lien. You could file a motion to dismiss, or simply sit back again. Unless you are needing to sell/refinance, wait to see if he tries to perfect this “lien” at which point you can file the motion to dismiss then.
Dear Melissa,
I paid the builder for a new home. I had several punch list items done after settlement and these punch list vendors have not been paid by my builder. One vendor has sent a bill to me for the work performed and they are thinking about putting a lien on my house if I do not pay. What sould I do?
Dave
Right now, nothing. Many people threaten liens but never file them. Others file the lien, but never perfect it with a lawsuit, in which case, it is void as if it never existed. But, you could tell the vendor that you paid all you owe to the builder, so there is no more funds to be paid out to the vendor. If you can prove this, ultimately the lien against your property would fail, but you do need to be able to prove it. Don’t ignore any court filings, and make sure you answer any lawsuit/Complaint timely. Hope that helps.
Dear Melissa,
I had my stucco siding repaired about 18 months ago by a specialty contractor due to moisture penetrating and compromising an exterior wall. Just a few weeks prior to that, I had a new roof installed. I am now selling the home and there were two issues discovered, one caused by a small gap in the flashing where water was running down an wall. Another hole was discovered in the flashing that the siding guy should have replaced when he redid the stucco. The roofer said there were two parts to the damage – his part and the other, which he thought the siding guy should own. The roofer spoke with the siding contractor and communicated they would split the costs of repairs.
I got a bill from the siding guy, for just under $2K, to fix and repair the same portion of wall he repaired 18 months ago. His crew was the last crew that worked on the house (between roofing and siding). He never told me I would have to pay for this repair and had explicitly told me he would take care of it. He and the roofer have about the same dollar amount into separate repairs. He told me if i don’t pay for this work, he’ll put a lien on my property. The roofer who admitted to owning some of the problem said they both agreed to split the cost – i have nothing in writing from either of them, but i also will get no bill from the roofing company. I’m asking for advice. This house is now on the market, and i hope to sell it soon. Your advice is welcome. Thank you, Mike
Mike:
First of all, many people who threaten liens do not actually file them. If he does, you can pay the money into the court to “bond off” the lien (enabling you to sell the house free and clear), and force him to prove that you agreed to pay for repair work. He likely will not be able to do so, at which point you can get your money back from the court.
Thank you for the great resource you have!
I had security cameras installed by XXX company in Raleigh. First they put the wrong cables into the wall. They offered to replace those cables for $1,700…The wrong cable caused me that I had to buy 5X more expensive cameras. When they installed it, they thought that the system was not working. They came and took the cameras down. I spent about $350 to return the system to manufacturer. Manufacturer stated that cameras were working fine, they saw the recording of my house. They reinstalled the cameras and claimed that it did not work. I insisted to connect cameras to a high definition TV and VOILA there was high def images coming from all the cameras.
Now, they claimed that I have to pay them for their screw up (extra $220.00), that I refused. They threaten a lien on my house and in the lien claim they state that the cameras WERE BROKEN (lying).
What are my options as I am mad as I can be.
Thank you for your advice.
Paul Retfalvi, MD
Paul:
I’m sorry to hear of your issues. If the contractor places a lien, they still would have to perfect the lien by filing a lawsuit, and many contractors never take that step. So it is a bit of wait and see in that regard. For $220, I doubt they will seriously file a lien, but if they do, you could countersue for your damages from them.
Melissa,
Last November we had our roof replaced. We received a quote for the roof, but the rest of the communications were in text messages. We paid the roofer half up front and the other half once the work was completed. We never received a final invoice or lien waivers and now the dumpster sub contractor has threatened to place a lien on our property because he has not been paid. I have the quote, check images and text where the roofer asked for final payment. Does the sub have a claim against us? Should I just pay him directly and avoid the lien?
Thanks!
Hi Tim. It is impossible to give specific advise without more information. However, if you have paid the full amount owed under your contract with the roofer, and can demonstrate as much, then the subcontractor should not be able to recover from you. That may not stop him from filing a claim of lien, but if you can show to the court that you have paid all that was required, you will ultimately prevail.
I signed a contract with a GC in 2011 to construct my home and right from the start of the project I began to notice problems, which continued to multiply as the project progressed. Eventually, I received a phone call from one of the subs that they had not been paid. Then, I received a call from a vendor that they had not been paid as well. On top of that, I reviewed the draw sheet which revealed that the bank had been giving the contractor draws for work that had not even been started. After learning about all of these issues, I decided to terminate the contract and assume the role of GC.
