Avoid Getting Sued By Your Contractor
From time to time, you hear a story about a homeowner getting sued by a subcontractor or supplier who claims they never received payment for materials they supplied for a project on your home. The homeowner paid the contractor in full according to their agreement, but now, the homeowner has to pay more money for a project already paid in full to a subcontractor or supplier. How can this happen? The homeowner did their homework by checking with the local Better Business Bureau, verified insurance and references, and thought they negotiated the best possible terms for work to be completed. When the project was finished, the homeowner was satisfied and paid the contractor in full. So, what right does the subcontractor or supplier have suing the homeowner?
Unfortunately, this occurs too often. What happened was that the contractor simply didn’t pay the subcontractor or supplier for the materials they purchased to be used for the home project. Maybe the contractor ran into financial difficulty and couldn’t pay for the materials. Maybe the contractor just simply skipped town. Either way, the supplier or subcontractor wants their money and has no other recourse but to sue the homeowner and place a lien on the home.
How can a homeowner avoid getting sued by a contractor or their supplier?
After you’ve verified a contractor’s references, proof of insurance, checked with the Better Business Bureau for any claims against them, and negotiated a price and terms of an agreement, insist on knowing up front who the contractor’s suppliers will be and if they will be subcontracting out a portion of the work. Explain upfront that they and their suppliers and subcontractors will need to sign a lien release prior to payment. Keep in contact with suppliers and subcontractors involved as work is completed to be sure they have been paid by the contractor. A lien release states in writing that a contractor and/or their suppliers received payment in full, and they no longer have the right to place a lien on your home for nonpayment. This will save you from headaches and potential legal costs down the road.
You can get a lien release from your attorney or a title company. Some contractors even provide them for their clients. The important thing is to get one, read it, and understand it. If you don’t understand it, have it reviewed by your attorney. ■
All information contained herein is not guaranteed and is subject to verification.