Once terminated, I hired a new contractor to assist me in completing my home. He called the building inspector and set up an inspection for temporary power. The inspection failed! Apparently, the contractor had never passed framing inspection on the home and was instructed not to continue with the project until passing framing inspection. The contractor proceeded anyway. The inspector made me remove ALL of the siding from my home and we discovered the GC had not caulked the windows, taped the seams, etc. The new contractor informed me that my home would have been rotten in less tham 5 years. In addition, the new contractor found that there were no floor joist at the front door, cardboard had been used between the porch and side of the house, the nails used on the porches were not the correct ones and every board had to be removed and re-nailed, etc.
The original contractor has filed a lawsuit against me for breach of contract with a lien for $29,660.00. The vendor has also filed a suit against the contractor and me with a lien for ~$10,300.00. I have paid out over $19,000 in legal fees and still have not gotten my day in court, I have filed a complaint with the General Contractors Licensing Board, and I have filed complaint with the NC Commission of Banking. I need to know if you feel I have a strong enough case to fight in court and if so, can you direct me toward an attorney who can assist me in my endeavors. I have no more money for attorney fees, I currently have and attorney who indicated he would take my case on a contingency basis but has failed to correspond with me in ~2 months, and I need to find someone who will be willing to help me on a contingency basis.
Any advice is GREATLY appreciated!
Tiffany:
I apologize for the delay in responding, but I’ve had some technical issues here. Hopefully you have gotten the help you need. I’d really try to follow up with the attorney that said he would do the work on contingency, as it does sound like you have a serious problem and decent set of facts. If you need additional help, call the Lawyer Referral Service in Cary. They can give other referrals to lawyers that can take contingency cases.
I had two liens filed against me and “perfected” in 2013 by the general contractor who started constructing my home and a vendor who furnished supplies for the construction process. I bonded off both liens and won the case against the contractor but the vendor has never pursued the issue any further. I would like to be able to get my money back that I used to I bond off the lien. Is there a statute of limitations on how long a vendor can wait to take me to court?
My brother in law and I contracted with a builder to build a house on a property in nc. Officially the deed is in 5 people’s name, each originally having 1/5 ownership. Me, my two sisters and a brother, my brother in law was also given 1/5. One sister and brother wanted nothing to do with the property and my brother in law and his wife (my sister) wanted to tear down the old structure and build a new home.
The builder drew up the contract and put my name and my brother in laws name on the contract.
The structure is finished and we have furnished and are currently using it as a vacation home. The builder went 25% over budget, we paid him 12% over his original price and refused to pay the additional 12% overage.
He has placed a Claim of Lien on Real Property, he placed it against everyone on the deed plus my parents who were the original deed owners but legally transferred to the 4 kids and 1 brother in law.
Is there a slander of deed case we have against the builder.
Thanks,
Bob
There may be a case for your parents if they transferred the property properly before any contract was signed. Otherwise, as far as the non-involved siblings, if they co-own the land then they are necessary and proper parties to the lawsuit. A claim of lien on land is for the added value given to the land, and even though they didn’t sign the contract, they’d benefit if, for example, you sold the property that now has a house on it. So it is proper that they are in the lawsuit. However, those non-involved siblings wouldn’t have any liability beyond the value of the property, whereas if you got hit with a large judgment based on the contract, your personal assets would be at risk.
Even though the contract was exceeded, the contractor may have issues re: changes/overrages, verbally approved changes, etc. These things are very fact dependent, but if he has a valid belief in being owed the additional money, than you don’t really have a slander of title suit against him. You may very well, however, have a good counterclaim for the overage you already paid, and for any other defects or issues with the house.
It is most important that if he files the lawsuit to perfect the lien (sometimes folks don’t, in which case it becomes invalid)– if he does file the lawsuit, and serve you (via sheriff, certified mail, or Fed Ex/UPS), you file a written Answer to the lawsuit denying the allegations. Let me know if you want to talk further.
Wow! Thank you for the good and quick response. I do have a follow up question.
The bid price was 175,000, we paid a total of 197,000. Builder is asking for an additional 21,000.
There were no changes made by us but there were errors made by the builder that cost $.
He put a Claim of lien on real property for the $21,000.
If he makes “perfect” the lien can he force the sale of a 200,000 house to satisfy his 21,000 lien?
Thanks
Bob
Hi Melissa,
I don’t know if you got my original question.
We had a new roof put on our home in 8/2014. We went through our insurance because the roof had defective shingles and hail/storm damage. The insurance co. paid us and we paid the roofer first check 6/27/14. The job was completed in late August and our final payment was made to the roofer on 9/9/14. The roofer gave us a waiver that I mentioned in other posting on 10/9/14. He said he was having problems with the supplier. We received a claim of lien on real property by cert. mail on 11/10/14. The roofer said he was handling it all not to worry. Then on 11/26/14 we received the complaint. The complaint says that Plaintiff is serving us with the lien simultaneously with the summons and complaint.
What should we do? Thanks so much. Your blog is wonderful.
Leslie:
Yes, got your emails. You definitely need to file an Answer to the Complaint. The fact that you have a lien waiver before the lien was filed means that the lien will likely fail. However, you must present the waiver evidence to the Court. Give me a call and we can talk further. Area Code 919, number 881-2214
Hi Melissa,
I forgot to add that the Roofer gave us a Full Unconditional waiver stating that having been fully paid and satisfied, by signing this waiver, all his construction lien rights against such property are hereby waived and released signed 10/9/14. Hope this helps.
thanks so much.
Yes, having the lien waiver is crucial to getting the lien released, as discussed in my reply to your other comment.
Thank you for providing this valuable information. We have had a lien filed on our home that is currently under construction. The lien was filed by a framing contractor who was contracted by the GC. The contractor was paid regularly for work performed. However we now know that he did not complete important aspects of said work such as bolting the porches to the house and many other issues. Earlier in the project we had to halt the framing while another engineering issue was worked out. The framing contractor wanted to continue to get paid for work he had not completed yet. We refused and he walked off the job. When we resolved the engineering issue he was contacted numerous times to come back and finish the job. He refused to return unless we agreed to pay him more money than what was in the contract. We refused and gave him a specific time frame to return to the job or we would be forced to replace him. He did not return so our GC got someone else to finish the job. The framing contractor has now filed a lien. What is the best way to handle this. Thank you in advance for your help.
Amanda:
I apologize for the delay in responding– this comment went into my spam! If I understand correctly, the framing contractor was under the GC that you terminated. If you paid everything you were required to pay to the GC, you may be okay. Subs are only entitled to lien rights to the extent of their GC, and if the GC was paid in full for the work that he *did* do, then the Sub cannot come after you. But, you do still need to handle the lien he’s placed on the property. You can wait it out and see if he actually perfects the lien, you can bond off the lien (via the clerk of court) and let him prove his case (or not), after which you’d get that money back. It depends in part on how much money is at issue, and whether you can afford to bond it off or take a wait and see approach.
I am in the middle of construction on a detached garage/shop. I have a written contract with my GC that has the payment draws broken up into 4 payments based on specific percentages of the total contract amount, due at specific intervals as work is completed. After having several issues with quality and major setbacks due to his subcontractors being incompetent and/or mis-informed by my GC, I am ready to find someone else to finish the project. I have held payment on draw #2 due to all written conditions not being completed, much less satisfactory. My GC insists that I pay the 2nd draw to allow progress and the issues will all be fixed in the end. We are at a stand still and nothing has been done for 3 weeks and we have passed the contracted time frame for the project by 3 weeks so far. Can the current GC put a lien on my property due to “partial completion” of the second draw terms? I may end up paying more than our contracted amount to have someone else come in behind to fix things and complete the project. In the event I incur additional amounts to fix/finish the project, are there grounds for a lawsuit to compensate me the difference I had to pay? If my current GC files a lien, can I continue progress with a new GC and settle the lien after the fact in court?
Brad:
I’m sorry to hear of your construction issues. The short answer is that anyone can put a lien on any property, whether valid or not, and you’ll have to deal with that. The way you deal with it is to “bond off” the lien, or reach a settlement. You cannot pay any subcontractors or vendors if a lien is placed on the property unless you’ve bonded off the lien. If you end up paying more than the contracted amount to get the work completed, yes, you can sue the GC for the difference. That is, if the GC is terminated for default, and you can prove that, you are entitled to the extra costs to complete. Feel free to give me an email to discuss further- I’m at mbrumback at rl-law dot com.
We signed a contract with a builder a year ago to build a large 3000 sf. addition to our existing home. We have a construction loan taken up for the project.
Due to multiple reasons (poor workmanship, multiple errors, unexplained delays, unproven increase in prices) we are at the point of firing him. We have about 25% work left to get C/O.
We have kept good documentation of all of our claims. He owes us $18,000 that we paid out of pockets for items needed just to speed things up.
What is the likelihood that he can put a lien on our property if we fire him? Does he also have to file a lawsuit for money he claims? What are our chances to finish the project without further problems?
Thanks a lot.
Andrea: You could face a lien; however, there are ways to handle that including “bonding off” a lien. If you terminate him for cause, and can prove the cause, then he is unlikely to prevail on a lien claim. The exception would be for work that he did do if you haven’t paid him for any of that work yet.
I don’t know how much in dollar value the 25% is worth, but hopefully it is more than the 18k he currently owes you. He couldn’t just lien the property- he would have to “perfect” the lien with a lawsuit if he elected to sue for money. You can also sue him for the money you expended that you shouldn’t have had to spend.
Your best bet is to continue to document everything, and hold his feet to the fire in getting the project done. There are other things you can consider too– lawyer letters, incentives, etc. Best of luck. Please contact me if you want to discuss how we could help you.
My Wife and I signed a contract with a GC to add a large addition to our home. Each time we pay the GC for work completed we have him sign a lien waiver with regard to the completed work. This last July 4th the GC comes to me a states that we need to pay three bills that we already gave him money for and he already signed waivers for. The contract with the GC have been fully paid and I now have a Sub contractor trying to Lien our “real Property”.
1. Since the only signed Contract I have with The GC has been Paid and then some can the Sub Lien Project Funds?
2. Since the GC has been Paid and signed Waiver can the Sub Contractor lien the real property?
Thank you in advance
Gary
Assuming the facts are as stated, the sub can *try* to lien project funds, or the real property itself, but in the fact situation you are describing, it sounds like you are protected. That is, if there are no funds yet to be paid to the GC (the entire contract has been paid, and you have proof of that), together with the fact that the GC has waived any liens, means that the sub really doesn’t have a lien at this point. Can he try to file an improper lien to affect your title to property? Sure. But will it stand up? Not on these facts. Both the fact that you’ve paid all the funds owed, PLUS the fact that you have a waiver, give you good protections. Hopefully this sub will check with counsel before he starts down this fruitless path. I’d direct the sub to the GC and show him a copy of the lien release. Hope that helps! If you need any assistance if he should try to file a lien, give me a call.
I have an issue , I had a guy helping to bring all the subcontractors to my construction of my house. I am serving as an owner / contractor. Every sub he brought to the job he didn’t pay and I had to make sure they were paid. He was to per a verbal agreement which he would never sign a contract with me , so I was to pay him 5% on every sub he brought or any merchandise he bought. Now he played games paying those contractors and he charged us for clearning our land which we had to finish paying more to other contractors to clear the land, but from there on out we paid other contractors and he didn’t pay timely or at all, we had to pay them. But he did work in our house that we now have to fix. He was paid for all of it but now is threating to lein our house for 20,000 he is not a licensed GC and has no contract with us. We paid for every phase and now left to fix his mistakes. Can he file a lien on my property without having a contract? He states we owe him for work that I have text’s showing what he is asking for is paid on the check. Please help he has raked us over the coals and no once closed I have to get a loan to pay back family and if he liens the house I will have to go to court and now low on money due to his mistakes in my house having to be corrected.
Ginger:
The short answer is yes, he can file a lien even without a written contract and without a license. HOWEVER, he may not be able to successfully enforce such a lien, and you might even have a claim against him for slander of title. You don’t actually need a written contract, and the license issue doesn’t seem to come into play as the work sounds like it was all for under $30,000, which is allowable under NC Law. Your other issues (re: him not paying subcontractors, not performing, etc) are all good defenses to any lien claim.
First, keep in mind that just because he files a lien claim doesn’t mean he will properly “perfect” the lien claim. A lot of contractors file the Notice, but then fail to file the lawsuit to perfect within the time frame. If so, then it’s just as if the lien was never filed to begin with. If he does perfect, you’ll need to file an answer, and assert all of your defenses and/or counterclaims against him for the money he’s cost you.
I’d wait to see what he does first; in particular, what he does about perfecting any lien notice. If he does proceed and you need our help, give me a call.
First – great website and so helpful. I was reading your ABC’s of Current NC Lien law post as well and I have a quick question.
Scenario:
We contracted for foundation work after April 1, 2013. The total budget was less than $14,000. The contractor sub-contracted work for adding special piers under the house. Sub-contractor finished work on June 24th. Contractor (finally) finishes everything and is paid in full Sept. 17th. Sub-contractor contacts us 2 days ago (Oct 16th) and threatens to put a lien on the house because they’re still owed $3,000 by contractor. This was the first we’d heard of any issues.
Everything I’m reading says that they can’t put a lien on our house. It’s more than 120 days since their part was done, no notice of work, etc… or am I missing something?
Thanks in advance!
Will:
If their work was done more than 120 days ago, then you are correct. They should not be able to lien your property. This is not to say that they won’t try– but if they do you should be able to get it dismissed fairly quickly. If they go to a lawyer for the lien, they will likely be told that it’s untimely.
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